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The founder of Patagonia, Yvon Chouinard, and his family, have given away the $3 billion company to an environmental trust and non-profit.

T he company will still be an active producer of apparel, camping supplies and other goods — but all profits will go to the organisations to fight the climate crisis and pursue other environmental goals.

The move is a bold new step for a company that has taken a leading activist role for years, especially on environmental causes.

“Instead of extracting value from nature and transforming it into wealth for investors,” Mr Chouinard wrote in a public letter, “we’ll use the wealth Patagonia creates to protect the source of all wealth.”

The company’s voting stock will go to the Patagonia Purpose Trust, which will “protect the company’s values”. The non-voting stock will go to Holdfast Collective, a non-profit that will use the company’s profits each year for environmental action.

When deciding what to do with the company, Mr Chouinard wrote that neither selling the company and donating the profits nor going public seemed like good ways of ensuring that the company would continue its activist role.

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

In 2011, Patagonia ran what might be the most iconic sweater advertisement of all time. It took out a full page in the New York Times during the Black Friday season, urging customers, “Don’t Buy This Jacket.”

“We ask you to buy less and to reflect before you spend a dime on this jacket or anything else,” the ad read. “Don’t buy what you don’t need,” it continued, noting it took 135 litres of water and 20 pounds of CO2 to manufacture each unit.

The message was tantamount to heresy in the retail world, but nothing new for the Ventura, California-based retailer, which has always been on the cutting edge of sustainability, a place where one experiences the competing tensions of social and financial good more than anywhere else in the business world. The ad, despite its message, was a boon for the company’s sales.

Now, Patagonia is pushing this mindset, with the family giving 100 per cent of their shares over to a trust and nonprofit dedicated to fighting the climate crisis.

The move not only funnels the company’s roughly $100m a year in profit towards environmentalism, but locks in an ownership structure the family says is designed to ensure the company continues running in a sustainable way, with commitments like going carbon neutral and only using renewable or recycled materials by 2025.

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In August, the Chouinards gave their 2 per cent voting stock in the company over to an entity called the Patagonia Purpose Trust, overseen by the family and close advisers, while the other 98 per cent went to a 501(c)(4) nonprofit called the Holdfast Collective dedicated to climate causes. The corporate tax structure means the collective can spend directly on political advocacy and lobby to influence policy.

When Leslie Davis Burns, a professor emerita at Oregon State University who taught global sourcing and corporate social responsibility, heard the news, she said she cracked a big smile

“I just went, this is so Patagonia,” she said. “As an activist company, they have always pushed what can we do and how can we do it differently and be authentic in making a difference.”

Such activist companies are rare in the business world period, not to mention the fashion industry, which has an awful track record on issues like labour, waste, and pollution.

The company has always done things a little differently.

Yvon Chouinard, a self-described “reluctant businessman,” got his start as a wandering climber bum, blacksmithing rock climbing gear for use on the iconic walls of California’s Yosemite Valley in the 1950 and ‘60s. In 1970, after a climbing trip to Scotland, he started importing the rugged rugby shirts he encountered there and selling them to climbers. In 1972 Patagonia was born.

Even in these early days, the company was willing to change its approach and forgo profits if it meant leaving less of a trace on the planet.

In the early 1970s, Mr Chouinard stopped selling stake-like pitons because they were scarring rock walls in climbing havens across the world, even though they made up 70 per cent of his hardware business at the time.

Later, as Patagonia continued to grow, it made a shift to more pricey organic cotton in the 1990s, after an internal audit showed intensively farmed cotton was damaging to the environment.

It embraced other environmentally focused solutions well ahead of competitors, too, such as starting to make its fleece from recycled soda bottles in 1993, an initiative that translated into 91 per cent of the company’s fabrics in Fall 2022 being made of recycled plastic.

The company also helps repair and resell customers’ used gear, and began giving 1 per cent of its sales to environmental causes in 1985, an effort that would, in 2002, directly inspire the 1% for the Planet pledge, which has since been embraced by a wide range of companies.

Still, as time went on, Mr Chouinard, who famously does not own a computer or cell phone, and would disappear into the backcountry for months on end, began to chafe in his place in the corporate retail world.

High-performance outdoor gear was designed to be worn and pushed to the limit for years, but was becoming a trendy mainstream fashion brand. Patagonia has even earned the nickname “Pata-Gucci” for its coveted, high-priced goods.

“We outgrew our loyal customer base and increasingly were selling to yuppies, posers, and wanna-bes,” he told Inc. in 1992. “These people don’t need this s*** to get in their Jeep Cherokees and drive to Connecticut for the weekend.”

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