Just over two years ago, founder Yvon Chouinard and his family announced that they were giving up their ownership of the outdoor clothing brand to advocacy groups climatewhich will use the profits to nature conservation and biodiversity. Brand restructuring Patagonia however, it was not without challenges.
Patagonia: The marriage of capitalism and charity
The move made headlines as a novel marriage capitalism and charityhas led some to wonder whether the transformation will encourage others to follow suit, CNBC reports.
“I don’t think internally anyone is surprised,” Nina Hajikhanian, CEO of Patagonia EMEA, told CNBC of the company’s employees. “It was really about creating a new kind of capitalism, turning capitalism on its head and inspiring other companies to do things differently – and it seemed like a really natural step,” she added.
Patagonia donates profits to environmental causes
Patagonia told CNBC that since announcing the change in September 2022, the company has committed more than $71 million to environmental causes. This number is independent of additional grants and in-kind donations provided under the “1% for the Planet” program.
Holdfast Collective – the US-based charity that currently owns all of Patagonia’s non-voting stock, or 98% of the company – has donated to more than 70 groups in its first year of operation. In February, for example, it made a $5.2 million donation to The Nature Conservancy in Alabama.
Restructuring challenges
However, Patagonia’s restructuring was not without challenges. “I think it also creates some tensions… because at the same time that you’re investing in this really important work to make sure that we’re moving forward… when we go through periods where the business is not as strong as may be in a different year, it causes some tension in the talks,” Nina Hajikhanian told CNBC. “For example, where does the funding go? Do you invest it back into our business? Or make sure that these investments through the Holdfast Collective go to areas where environmental solutions are being created?” – she continued.
Company CEO Ryan Gellert said in late September that economic headwinds and some “major internal changes” would require 41 layoffs at the company, or about 1% of its global workforce. “Many people have asked me how Patagonia has changed since its founders, the Chouinards, transferred their shares to Patagonia Purpose Trust and Holdfast Collective two years ago. My answer is: Not much,” Gellert said at the time. Patagonia’s CEO said the changes were made with the long term in mind, describing them as “fundamentally important” for the next 50 years.
