Nuno Moreira da Cruz
Patagonia: What a move this week!“We’re making Earth our only shareholder”
September 18th 2022
Outdoor clothing company Patagonia is one of the best examples of Responsible Business and Leadership. You just have to visit their web page to "feel" the harmony of the ecosystem where suppliers, employees, customers, and local communities all embrace the same Purpose: “Patagonia is in business to save our home planet."
For the past 50 years, Patagonia has been a business at the cutting edge of environmental activism, sustainable supply chains, and advocacy for public lands and the outdoors. Its mission has long been “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”
Patagonia reinvents itself again this week! "We are making the Earth our only shareholder" nothing less than this, said its founder Yvon Chouinard.
He has now fundamentally changed the company’s ownership structure to ensure its legacy and step up its fight against the climate crisis. All voting stock (about 2% of the total) is now controlled by the Patagonia Purpose Trust, while the other 98% is under what’s called the Holdfast Collective. As it has been described, the goal behind the Patagonia Purpose Trust is to create a permanent legal structure to enshrine the company’s purpose and values so that there is never deviation from Chouinard’s intent. And to make sure the company continues to demonstrate that capitalism can work for the planet. Meanwhile, the company says that all annual profits that are not reinvested back into the business (which they estimate to be about $100 million per year) will be distributed by Patagonia as a dividend to the Holdfast Collective.
His letter to the employees explaining the move is nothing less than a masterpiece of vision, simplicity, and passion for the environment. One of the jewels there: “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.” Clearly a “must read."
Other examples of other Sustainability decisions in recent years include:
Opposition to Trump’s tax cuts with a strong statement from its former CEO Rose Marcario “Based on last year’s irresponsible tax cut, Patagonia will owe less in taxes this year. We are responding by putting $10 million back into the planet because our home needs it more than we do”.
Black Friday advertisement telling consumers not to engage in empty consumption by purchasing its jackets.
Launched a program called “Worn Wear,” which allows customers to pay for repairs to old items or trade them in for store credit. In fact, Yvon Chouinard uses to say that “he sells a jacket, but he stills feels responsible for it until the end.” Meaning, “don’t throw it away; we will recycle, reuse it, whatever, as long as it does not end in a landfill”.
And if you are wondering about financial results, here they go: 1,5bn$ sales, 14% compound growth and tripled bottom line in the last ten years. As someone from Wall Street said, "It is hard not to love Patagonia." A clear example of a company that can do well by doing good.
Nuno Moreira da Cruz
Center for Responsible Business & Leadership