When an announcement about the ownership of Patagonia was finally made after ideas about its future had bounced around headquarters for a few years, few could have foreseen the immediate destiny of one of the biggest brands in outdoor apparel. For founder and owner Yvon Chouinard, the right situation and the right buyer had never seemed to materialize, so he became open to a more radical idea. On what seemed to be any other mid-September day, Patagonia declared that it was giving the company away.
The recipient? You may know her — Mother Earth.
Chouinard and his family have devised a plan to place ownership of the company into the Patagonia Purpose Trust and the nonprofit Holdfast Collective, the latter of which is tasked with using profits to support various organizations fighting climate change and other environmental issues.
A move like this isn’t out of the ordinary for Chouinard and Patagonia. Known for taking political stances, Patagonia sued the Trump Administration, used organic cotton before it was fashionable, sought out grassroots organizations to support, and gave consumers the option to buy recycled apparel. But how does a company valued at $3 billion remain competitive with a philosophy that seems contrary to big business? With an approach the Los Angeles Times called “conscious capitalism.”
Making Second-Hand Gear Fashionable
In 2017, Patagonia launched Worn Wear, an up-cycle program where customers can trade in their unwanted Patagonia apparel for store credit and gift cards. Patagonia then sells the used apparel on their Worn Wear website at a discounted price. It’s an idea that might seem counterintuitive to most retailers. The consumer way is to throw out their old purchases for the next, better edition of the product. Patagonia turns that familiar model on its head.
Giving old gear and apparel new life fits the brand’s ethos and meets growing consumer support for companies with a responsible ecological footprint. Chouinard and Patagonia have made it a company goal to reduce their carbon footprint, and a daily counter is featured on their website.
Millennials and Gen Zers are flocking to thrift and secondhand shops, whether online or brick-and-mortar. Social media has been a major driver of these age groups turning back to the styles of the 90s. “Retro” Patagonia gear has been sought-after for a number of years, with their cornerstone items such as fleece jackets selling for around $1000 on eBay. With a worldwide secondhand clothing market grabbing an estimated $130 billion yearly, Patagonia is leading a global trend.
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Unafraid of the Consequences of Activism
In 2017, President Trump drastically reduced the acreage of Bears Ears National Monument. Patagonia’s response was to sue President Trump and the heads of four other agencies responsible for national monuments.
Less than a year earlier, Chouinard and Patagonia had been celebrating after over a million acres of land in southeastern Utah were designated a national monument, thus giving the land protection under President Obama. But with the new administration came a shrinking of that designation. Patagonia quickly filed a lawsuit against the President, claiming that only an act of Congress could reduce the land size of a national monument.
Picking fights in the political world is nothing new for Patagonia, and the company is certainly aware of the consequences — big names and big business can strike back, and consumers can boycott the brand.
Some people did decide they would never purchase a Patagonia item again, but Chouinard and the leaders at the company expected the backlash. For every person that leaves, others are attracted to the company for its conscious capitalism. The decision to launch a lawsuit appeals to the same demographic who are buying Worn Wear. Younger generations want to represent and be represented by a brand that shares their values, and politics is the chosen battlefield. For these consumers, politics does not scare them off — it draws them in.
Patagonia’s Only Shareholder — Earth
Before the restructuring of Patagonia ownership, Chouinard had been cautious of any potential new owners, private or public, failing to share the same environmental vision the company had embodied for so many years. Since there was no guarantee, Patagonia created a guarantee.
Chouinard transferred 98% of Patagonia shares to Holdfast Collective and all of his family’s voting stock — the equivalent of 2% — to Patagonia Purpose Trust. All profits that exceed what is reinvested in the company now find their way to these entities. The sole goal of the trust and nonprofit is to fight climate change around the globe. Chouinard’s release of Patagonia’s ownership can be seen as the ultimate move towards his objective of supporting the environment.
Despite widespread praise for the move, reports in Bloomberg and Fortune along with others have suggested it is just a way for Chouinard to retain some control of the company and avoid hundreds of millions in taxes. But Patagonia says Chouinard wanted a guarantee that different ownership would not put his vision for affecting climate change at risk.
“There was never an ask from the Chouinard family that we avoid taxes [when structuring the transaction],” Patagonia spokeswoman Corley Kenna told Bloomberg. CEO Ryan Gellert added: “We are actually one of the few companies that have lobbied consistently and publicly for higher taxes, particularly in support of climate legislation.”
Patagonia created a reputable platform over decades to take a stance on political issues, give a voice to the voiceless, and fight environmental abuse. The company never seemed to care about issues that could be characterized as polarizing in big business. After all, Chouinard says: “I never wanted to be a businessman.” With the transfer of ownership, Patagonia says it hasn’t gone public — it has “gone purpose.”