Long before you could shop for your Patagonia apparel and gear at Snowmass Village Mall, company founder Yvon Chouinard was an avid rock climber and mountaineer living in California.
He started out by making durable gear for his and his friend’s outdoor adventures.
Chouinard wanted to cultivate an outdoor brand that strives to do less harm to the environment than traditional brands.
“I never wanted to be a businessman,” he said in a statement from Patagonia. “I started out as a craftsman, making climbing gear for my friends and myself, then I moved on to clothing.”
With the brand now valued at $3 billion, Chouinard and his family transferred ownership to a special foundation and nonprofit dedicated to fighting climate change, the New York Times first reported.
The newly formed Holdfast Collective now receives 98% of the company’s profits, an estimated $100 million a year, according to the New York Times. The organization’s money is channeled to non-profit environmental groups and political organizations.
The other 2% — all voting shares in the company — will go to the newly formed Patagonia Purpose Trust. The trust was created to allow the Chouinard family and their advisors to oversee operations and ensure the brand continues its commitment to social and environmental wellbeing.
The shades of green
Prior to this initiative, Patagonia reportedly donated 1% of profits to climate protection organizations each year.
According to a 2021 McKinsey sustainability reportLess than 1% of philanthropic donations in the United States go to environmental nonprofits, making Patagonia’s recent initiative all the more groundbreaking.
Still, the fashion industry is considered one of the most polluting industries in the world, lagging behind the oil and gas industry.
Patagonia may not fully claim to be a “fashion” company, but it still produces new clothes every year. While companies can do their best to mitigate their impact on the environment, there is no way to be fully sustainable when manufacturing new items.
According to a 2017 study published in Semantic Scholar, the fashion industry is responsible for an estimated 3% of global carbon emissions and emits more than 850 million tons of carbon annually.
However, unlike many brands who tout their environmental efforts, Patagonia is not afraid to admit that their business has a negative impact on the planet.
The brand ran an ad in the New York Times on Black Friday“Don’t buy this jacket.”
In response to the ad, the brand said: “Each Patagonia garment, whether organic or made from recycled materials, emits many times its weight in greenhouse gases, generates at least half the garment’s waste and consumes vast amounts of freshwater, which is now becoming scarce around the world. ”
“A New Form of Capitalism”
Chouinard has bold intentions of giving away his company. He told the New York Times in an exclusive interview that he hopes his company will “inspire a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people.”
In typical succession fashion, the company could have been passed down to his children, but they reportedly didn’t want it.
Patagonia chief executive officer Ryan Gellert told the New York Times that the children “embody this idea that every billionaire is a political loser.”
While Patagonia’s efforts have been applauded by many, the intent has also been met with skepticism, with some saying it might just be a typical tax gimmick.
According to Grist, the company paid $17.5 million in taxes on its donations, which was a small percentage of the money raised. The 501(c)(4) organization that receives Patagonia’s profits is considered tax-exempt by the IRS. This is unclear considering the trust still allows the Chouinards to oversee all operations.
Others have noted that Patagonia’s latest move isn’t all that new. Earlier, billionaire Barre Seid had donated $1.6 billion to a conservative nonprofit, the New York Times reported in August.
Therefore, this “new form of capitalism” may come under the guise of good-hearted philanthropy, but encourage the trend of the ultra-rich buying more political power than before.
This news comes at a contentious time for income inequality.
Aspen and the Roaring Fork Valley have felt the impact of the ultra-rich, and some 100 billionaires can call the area home or their second home.
“Basalt has been aspenized,” Denise Drake told Elizabeth Key in an opinion piece published by The Aspen Times in August. “The billionaires pushed the millionaires to basalt.”
One question is how many will follow Chouinard’s new form of capitalism — and even if that would be a good thing.
This story is from AspenTimes.com.