MBold statements about tackling the climate crisis have become a tough sell in the corporate world over the past few years. But this was taken to a whole new level when the founder and owner of Patagonia’s outerwear company, Yvonne Chouinard, announced that his family was transferring 98% of the company’s stock to a newly created nonprofit organization dedicated to combating the climate. Separation.
Chouinard was praised for “giving up” his company for the sake of the planet. He himself claimed that it was “turning capitalism upside down”. The widespread admiration for Chouinard is a clear sign of popular dissatisfaction with the excesses of the global corporate economy and its billionaire bosses. But the question remains: Is This giveaway sign of any fundamental change in the system?
This announcement was the result of Chouinard’s 50-year commitment to work to save the planet. In a letter he released last week, titled “The Earth Is Now Our Sole Contributor,” he outlined Patagonia’s next chapter. The company will be transferred from the Chouinard family to two entities: a trust and a non-profit organization. The stated goals of this bold move are to “protect the company’s values”, fight the environmental crisis and defend nature.
In practical terms, Chouinard’s plan means that about $100 million in uninvested profits will be given each year to a nonprofit called the Holdfast Collective. Holdfast will own 98% of Patagonia, all of which is in non-voting stock. The exact nature of the work that Holdfast will do has not been determined, other than the very general idea of an environmental purpose. Patagonia describes this purpose as “fighting the environmental crisis, protecting nature and biodiversity, and supporting thriving communities.”
Holdfast is an organization recognized as tax exempt under the US Internal Revenue Code 501(c)(4). This means that, unlike public charities, they are legally allowed to engage in political activity.
Meanwhile, only 2% of the company, but all voting shares, go to the Patagonia Purpose Trust. This is the organization that Patagonia says is “created solely to protect our company’s values and mission” to save the planet. This means that the trust has a veto over decisions such as the composition of the board of directors, its organizational structure, and company operations.
So Chouinard’s role isn’t Patagonia’s owner anymore, so what is Chouinard’s role in the future? “The Chouinard Family will direct the Patagonia Purpose Trust,” the Patagonia website says, will continue to sit on the Patagonian Board of Directors, and will “direct the philanthropic work of the Holdfast Collective.”
It appears that while Chouinard is giving up ownership of his company, he is not giving up control. But is what he does qualitatively different from the actions of other billionaires? These days, like the old thief barons, the global elite are lining up to give up their fortunes for good causes. Just take a look at the Giving Pledge of Bill Gates and Warren Buffett, where they and more than 200 other of the world’s richest people committed to giving away most of their wealth to tackle the problems facing society. The Gates Foundation itself spent a staggering $6 billion in grants and charitable contracts in 2021.
What makes Chouinard different is that instead of making an abstract pledge, he literally gave up his assets. He is no longer a billionaire. With this step, his political ambitions are as explicit as the environment. “Hopefully this will affect a new form of capitalism that doesn’t end up with a few rich and a group of poor,” he told the New York Times.
The contribution of Chouinard and others to addressing the climate crisis is undoubtedly a good thing; After all, governments around the world have failed for decades. But the problem is that this is all part of an evolving global system in which private interests are increasingly taking charge of dealing with public and social problems. And as we see with Chouinard, the empowered elite are able to make the decision.
Rather than addressing the underlying political and economic system that leads to inequality, billionaire philanthropy offers him a moral justification. They may decide to part with their money, but they are still the ones making the decisions. The rest of us have to rely negatively on their generosity. What exactly Holdfast Collective will spend $100 million a year has yet to be revealed. However, one of the key questions is whether it will be open to public scrutiny and accountability.
We live in an age when business owners are taking on the role of moral stewards of society, using their wealth to tackle what they see as society’s biggest problems. Meanwhile, the wealth and number of billionaires in the world are increasing, and society’s inequality is stretching to breaking point.
It’s great that Chouinard has hired his company to work for the future of the planet. What is not remarkable is how our lives and our future are increasingly dependent on the power and generosity of the wealthy elite, rather than being governed by the common will of the people. As a global community, we can’t hold back and hope that future billionaires will decide to give up their fortune in service of the planet – there is little time left for such elusive luxuries.