Patagonia Founder Donates Company to Fight Climate Change

Patagonia Founder Donates Company to Fight Climate Change title=
Yvon Chouinard (Photo: Campbell Brewer)
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By Lauren Bray, edhat staff

The founder of the Ventura-based apparel company, Patagonia, has donated the billion dollar enterprise to fight climate change. 

Yvon Chouinard, his spouse and two adult children, signed away their ownership and are dedicating all company profits to projects and organizations that will protect wild land and biodiversity.

Patagonia is estimated to be worth $3 billion, according to The New York Times.

In a letter posted Wednesday on the Patagonia website titled "Earth is now our only shareholder," Chouinard passionately wrote about reimagining capitalism

"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," he wrote.

Chouinard reflected on starting with materials that caused less harm to the environment, then giving away 1% of sales each year, becoming a certified B Corp and a California benefit corporation, and writing values into their corporate charter.

Patagonia Campus in Ventura (Photo: Kyle Sparks)

Now, nearly 50 years since finding popular apparel company, the Chouinard family has transferred all ownership to two new entities: Patagonia Purpose Trust and the Holdfast Collective. Every dollar that is not reinvested back into Patagonia will be distributed as dividends to protect the planet, according to a company press statement.

The Patagonia Purpose Trust now owns all the voting stock of the company (two percent of the total stock) and exists to create a more permanent legal structure to enshrine Patagonia’s purpose and values. It will help ensure that there is never deviation from the intent of the founder and to facilitate what the company continues to do best: demonstrate as a for-profit business that capitalism can work for the planet, according to the company's statement.

The Holdfast Collective owns all the nonvoting stock (98 percent of the total stock), and it will use every dollar received from Patagonia to protect nature and biodiversity, support thriving communities and fight the environmental crisis. Each year, profits that are not reinvested back into the business will be distributed by Patagonia as a dividend to the Holdfast Collective to help fight the climate crisis.

The company projects that it will pay out an annual dividend of roughly $100 million, depending on the health of the business.

"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," wrote Chouinard.

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a-1663281271 Sep 15, 2022 03:34 PM
Patagonia Founder Donates Company to Fight Climate Change

This has made my day x1000, I've been telling everyone I see about it. What an absolutely beautiful gift to earth and to all of us. It is so rare to see companies making decisions like this. I hope this inspires similar acts. Truly amazing, I am blown away.

Simpleton Sep 15, 2022 03:55 PM
Patagonia Founder Donates Company to Fight Climate Change

He just made a for profit company a protected trust non profit charity. His CPAs and lawyers probably utilized a South Dakota trust, which is especially good for dynastic handoffs and privacy.

So yes, it's a giant tax dodge that also allows him and his dependents to remain employees and controllers of the trusts and company. But huge props to Mr Chouinard and his team for leveraging some very clever PR.

a-1663283505 Sep 15, 2022 04:11 PM
Patagonia Founder Donates Company to Fight Climate Change

No good deed goes unpunished, or criticized by anyone keeping water clean for you to drink. It may be good tax-wise, but this man and his company donated millions upon millions of their profits to help others and resources we all need and enjoy. The fact is, he and his descendants could continue making billions into their own pockets for generations but they decided not to for the greater good. Unlike every other American billionaire, sans Mackenzie Scott, who keep getting richer and richer.

Simpleton Sep 15, 2022 04:21 PM
Patagonia Founder Donates Company to Fight Climate Change

Hundreds of private companies do this annually, not many are of this size. Even little guys like me are encouraged to consider it by our CPAs. It's best when your kids want to retain control but don't want to do the day to day management. This is not a tax strategy used by public companies (such as Amazon). reminder that non profit can pay 100% of it's contribution in the form of overhead (ie, salaries to the trust's employees).

But look, the guy created a multi billion dollar company and he can do what he wants, and donate monies to whatever he wants. But he isn't dumb and he has a lot of great legal and tax advisors. Good on him for leveraging these strategies.

a-1663293964 Sep 15, 2022 07:06 PM
Patagonia Founder Donates Company to Fight Climate Change

"The trust, which will be overseen by members of the family and their closest advisers, is intended to ensure that Patagonia makes good on its commitment to run a socially responsible business and give away its profits.

Because the Chouinards donated their shares to a trust, the family will pay about $17.5 million in taxes on the gift.

The Chouinards then donated the other 98 percent of Patagonia, its common shares, to a newly established nonprofit organization called the Holdfast Collective, which will now be the recipient of all the company’s profits and use the funds to combat climate change. Because the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax benefit for its donation.

“There was a meaningful cost to them doing it, but it was a cost they were willing to bear to ensure that this company stays true to their principles,” said Dan Mosley, a partner at BDT & Co., a merchant bank that works with ultrawealthy individuals including Warren Buffett, and who helped Patagonia design the new structure. “And they didn’t get a charitable deduction for it. There is no tax benefit here whatsoever.”
NY Times

Chip of SB Sep 16, 2022 10:09 AM
Patagonia Founder Donates Company to Fight Climate Change

Sac, for millennia humans have held the belief that they can influence the weather by making various forms of sacrifices. The weather has always been a bit unpredictable in both the short term and the long term. Until recently, it was widely understood that weather is a phenomenon that humans have little influence on, and that making sacrifices will not result in desired weather outcomes. Although it seems our society is losing that knowledge, I still hold the understanding that I cannot make the air colder by sacrificing my standard of living.

sacjon Sep 16, 2022 10:23 AM
Patagonia Founder Donates Company to Fight Climate Change

CHIP - yeah, you seem confused here. This isn't about changing the weather, it's about addressing the proven effects of pollution on our climate, again not weather, and as the article states (not surprised you didn't even read it): to "protect wild land and biodiversity."

Chip of SB Sep 16, 2022 10:23 AM
Patagonia Founder Donates Company to Fight Climate Change

I’ll add an example. Below is a link to a Mercury news article from a few years back explaining the results of a study of tree ring data that established a record of drought in california going back over 1000 years. Be sure to scroll through to the last picture which is a graph of the drier and wetter periods identified in the tree ring data. The drought in 1850 was so severe that it caused the demise of the Spanish ranchos, subdivision of lands, and tremendous societal changes. That drought was nothing by historical standards. History indicates a severe drought could occur in the future and it almost certainly will. That does not mean that humans are causing it to happen, or that humans can make it rain more by making sacrifices.

sacjon Sep 16, 2022 11:06 AM
Patagonia Founder Donates Company to Fight Climate Change

"History indicates a severe drought could occur in the future and it almost certainly will. That does not mean that humans are causing it to happen," - Just because it has changed in the past without our interference in the past isn't proof positive that humans haven't affected our climate over the past 100 years. Simple logic there.

Chip of SB Sep 16, 2022 11:51 AM
Patagonia Founder Donates Company to Fight Climate Change

Sac, humans certainly believed they could interfere with the climate more than 100 years ago, just as many humans continue to hold that belief today. Claiming that undesirable changes to climate and harmful weather events are caused by humans and can be avoided by making various forms of sacrifices is one of the oldest cons in existence. We know there have always been and will be droughts, hurricanes, heatwaves, and even ice ages. I guess it’s only natural to try to capitalize on these phenomenon. However, it’s dangerous to make sweeping policy decisions based on false beliefs. Many European countries dismantled the infrastructure to produce their own energy based on a belief that they could make the air colder. Now, with great irony, they will be suffering with cold air this winter along with extreme cost increases, economic turmoil, and a weakened strategic position to confront Russian aggression.

Chip of SB Sep 16, 2022 01:45 PM
Patagonia Founder Donates Company to Fight Climate Change

Sac, science is not about declaring things settled or proven. Science is also not at all about consensus, or suppressing dissent. However, I would agree doomsday predictions and the belief that we can make the air colder and cause the seas to fall by making sacrifices of various sorts would fall within the purview of the “proven science” of con artistry.

MarcelK Sep 17, 2022 12:16 AM
Patagonia Founder Donates Company to Fight Climate Change

Chip's failure to understand the process of science, and climate science specifically, is complete.

Greenhouse gases in the atmosphere are transparent to incoming solar radiation. That incoming energy is radiated back as infrared, which is scattered by greenhouses gases, slowing its escape. When the greenhouse gas concentration is high enough, this results in a slow gradual accumulation of energy in the atmosphere, increasing its average temperature. Reducing the amount of greenhouse gases in the atmosphere would reduce and could eventually end this process of increasing average global temperature. Mocking this as "make the air colder" is stupid and dishonest, but if one wants to put it in those terms then, yes, of course one can "make the air colder" by spending money to affect the processes that make it hotter.

And everything that we accept as *being* a scientific finding is achieved through consensus, which is a fundamental part of the process of doing science. Results are peer reviewed, published, subjected to scrutiny by other scientists, and attempts are made to replicate them. Results that can't be replicated, are based on poor methodology, make unwarranted assumptions, use overly small datasets, etc. are rejected or at least held to be suspect. Only once there is a consensus among scientists in the field that findings have passed these rigorous tests are they accepted as scientific findings, and even then they are always subject to further scrutiny--findings that are successfully challenged, that lose their consensus acceptance, are no longer considered to be scientific results.

a-1663401302 Sep 17, 2022 12:55 AM
Patagonia Founder Donates Company to Fight Climate Change

Trying to educate the basic voices of con sheep of SB about how science works is a waste of time. They have chosen willful ignorance, and as such will ignore any facts not supporting their chosen, politically-motivated narrative. Theirs is the antithesis of the scientific process.

MarcelK Sep 17, 2022 02:42 AM
Patagonia Founder Donates Company to Fight Climate Change

@12:55 You're almost certainly right, but you have to appreciate the optimism of this educational video:

Chip of SB Sep 17, 2022 10:32 AM
Patagonia Founder Donates Company to Fight Climate Change

Marcel, there is one fatal flaw in your logic. You have gone all in on warming. The historical record makes it very clear that our climate gets warmer sometimes, but can also get colder, see the link below for an example. If the air cools over a period of several years, people simply won’t believe you anymore. I figure there is about a 50/50 chance of that happening. It won’t be so easy to adjust historical temperature station data to cool the past once another decade or two of satellite data has been collected. You would be wise to hedge your bets and pivot to “climate change” instead of committing to warming, that way you could make a similar case that CO2 is making the air colder and causing the seas to recede if that’s how it turns out. However, as long as you time your predictions far enough in the future so they won’t come due in your lifetime you’ll be safe.

Chip of SB Sep 17, 2022 08:48 PM
Patagonia Founder Donates Company to Fight Climate Change

Yes Alex, I’m sure this tax plan will make the air at least a couple of degrees colder. On top of that, I expect this tax planning will make the sea level fall too. Saving a few hundred million on capital gains taxes is sure to put a chill in the air. In bet if I buy a Tesla and take it for a few laps around town icicles will form and snow will fall on Santa Barbara.

haskelslocal Sep 16, 2022 08:08 AM
Patagonia Founder Donates Company to Fight Climate Change

Tax avoidance Strategy. Period. All family offices and large wealth advisors have been setting up these irrevocable trusts for decades. It is legal and nothing but loophole filled complexity. Ironic at best as a company that resells goods designed to keep you warm is selling itself as being responsible for cooling the planet. So it can keep you warm.

MarcelK Sep 17, 2022 06:18 AM
Patagonia Founder Donates Company to Fight Climate Change

"Ironic at best as a company that resells goods designed to keep you warm is selling itself as being responsible for cooling the planet. So it can keep you warm."

Being this disingenuous must take special training.

proletariat Sep 16, 2022 08:43 AM
Patagonia Founder Donates Company to Fight Climate Change

I wonder if he considered handing it over to the workers. I know of at least one local medium sized company that did so successfully: CMC Rescue, which is set up under an employee stock ownership program (ESOP), and not a cooperative.

It's a shame he's "reimagining capitalism" instead of creating a democratic workplace.
Assuming this isn't just a tax-dodge, this could mean that he thought so little of his workers that he didn't believe they would make good decisions. It's also possible that he *did* ask the workers, and they didn't trust *themselves* to run the company and choose good leadership, which would be even sadder.

This would have been such a great opportunity to demonstrate the viability of democracy in the workplace! Sad to see it go the other way.

lovesbalot Sep 16, 2022 09:52 AM
Patagonia Founder Donates Company to Fight Climate Change

Chip/Haskel/Proletariat You're being so negative it is painful to even read your comments.. First off Patagonia is a generous employer, subsidized child care, health benefits from day one, fun work environment with flexibility for a company that already has done lots of good and made movies about rivers and natural environment all about saving nature. Now they decided to make Earth their only shareholder. That is precedent setting. Reimagining capitalism is what is needed if we want to do anything meaningful about climate change. Patagonia is a thoughtful leader in countless ways.

proletariat Sep 16, 2022 01:45 PM
Patagonia Founder Donates Company to Fight Climate Change

I've heard great things about their daycare program too!
I just wish the workers -- who stay there longer than average and therefore have put more of their creativity, dedication and love into the business -- were given the chance to run it as they saw fit, which could very well include sending some of the profits to organizations that are trying to save the planet. The notion of reimagining capitalism while it's been the driving force behind the destruction of the earth is just heartbreaking. The world's productive capacity has not always been managed under capitalist structures, and there's no reason it should, will, or can continue this way.

I get that his intentions are good, and I hope that the profits of the new Patagonia are used to make substantive, positive changes for the earth. I just wish that the employees were given a say (structurally) in how the fruits of their labor are appropriated.

Sun Sep 16, 2022 01:34 PM
Patagonia Founder Donates Company to Fight Climate Change

I think it's great, well done. We need a change from capitalism, it’s destroying our planet and our health. We need Natural Capital Accounting where every company is required to factor in the actual Environmental cost and pay that amount towards planting trees, and cleaning and rebuilding wetlands, rivers, and streams.

Blue Print for Green Economy

Systems of Environmental Economic Accounting AERIES AND SEEA

Chip of SB Sep 16, 2022 05:01 PM
Patagonia Founder Donates Company to Fight Climate Change

Here is an article about the tax implications of this deal. They are saving close to $1 billion in tax liability through this creative restructuring. Whenever I hear “climate change” as the basis for a decision of this magnitude, I know there is more to the story. In any case, the law is the law and kudos for developing a clever tax planning strategy. I just wish those of us who were not billionaires could have lower tax rates too.

Luvaduck Sep 16, 2022 06:07 PM
Patagonia Founder Donates Company to Fight Climate Change

Chouinard was an inspirational climber back when gold-line, pitons and tennis shoes were what was available. Serious climbing involves serious thought, concentration, personal responsibility and mental toughness not just the willingness to assume calculated risk. It engenders a love and respect for nature that goes core deep. Over the years as population exploded and amazing new equiptment came into being, many routes aren't what they were and some climbers aren't as serious either, but there are some who appreciate and accept the challenge of developing their skills to the highest point possible. Chouinard gave to the "church" he worshipped in, believed in and loved. What those who come do or don't can never affect that.

Sun Sep 17, 2022 11:00 AM
Patagonia Founder Donates Company to Fight Climate Change

Setting up a Natural Accounting Committee creating a 25 year plan to implement your objectives backed by Natural Accounting Accounts. A 25 year plan

1. First Baseline to establish what you actually have, use ARIES for SEEA
Carbon baselining, biodiversity baselining, water biodiversity baselining

2. Set out how you are going to do it, 25 year plan in formal government policy which translate into statutory targets set in law that need to be achieved for key component of parts water biodiversity, waste, etc... Once something is legally required, it's legally challengable when you fail to do it.

3. This is how we are going to measure it, this is why the numbers matter, this is why the accounts matter, this is how we are going to do it. and this is how to implement it.

Deiter Helm
Natural Capital book
Green and Prosperous Land

EastBeach Sep 17, 2022 05:11 PM
Patagonia Founder Donates Company to Fight Climate Change

Huge props to Yvon! While other billionaires are spending their dough cavorting in space or the metaverse, Chouinard is using his wealth to protect our environment. Contrast that with the $1.6B 501(c)(4) Barre Seid setup to fund forced-birthers and stack the courts with Trump puppets. Day and night.

MarcelK Sep 18, 2022 04:42 AM
Patagonia Founder Donates Company to Fight Climate Change

The lying right wing maggots have no idea what you're talking about. Leonard Leo will be using that $1.6B to corrupt the court system and rob women and the rest of us of rights for decades to come.

EastBeach Sep 18, 2022 12:52 PM
Patagonia Founder Donates Company to Fight Climate Change

There are lots of threads to pull here. In the context of Patagonia, Yvon wants it to continue operating as a non-profit and have profits fund environmental protection. He did that by transferring 98% of the company to a 501(c)(4). No tax breaks as mentioned by A-1663293964. In contrast, Barre Seid wanted to give *cash* to a dark money group headed by Leonard Leo (former VP of the Federalist Society who justice Clarence Thomas has called the "third most important man in America"). Seid pulled that off tax-free by donating one of his companies (Tripp-Lite) to a 501(c)(4) run by Leo called The Marble Trust. Marble trust then sold Tripp-Lite and paid no taxes on the sale. So Seid Barr was able move his $1.6B into the hands of Leo tax-free to co-mingle with dark money contributions. To what end? End abortion rights, embed Trump-friendly jurists throughout the Federal justice system, move control of elections into the hands of state legislatures, etc. The Federalist Society has a clever game plan and all the pieces are falling together where one small victory enables others. The Marble Trust project was kept secret for 2 years until NYT broke their story last month. It's a good example of how important journalism is to democracy.


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