There is plenty to be despondent about living in South Africa right now. But every now and then a glimmer of hope arrives to keep us believing that the future we all deserve is possible. Like the arrests this week of former SAPS national commissioner Kgomotso Phahlane and other generals in SAPS Crime Intelligence. These arrests follow those of Brian Molefe and Anoj Singh last month. You might recall their names from the #GuptaLeaks where we exposed their dodgy Transnet contracts.
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Not for the first time, ordinary South Africans are stepping up where the government isn’t… From creating apps to alert others about load shedding, to parking their cars and assisting as point guards to keep traffic moving, our collective ability to take care of each other when the chips are down might be the last thing keeping us going.
We can’t all be out repairing potholes and drilling boreholes. But what Daily Maverick can do is to ensure that we provide the only tool that enables all South Africans to make themselves heard: information.
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We may literally be in the dark but everyone that calls South Africa home deserves to be enlightened.
‘If you want to die the richest man, then just stay sharp. Keep investing, don’t spend anything. Don’t eat any of the capital. Don’t have a good time. Don’t get to know yourself. Don’t give anything away. Keep it all. Die as rich as you can.
“But you know what? I heard an expression that puts it well: There’s no pocket on that last shirt.”
This is a quote from Susie Tompkins Buell that Yvon Chouinard, founder, former owner, and current board member of Patagonia included in his book Let My People Go Surfing: The Education of a Reluctant Businessman .
In an unprecedented move that had environmentalists celebrating and some business moguls sceptical, outdoor clothing retailer Patagonia announced that “Earth is now our only shareholder” of the $3-billion company — meaning that instead of making the company public, profits not reinvested back into the business will be distributed as dividends to protect the planet.
Chouinard has often stated he has never wanted to be a businessman, and recently told The New York Times that Forbes magazine listing him as a billionaire “really, really pissed me off”.
As Buell’s quote implies, once we’re gone, we can’t take anything with us — but we definitely can leave something behind.
In a letter published on Patagonia’s website on Wednesday, 14 September, the day the new ownership structure was announced, Chouinard stated: “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.”
Patagonia has always been seen as a pioneer in the retail space for its unorthodox sustainable business practices. It was one of the first apparel companies to switch to organic cotton, which it did in 1996, and committed to giving away 1% of sales to grassroots environmental nonprofit organisations every year since 1985 — donating more than $ 100-million towards the preservation and restoration of the natural environment.
But, Chouinard said, “While we’re doing our best to address the environmental crisis, it’s not enough.”
Now 83, Chouinard considered selling the company and donating all the money to causes that fight the climate crisis, but said they couldn’t be sure future owners would have the same ideals.
And Chouinard believed that taking the company public would be a “disaster”, saying: “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.”
So Patagonia, which started as an “experiment in responsible business”, once again started something new.
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.
Read Yvon’s letter at https://t.co/TolGLfHEGG
Patagonia has said, “instead of ‘going public’, you could say we are ‘going purpose’ ”, with its new ownership structure.
Ownership has been transferred into two new entities. All the nonvoting stock, which is 98% of the total stock, has been donated to a newly established nonprofit organisation, the Holdfast Collective, which the company says, “will use every dollar received from Patagonia to protect nature and biodiversity, support thriving communities and fight the environmental crisis”.
Basically, this collective will receive all the company’s profits that are not reinvested back into the business and use them to combat the climate crisis.
Patagonia projects that it will pay out an annual dividend of roughly $100-million, depending on the health of the business.
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The remaining 2% — all the voting stock — has gone to the Patagonia Purpose Trust, which Chouinard says was created only to protect the company’s values and mission. As the trust owns all of the voting stock, it has the right to approve key company decisions.
While many were blown away by Chouinard’s decision, some were sceptical. Bloomberg reported that the move was structured in a way that allows Chouinard’s family to keep control of the company while avoiding an estimated $700-million in taxes.
The Holdfast Collective is classified as a 501(c)(4) nonprofit organisation, which allows it to make unlimited political contributions and means it isn’t eligible for income tax deductions.
Patagonia founder Yvon Chouinard has described his decision to give away the company as his last-ditch effort to do all he could to protect the planet, however, it’s also helping him skirt around $700 million of tax bills. Funny that!#CostOfNetZero
👉 https://t.co/HRZbhO6ZGB pic.twitter.com/FVhFlZ4yyG
— Net Zero Watch (@NetZeroWatch) September 16, 2022
Bloomberg reported that while Chouinard will owe $17.5-million in gift taxes for the shares he transferred to the trust, he won’t have to pay the federal capital gains taxes he would have owed had he sold the company, and many have taken to social media to speculate that this was the main motive behind this move.
While Chouinard might have figured out a smart way to avoid taxes, he is no longer benefiting from the $100-million annual profits from a company he built from the ground up — a decision most businesses or billionaires wouldn’t dream of making.
Chouinard told The New York Times : “Hopefully, this will influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people.”
He wrote in his book: “Before we are entitled to encourage other companies to act responsibly, we have to do so ourselves.
“We need to realise that most of the damage we cause to the planet is a result of our own ignorance and that we cannot afford to go about blindly doing unnecessary damage simply because we lack curiosity.”
One of Patagonia’s mission statements is to “use business to inspire and implement solutions to the environmental crisis,” and, hopefully, its new ownership structure will spur other billionaires and fashion retailers to use their economic power for good.
If only all eco companies actually cared about the planet.
— Nathan Mackenzie Brown 🔬🌎 (@NathanMackBrown) September 14, 2022
Patagonia chair Charles Conn said: “The current system of capitalism has made its gains at an enormous cost, including increasing inequality and wide-scale uncompensated environmental damage.
“The world is literally on fire. Companies that create the next model of capitalism through deep commitment to purpose will attract more investment, better employees, and deeper customer loyalty. They are the future of business if we want to build a better world, and that future starts with what Yvon is doing now.”
Patagonia board member Dr Ayana Elizabeth Johnson said: “The stakes could not be higher. If we want to protect nature and support communities, businesses can’t continue to adhere to the prevailing economic model.
“Patagonia has been breaking the mould for decades, and now they have shattered it.
“Now I want to know, which companies will be next to step up?” DM/OBP
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by Julia Evans, Daily Maverick September 19, 2022
This <a target="_blank" href="https://www.dailymaverick.co.za/article/2022-09-19-clothing-company-patagonia-to-donate-annual-profits-of-100m-to-its-only-shareholder-the-earth/">article</a> first appeared on <a target="_blank" href="https://www.dailymaverick.co.za">Daily Maverick</a> and is republished here under a Creative Commons license.<img src="https://www.dailymaverick.co.za/wp-content/uploads/2021/10/favicon.png?w=97" style="width:1em;height:1em;margin-left:10px;"><img src="https://www.google-analytics.com/collect?v=1&tid=UA-10686674-10&cid=1&t=event&ec=third-party&ea=view&el=1&cs=OBP&cm=tag&cn=article&dp=clothing-company-patagonia-to-donate-annual-profits-of-100m-to-its-only-shareholder-the-earth&post=1401837&dt=Clothing%20company%20Patagonia%20to%20donate%20annual%20profits%20of%20$100m%20to%20its%20‘only%20shareholder’%20—%20the%20Earth" style="width:1px;height:1px;">
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it probably boils down to the “how much is enough” question. There is a number past which more wealth makes no difference. Gates and Buffett have and will give away probably $200 billion. Although it sounds like their kids must be annoyed, in reality if each kid gets 1/10 of one percent of that, it is virtually impossible to spend. Better they direct that spend than politicians spend the tax.
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