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Patagonia’s Purpose: a $3 Billion Gift to the Earth

purpose storytelling
Yvon Chouinard sells Patagonia

 

By John Millen

Patagonia is one of my favorite brands. Not only for its high quality outdoor clothing, but I believe it is the most purpose-driven company in the world.

Patagonia's brand lives and tells a remarkable story.

Lots of companies talk a good game about their values and purpose, but in the end they must bow to their shareholders' demands for ever more growth and profit, often in conflict with their stated values.

Yvon Chouinard (yuh·vaan shwee·naard), the CEO, founder and owner of Patagonia, started the company almost 50 years ago, to be both purposeful and profitable.

And last week he demonstrated his commitment to his values by giving away the $3 billion company and its $100 million annual profits –– to the earth.

Because it’s so clear and well written, I’ve included the 83-year-old Chouinard’s announcement letter below. You can read the original and learn more about the company here.

It’s an extraordinary move, but not surprising when you learn more about Chouinard and his company. He tells his story and unique philosophy in his fascinating book, Let My People Go Surfing, The Education of a Reluctant Businessman, published in 2005.

The book was updated in 2016 and in the new introduction he explains the roots of their philosophy and activism: 

My values are a result of living a life close to nature and being passionately involved in doing what some people would call risky sports. My wife, Malinda, and I and the other contrarian employees of Patagonia have taken lessons learned from these sports, from nature, and our alternative lifestyle, and applied them to running a company. 

…Patagonia and its two thousand employees have the means and the will to prove to the rest of the business world that doing the right thing makes for a good and profitable business.

As you read this remarkable letter, give thought to your own sense of purpose in business or life, and your level of personal commitment to your purpose.

All the best, 

John

 

Earth is now our only shareholder.

If we have any hope of a thriving planet—much less a business—it is going to take all of us doing what we can with the resources we have.

This is what we can do.

By Yvon Chouinard

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.

We started with our products, using materials that caused less harm to the environment. We gave away 1% of sales each year. We became a certified B Corp and a California benefit corporation, writing our values into our corporate charter so they would be preserved. 

More recently, in 2018, we changed the company’s purpose to: We’re in business to save our home planet.

While we’re doing our best to address the environmental crisis, it’s not enough. We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact.

One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed.

Another path was to take the company public. What a disaster that would have been. 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.

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

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.

Here’s how it works: 100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the nonvoting stock had been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. 

The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.

It’s been nearly 50 years since we began our experiment in responsible business, and we are just getting started. If we have any hope of a thriving planet—much less a thriving business—50 years from now, it is going to take all of us doing what we can with the resources we have. This is another way we’ve found to do our part.

Despite its immensity, the Earth’s resources are not infinite, and it’s clear we’ve exceeded its limits. But it’s also resilient. We can save our planet if we commit to it.

 

Image: Patagonia

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