Yvon Chouinard, 83, announced the move in a letter posted to the company’s website, entitled “Earth is now our only shareholder.”
The businessman stated that ownership of the company has been transferred to a trust, the Patagonia Purpose Trust, designed to protect the company’s values, as well as a nonprofit organization, the Holdfast Collective.
“The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis,” Chouinard said.
According to Chouinard, the Holdfast Collective owns 98 percent of the company and all of the nonvoting stock, while the Patagonia Purpose Trust owns 2 percent of the company and all of the voting stock. The non-voting stock carries “economic value but not decision-making authority,” he said, while voting stock “has both economic value and decision-making authority.”
The California-headquartered firm was already donating 1 percent of its annual profits each year to grassroots environmental nonprofits, he said.
The company projects that it will pay out an annual dividend of about $100 million, although that depends on the health of the business.
Patagonia was founded in 1973 and is reportedly valued at about $3 billion, The New York Times reported. Chouinard’s net worth is estimated to be around $1.2 billion, according to Forbes, although he is no longer a billionaire.
Chouinard said that he had weighed up selling the company and donating all of the money, but was concerned a new owner may not maintain Patagonia’s values or might give all of the company’s worldwide employees the boot.
The founder said he also toyed with taking the company public but noted that “even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility.”
“Instead of ‘going public,’ you could say we’re ‘going purpose.’ Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all wealth,” Chouinard wrote.
“Despite its immensity, the Earth’s resources are not infinite, and it’s clear we’ve exceeded its limits. But it’s also resilient. We can save our planet if we commit to it,” the businessman said of his decision.
Chouinard’s unorthodox approach to business has made headlines before. Patagonia previously ran a Black Friday ad in The New York Times urging customers not to buy their clothes in an effort to cut down on consumption, noting that “everything we make takes something from the planet we can’t give back.”
Instead, the company asked customers to repair, share, and recycle clothing they had purchased from the company.
In 2021, Patagonia stopped selling merchandise at Wyoming ski resort Jackson Hole because after one of its owners hosted a fundraiser with Rep. Marjorie Taylor Greene (R-Ga.). In a statement to Axios at the time, the company said the fundraiser did not align with its values.