The billionaire founder of Patagonia has given his company away to help fight the climate crisis, according to a Wednesday announcement.
“While we’re doing our best to address the environmental crisis, it’s not enough. We needed to find a way to put more money into fighting the crisis,” Yvon Chouinard, who started the outdoor apparel brand almost 50 years ago, wrote in a Wednesday letter. “We can save our planet if we commit to it.”
Patagonia’s website now reads, “Earth is now our only shareholder.”
Chouinard and his family have transferred their ownership in the company, worth about $3 billion. Patagonia’s new owners are environmental nonprofit the Holdfast Collective and the Patagonia Purpose Trust, created by Patagonia “to protect the company’s values.”
The Patagonia Purpose Trust owns all of the voting stock, or 2% of the company. That leaves the other 98% to the Holdfast Collective, who holds all of the nonvoting stock.
Patagonia itself will continue to be a for-profit business, a certified B Corp and a California benefit corporation. But every year, after first reinvesting in the company, all the money Patagonia makes will be given to Holdfast Collective to help fight the climate crisis, the company says.
The Holdfast Collective “will use every dollar received to fight the environmental crisis, protect nature and biodiversity, and support thriving communities, as quickly as possible,” Patagonia writes.
Expected contributions for these climate pursuits total to about $100 million each year, depending on how well the business is doing. According to The New York Times, Patagonia sells more than $1 billion in apparel annually.
The clothing company will also continue to donate 1% of annual sales to grassroots environmental nonprofits, in line with previous commitments the company has made in recent years.
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Other options were to go public or sell the company and donate all the money, but neither felt like Patagonia’s mission would be preserved with full certainty, Chouinard said.
“Truth be told, there were no good options available. So, we created our own,” Chouinard wrote on Wednesday. “Instead of ‘going public,’ you could say we’re ‘going purpose’ … We’ll use the wealth Patagonia creates to protect the source of all wealth.”
Because Chouinard and his family transferred their ownership to a trust and a nonprofit, there will not be tax benefits, The New York Times reports. The family will pay about $17.5 million in taxes on the gift to Patagonia Purpose Trust. They also won’t receive tax benefits on the shares they donated to Holdfast Collective – as the nonprofit is a 501(c)(4) and can make unlimited political contributions.
“They didn’t get a charitable deduction for it. There is no tax benefit here whatsoever,” Dan Mosley, a partner at merchant bank BDT & Co. who helped Patagonia with the new ownership structure, told the Times.