Patagonia's Yvon Chouinard gives everything away to fight climate change

All the profits of the $3 billion company, Patagonia, will now go towards fighting climate change and protecting land across the world

"Earth is now our only shareholder". This is not only the new description of clothing company Patagonia's Twitter account but also the title of the letter written by its founder, Yvon Chouinard.

Nearly half a century after founding the company, the billionaire has decided to transfer Patagonia's ownership to a specially designed trust and a non-government organisation (NGO).

All the profits of the $3 billion company will now go towards fighting climate change and protecting land across the world. According to a New York Times (NYT) report, the company earns nearly $100 million yearly.

Patagonia makes outdoor clothing and gear for silent sports like climbing, surfing, and skiing.

In his letter, Chouinard wrote that they had two options before them. One was to sell Patagonia and donate all the money. But they were not sure if the new owners would maintain the company's values.

The other option was to take the company public. He said it would have put the company under pressure to create short-term gains.

So, "Instead of 'going public,' you could say we're 'going purpose,'" Chouinard wrote.

Under the new arrangement, 100 per cent of the company's voting stocks (2 per cent of all the shares) will go to Patagonia Purpose Trust, which will take care of the "company's value."

And 100 per cent of the non-voting stocks will go to Holdfast Collective, an NGO designed to fight climate change.

"Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis," Chouinard added.

With this, the company is set to become one of the biggest players in climate philanthropy.

Earlier, the company donated 1 per cent of its sales to fight climate change. Yet, according to NYT, as the company's valuation started soaring, Chouinard found himself on Forbes magazine's list of billionaires. He grew more discontent with that.

"I was in Forbes magazine listed as a billionaire, which really, really pissed me off," he was reported as saying by NYT, "I don't have $1 billion in the bank. I don't drive Lexuses."

In 2020, he reportedly started talking about selling his company if he could not find a good alternative. He asked the lawyers of the company to start exploring the options.

After months of discussions, the lawyers could not come up with a plan that could impress Chouinard.

Finally, in December 2021, the company landed on this option and decided to pursue it.

"We can save our planet if we commit to it," Chouinard said at the end of his letter.