Patagonia: Billionaire boss gives fashion firm away to fight climate change

The outdoor clothing manufacturer Patagonia's millionaire founder has donated his business to a trust for humanitarian purposes.

Any earnings that are not used to operate the company, according to Yvon Chouinard, will be used to combat climate change.

Due to its commitment to sustainability, the brand has developed a cult following. Examples include offering affordable repairs and a lifetime guarantee on all of its clothing.

It is well-known for the advertisement "Don't buy this jacket," which urges consumers to think about the environmental consequences.

On the company's website, it is currently stated that Earth is the lone stakeholder.

In his own words, Mr. Chouinard "never aspired to be a businessman."

He was an avid rock climber who first made metal climbing spikes for himself and his pals to wedge into rocks before transitioning into apparel and finally developing a tremendously popular sportswear brand.

Patagonia, founded in 1973, generated an estimated $1.5 billion in revenue this year, while Mr. Chouinard's worth is believed to be $1.2 billion.

He has, however, always been reluctant to acknowledge his money, telling the New York Times that he was "horrified to be seen as a millionaire."

Depending on the company's performance, he asserted that revenues to be contributed to climate change will total about $100 million (£87 million) annually.

"Despite its immensity, the Earth's resources are not infinite, and it's clear we've exceeded its limits," the entrepreneur said of his decision to give up ownership.

"Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source."

Sales have not been affected by the company's marketing campaigns, which center on urging customers to buy only what they need. However, detractors contend that by making the company more well-known, it has encouraged consumers to spend more money.

The Californian company was already devoted to sustainable business practices and gave 1% of its annual profits to grassroots campaigners. But the hesitant businessman claimed in an open letter to clients that he wanted to take things further.

He claimed that he had initially thought of either selling Patagonia and giving the proceeds to a good cause or going public with the business.

However, he claimed that both possibilities would have required giving up management of the company.

People who have donated their wealth

Microsoft founder Bill Gates this year vowed to "drop off" the world's rich list as he made a $20bn donation to his philanthropic fund. The tech boss, who is thought to be worth $118bn, had pledged to give his wealth away to charity in 2010 but his net worth has more than doubled since then.

Last year the boss of the Hut Group, which owns a range of online beauty and nutrition brands, donated £100m to a charitable foundation after becoming a billionaire when his firm was listed. Matthew Moulding said of his newfound wealth that he "couldn't even comprehend the numbers" and was trying to make a difference.

In 2019, Julian Richer who founded the hi-fi chain Richer Sounds handed over 60% of the business to staff.

The Chouinard family has instead given control of the property to two fresh organizations. The family-run Patagonia Purpose Trust will continue to have a majority stake in the business but will only hold 2% of the company's equity, according to Mr. Chouinard.

It will direct the charitable endeavors of the Holdfast Collective, a US organization "committed to tackling the environmental disaster" that currently holds 98% of the company's non-voting stock.

To combat the issue, Mr. Chouinard declared, "each year the money we produce after reinvesting in the firm would be paid as a dividend."