Patagonia Changed Its Model to Help Save the Planet — Its President Says It Can’t Do It Alone
Patagonia made headlines in September when founder Yvon Chouinard announced he would transfer ownership of the privately held business to a nonprofit and specially designated trust.
While this move was drastic for a for-profit business, the company hopes to inspire other businesses with a blueprint for “evolving capitalism,” to help address their collective impact on the environment, explained Patagonia president Jenna Johnson.
“We’re hopeful that there are a lot of other companies who are really purpose-driven, that can look at [this] and say, even if it’s not exactly how Patagonia is doing it, this is a model that they could use in order to really reinforce the purpose and mission of their company,” Johnson said during the closing session at the American Apparel & Footwear Association’s Executive Summit earlier this week.
The privately held business, reportedly valued at $3 billion, in September transferred 100% of its voting stock (or 2% of the company’s total stock) to the Patagonia Purpose Trust, meant to preserve the values of the organization. All nonvoting stock (or 98% of the company’s total stock) was transferred to the nonprofit Holdfast Collective, which works to protect the environment.
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The goal was meant to ensure that Patagonia’s profits are completely reinvested in the business or used to further values and goals related to the environment, something intrinsically bound the mission of its founder.
To Johnson, the next level of progress can only come when different, otherwise-competing companies, can work together toward a common goal.
“The more we let our guards down, come together and bring expertise from this industry, we’re going to move bolder, faster and smarter together,” Johnson said. “And it doesn’t at all inhibit my ability at Patagonia to run and grow and develop and be competitive and a for-profit [business].”
Decarbonizing supply chains, for example, can’t be done in a vacuum and requires change at multiple levels of production and across multiple companies. Johnson also gave the example of Patagonia’s strong family support system, which she personally benefitted from when having her two children. This type of support, she explained, makes Patagonia a standout place to work. To her, it should also be the norm.
“I don’t want it to be our competitive advantage,” Johnson said. “I want us to respect workers across this nation and I want to compete on other things.”
Patagonia is still in the learning phase and figuring out how to function in this new structure, which is not protected from changes in the macroeconomic environment. The company hopes to be able to give $100 million a year to Holdfast Collective, though certain factors could alter that outcome.
“I’m quite confident that it will be less than that sometimes,” Johnson said. “But as the business grows, the intention is that will grow even larger than $100 million a year as we continue to scale the company.”
