The billionaire founder of fashion retailer Patagonia has announced that he has donated his company to a charitable fund.
Yvon Chouinard said that under the new equity structure, any profits not reinvested in running the business would go towards combating climate change.
That equates to about US$100 million (more than R$500 million) a year, according to him, depending on the company’s financial health.
Patagonia, valued at US$ 3 billion (about R$ 15.5 billion), according to the American newspaper New York Times, sells clothing for hiking and other outdoor activities in more than 10 countries.
Founded in 1973, its estimated revenue was $1.5 billion this year while Chouinard’s net worth is valued at $1.2 billion.
“Despite its immensity, the Earth’s resources are not infinite, and it is clear that we have exceeded its limits”, said the businessman about his decision.
“Instead of extracting value from nature and turning that into wealth, we are using the wealth that Patagonia creates to protect the source.”
The Californian company was already donating 1% of its annual profits to grassroots activists committed to sustainable practices. But in an open letter to clients, the entrepreneur said he wanted to do more.
He said he initially considered selling Patagonia and donating the money to charity, or taking the company public.
But he explained that both options would mean giving up control of the business.
“Even public companies with good intentions are under a lot of pressure to generate short-term gains at the expense of long-term vitality and responsibility,” he said.
People who donated their fortunes
Microsoft founder Bill Gates vowed this year to “abandon” the world’s richest list by donating $20 billion to his philanthropic fund. Gates – who is estimated to be worth $118 billion – promised to donate his fortune to charity in 2010, but his net worth has more than doubled since then.
Last year, the owner of the Hut Group, which owns a number of online beauty and nutrition brands, donated £100m to a charitable foundation after becoming a billionaire when his company went public. Commenting on his newfound fortune, Matthew Molding said he “couldn’t even understand the numbers” and was trying to help the world.
In 2019, Julian Richer, who founded the British electronics retailer Richer Sounds, handed over 60% of the business to employees.
Instead, the Chouinard family transferred all ownership to two new entities. The family-led Patagonia Purpose Trust remains the company’s controlling shareholder, but will own just 2% of its total shares, according to Chouinard.
And it will guide the philanthropy of the Holdfast Collective, an American charity “dedicated to fighting the environmental crisis,” which now owns all non-voting shares — about 98% of the company.
“Each year, the money we earn after reinvesting in the business will be distributed as a dividend to help fight the crisis,” explained Chouinard.