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Outdoor gear company Patagonia says “the earth is now our only shareholder" after transferring the company's ownership from founder Yvon Chouinard and his family to two nonprofits established to fight climate change. In a letter posted on the 50-year-old company’s website Wednesday night, Chouinard said Patagonia would transfer 100% of its voting stock to the Patagonia Purpose Trust, created to uphold the values of the company long known for its environmental activism. All of its nonvoting stock will go to the Holdfast Collective, a nonprofit “dedicated to fighting the environmental crisis and defending nature."

Patagonia makes outdoor clothing, gear and accessories for everything from skiing to climbing and camping. Indian business tycoon Harsh Goenka in a tweet said: “Billionaire Yvon Chouinard has transferred ownership of his clothing company Patagonia, worth $3 billion to a trust and nonprofit organization so that all of its $100 billion/year profits go towards fighting climate change. We have such inspirational people living in this world!"

Chouinard said he never wanted to be a businessman and started Patagonia as a craftsman, making climbing gear for himself and his friends.

“One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed. Another path was to take the company public. What a disaster that would have been. 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," he said.

“While we’re doing our best to address the environmental crisis, it’s not enough," Chouinard wrote. “We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact."

Patagonia estimates that after reinvesting some profits back into the company, about $100 million annually will be distributed to the Holdfast Collective as a dividend, depending on the health of the business.

Patagonia said it will continue its previous charitable donations, including donating 1% of its sales each year to grassroots activists and remaining a B Corp, a designation for companies that prioritize social and environmental standards as well as profits.

Here is the full text of Yvon Chouinard's letter

Earth is now our only shareholder.

If we have any hope of a thriving planet—much less a business—it is going to take all of us doing what we can with the resources we have.

This is what we can do.

I never wanted to be a businessman. I started as a craftsman, making climbing gear for my friends and myself, then got into apparel. As we began to witness the extent of global warming and ecological destruction, and our own contribution to it, Patagonia committed to using our company to change the way business was done. If we could do the right thing while making enough to pay the bills, we could influence customers and other businesses, and maybe change the system along the way.

We started with our products, using materials that caused less harm to the environment. We gave away 1% of sales each year. We became a certified B Corp and a California benefit corporation, writing our values into our corporate charter so they would be preserved. More recently, in 2018, we changed the company’s purpose to: We’re in business to save our home planet.

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 while keeping the company’s values intact.

“Truth be told, there were no good options available. So, we created our own."

One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed.

Another path was to take the company public. What a disaster that would have been. 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.

Truth be told, there were no good options available. So, we created our own.

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.

Here’s how it works: 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the nonvoting stock had been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. 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.

It’s been nearly 50 years since we began our experiment in responsible business, and we are just getting started. If we have any hope of a thriving planet—much less a thriving business—50 years from now, it is going to take all of us doing what we can with the resources we have. This is another way we’ve found to do our part.

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.

(With Agency Inputs)

 

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