Patagonia to redistribute profits to environmental and social causes
Patagonia, which has been a private company since it was founded in 1973, has announced plans to allocate all profits that are not re-invested back into the company to environmental causes.
The US-based outdoor brand is today (14 September) creating two new entities to hold its stock – the Patagonia Purpose Trust and the Holdfast Collective.
The Trust will hold all of the voting stock of the company. Those overseeing the Trust will vote to ensure the company actions are aligned with its stated commitments on environmental and social impact.
The Collective, meanwhile, will hold all of the non-voting stock. It is being created to funnel all profits raised by Patagonia that are not set to be re-invested in the business or its value chain into social and environmental projects. Priority themes, Patagonia has stated, include nature and biodiversity protection and restoration.
It is estimated that the projects supported through the Collective will collectively receive some $100m per year.
During his time as Patagonia’s owner, Yvon Chouinard founded the 1% for the Planet initiative and signed Patagonia up as the first business. Now, 20 years later, more than 5,000 businesses have adopted the approach. Chouinard has stated that the decision to go further, creating the Trust and Collective today, was taken to frame Earth as the company’s only shareholder. He also said it marked the company “going purpose” rather than “going public”.
He said: “If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have. As the business leader I never wanted to be, I am doing my part. Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source.”
Chouinard’s two children, Claire and Fletcher, will continue to work for the company and will be responsible for overseeing the strategic decisions made by the Collective.
Marine biologist Dr. Ayana Elizabeth Johnson, who sits on Patagonia’s board, said businesses “can’t continue to adhere to the prevailing economic model” if the climate and nature crises are to be solved and social issued tackled. She has challenged other companies to “step up” and end the creation of wealth for their shareholders, instead providing funding to solve humanity’s most pressing challenges.
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