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Marketing Brand Purpose Sustainability

‘A turning point in predatory capitalism’: Patagonia’s profit handover sets a new bar


By Ellen Ormesher | Senior Reporter

September 15, 2022 | 7 min read

The outdoor clothing retailer’s radical decision to hand over all profits (about $100m a year) to fight the climate emergency has been hailed as a landmark moment, setting a benchmark for corporate sustainability.

Yvon Chouinard

Founder Yvon Chouinard says the brand is ‘making Earth its only shareholder’ / Image via Patagonia

Patagonia has been experimenting with ethical business models for half a century. In one of its most radical moves yet, it has announced that all profits it makes will be donated to fighting the environmental crisis, protecting nature and biodiversity and supporting the communities most affected by climate change.

Conscious Advertising Network co-founder Jake Dubbins says the decision is “fucking awesome leadership, unprecedented and a turning point in predatory capitalism. Your turn Zuckerberg.”

Meanwhile, Solitaire Towsend, co-founder of sustainable agency Futerra, calls the move a “watershed moment. Patagonia has once again set the bar for corporate sustainability.”

Anna Lungley, chief sustainability officer at holding company Dentsu, reflects on the brand’s journey, saying it is a “shining example of a business wholly committed to sustainability from the ground up through its investment in people, processes and activism.

“For many decades they’ve led the way by incorporating sustainability into their very DNA, from creating products made from recycled materials such as plastic bottles to contributing at least 1% of annual sales to the preservation of the natural environment since 1986. They have also created the ‘Worn Wear’ program, reselling old products to increase their lifecycle.”

Going forward, 100% of the company’s voting stock will transfer to the Patagonia Purpose Trust, which has been created to protect the company’s values; and through the Holdfast Collective, 100% of the non-voting stock goes to not-for-profits dedicated to fighting the environmental crisis and defending nature.

The funding will come directly from Patagonia itself: each year, the money made after reinvesting in the business will be distributed as a dividend to the cause.

After the news was announced at a global town hall meeting on September 14, Yvon Chouinard, Patagonia founder, former owner and current board member, said: “We’re making Earth our only shareholder. I am dead serious about saving this planet.”

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Advertising activist network Creatives for Climate says the move is the start of the “radical need for a re-imagining of our system beyond shareholder capitalism.

“We all know Patagonia is a trendsetter for brands walking the talk on change – so this sets a new bar. We started Creatives for Climate alongside Patagonia’s marketing director Alex Weller, and with the support of the company, and we champion this move as evidence of the brand’s ongoing commitment to taking bold moves and shaking up the system we live in.”

Townsend adds that “people have started asking, ‘what comes after being a B Corp?’ and now we have our answer. B Corp status protects your purpose in your constitutional documents, but shareholders can decide not to be a B Corp at any time. Yvon Chouinard has actually done what so many businesses claim to do – built purpose into his business DNA.”

Patagonia will remain a B Corp and continue to give 1% of its profits each year to grassroots activists. The leadership of the company will not change.

However, Lungley warns that Patagonia shouldn’t simply be recognized as a ”great sustainable business,” but that “a major shift towards sustainability-first should be the ambition of every corporation.

”Sustainability must be the lens through which all companies do business if we’re to create a long-term future. We must see widespread NetZero commitments, radical decarbonization of supply chains, and a fundamental change in the way we drive consumption – away from products and services that damage the world, and towards ones that support it and allow it to regenerate.

”Patagonia has shown how it is possible to develop a strategy that is authentic, transparent, underpinned by science-based targets and delivers progress in the face of unprecedented climate change. There is a lot to learn from this,” she says.

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