In this news/opinion segment, the hosts discuss billionaire Yvon Chouinard’s decision to give away Patagonia, the outdoor apparel company he founded, in order to combat the climate crisis. The conversation begins with a brief history of Patagonia, highlighting Chouinard’s early life as a climber, the creation of the brand in 1973, and its long‑standing environmental commitments such as pledging 1% of sales to climate initiatives, becoming a B Corp, and the iconic “Don’t Buy This Jacket” campaign. The segment then outlines the succession dilemma Chouinard faced in the late 2010s: selling the company, taking it public, or passing it to his children—all of which he rejected because they could compromise the company’s mission. Instead, he worked with investment bankers to create an unprecedented structure: the Patagonia Purpose Trust holds 100% of the voting stock to protect the mission, while a new charity, the Holdfast Collective, holds all non‑voting stock and receives 100% of profits (about $100 million annually) to fund climate‑focused causes. The family incurred a $17.5 million tax hit, underscoring the lack of personal financial gain. The hosts reflect on whether this model will pressure other corporations to adopt similar ESG‑centric ownership structures, concluding that Patagonia remains an outlier but could inspire broader corporate responsibility.
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OK, very good morning. I am joined by my colleague Stephen because there's been some breaking news this morning and billionaire Patagonia founder has given away his company to fight the climate crisis. It's trending at the moment. Stephen, you've got your Patagonia top on.
I do, I do. I know they're not cheap, but they come with a lifetime guarantee. So, you know, I'm happy.
So explain to me what is going on here.
Yeah, it's— I mean, this is a brilliant, brilliant story, and it's something that, you know, it's a, it's a ray of sunshine amidst the kind of sea of greenwashing that we're getting at the moment. So maybe I should go back to kind of basics. Yvon Chouinard, this bloke, West Coast, United States. He lived out the back of his car, uh, you know, from the age of about 15, going around trying to climb mountains. Um, he funded this by making these little pitons that he sold to other climbers. Didn't really have a business, but just kind of got by. Went over to Scotland to climb, as you do, and found that rugby shirts, the Scottish rugby shirt, was a really, really appropriate material for climbing. So he started importing rugby shirts in about 1973 and made a company. Called Patagonia. So since 1973, the company has just been focused on this combination of providing really high-quality climbing and outdoor apparel, but also trying to look after the planet. So in 1983, these guys are just so ahead of their time. In 1983, they get— they decided to give away 1% of all sales, not profit, sales to help fight climate change. They have done some amazing initiatives like free childcare for everyone. Um, they've got— they were the first company to sign up to being a B Corp over in the West Coast. A benefit corporation is a kind of stamp of approval that you are ethically inclined and you are kind of reporting your environmental footprint. So they've really, really committed to this. And it all kind of came to a head, I think, in the mid-2000s with this amazing— I don't know if you've seen this— this amazing Don't Buy This Jacket advertising campaign came out on Black Friday, mid-2000s, big splash page in the New York Times saying, don't buy this jacket. Buy responsibly, only buy what you need. If you've got a jacket, fix it, don't buy a new jacket, which obviously to the Patagonia faithful, you know, you're preaching to the converted, what an amazing message. But then the rumblings came in that, you know, is this a little bit of greenwashing? Why are you advertising not to buy a jacket and then sales spike 30% the next week? You know, what is going on here? Is the kind of green-eyed monster kind of getting in the way? So Patagonia grew and grew, and it got to, I think, 2019, where Yvon, the founder and 100% owner with his family, they've never raised external funds, he saw himself featured in the Forbes list of billionaires. He was so upset by this. This was the trigger for him to say, look, this is not right. I don't have a billion dollars in my pockets. I drive a beat-up Subaru. I've got a single house. I'm not a billionaire. This is not the way that I want to be remembered. So this guy's getting on a bit. He's in his early 80s, and he starts putting together a plan, a succession plan. They had a bunch of options, right? So the first option was to sell the company. Lots of buyers would be interested in a company like Patagonia. Over a billion of revenue, et cetera, and then give all the proceeds away to charity. He liked that because the proceeds you could give to fighting climate change, but there was no assurance that the Patagonia brand would continue to do the right thing. So he was a little bit scared that he's created this thing that then gets bought by private equity and gets turned into a money-making machine. The second option was to take the company public, In his own words, what a disaster that would've been. Here's a company that's been thinking about protecting millennia of planetary, and he did not want to be caught by the cycles of quarterly earnings reports and maximizing profitability and things like that. Then the third option was to give it to the kids. He has 2 kids in their 40s who both work for Patagonia, but they didn't want it. Just put yourself in this position. You are about to get given a company worth about $3 billion, and they didn't want it because they didn't want to be seen to be the financial beneficiaries of this organization that wants to stay true to its spirit. Pretty cool. So all of these investment bankers that are used to sitting down and maximizing shareholder returns sat down and tried to come up with a structure that would work. The structure they came up with was they've created a thing called the Patagonia Purpose Trust, where 100% of Patagonia's voting stock is given to this trust. And this is an irrevocable commitment to protect the company's value. So this trust has got 5 or 6 people sitting on the board, including the family members. And their goal is to irrevocably protect the mission and the vision of the company. Set in stone. No going back. And then 100% of the non-voting stock has been given to a new— a charity called the Holdfast Collective. And basically, 100% of the profits from Patagonia— it was $100 million last year— goes to this charity. And the charity is responsible for giving to causes that help overcome climate change. So it's a really— it's never been seen before, this structure in terms of succession, where no one's benefiting financially. In fact, the family took a $17.5 million tax hit on their giving, you know, so they haven't tried to do any clever tax workaround here. It's just you know, it's not often you can say this, but it is just good. Um, and this has caused obviously a massive stir because it's just not normal.
I mean, how— when you say that it's not normal, I mean, is— does this put pressure on anyone else to follow, or is this literally like, this is an anomaly? Or does this add then to the pressure now for corporates to kind of—
does it—
I mean, I guess economically, given the situation we're in now, with the cost of living crisis and everything that's going on and the, the pressures that many companies are facing, do things like climate change and just generally ESG come a little bit off the forefront of topics at the forefront of the corporate agenda?
Um, yeah, it, uh, it's a great point. And I think Patagonia is an outlier, you know, so Yvon never wanted to start a company His purpose was not to make money. His purpose was not to build a global retail empire. So it's only natural that he doesn't want to see kind of a succession, a dynasty created out of this. So I think this is a bit of an outlier. And so much of ESG is retrospective. So you create a company that does a bunch of bad stuff. And then you think, oh gosh, we've done a bunch of bad stuff. Let's— I feel bad. Let's talk ESG. And let's layer on a nice— 50-page research report, right? So, you know, that mentality is never going to lend itself to giving away the whole company, right? And one of the advantages of being Patagonia is it was 100% owned by the family. You know, once you've got external shareholders that were, you know, that are thinking about the upside at somewhere down the line, it's going to take a lot of convincing for the whole company to be kind of, gifted to charity.
Yeah, well, look, a fantastic explanation, Stephen, much appreciated. And I'm going to leave the conversation with a quote from the man himself, who said that despite its immensity, the Earth's resources are not infinite, and it's clear we've exceeded its limits. But it's also resilient, and we can save our planet if we commit to it. What a champion.
