MMaking bold statements about addressing the climate crisis has become tricky in the corporate world in recent years. But it was taken to a whole new level when the founder and owner of the outdoor clothing company Patagonia, Yvon Chouinard, announced that his family was transferring 98% of the company’s shares to a newly created non-profit organization dedicated to the fight against the climate . Break.
Chouinard was applauded for his company’s “donation” to the planet. He himself claimed that he was “turning capitalism on its head”. Chouinard’s widespread admiration is a clear sign of popular discontent with the excesses of the global corporate economy and its billionaire bosses. But the question remains: does it does this gift mark any fundamental changes to the system?
The announcement was the culmination of Chouinard’s 50-year commitment to being in business to save the planet. In a letter he released last week, titled “Earth is now our sole shareholder,” he spelled out the next chapter for Patagonia. Ownership of the company will be transferred from the Chouinard family to two entities: a trust and a non-profit organization. The stated goals of this bold move are to “protect the company’s values”, fight the environmental crisis and protect nature.
In practice, Chouinard’s plan means that each year about $100 million in unreinvested profits will be given to the nonprofit, called the Holdfast Collective. Holdfast will own 98% of Patagonia, all in non-voting shares. The exact nature of the work Holdfast will do has not been specified, other than the very general idea of its environmental purpose. Patagonia describes this goal as “combating the environmental crisis, protecting nature and biodiversity, and supporting thriving communities.”
Holdfast is a 501(c)(4) recognized tax-exempt organization under the US Internal Revenue Code. This means that, unlike public charities, it is legally allowed to engage in political activity.
Meanwhile, only 2% of the company, but all of the voting stock, goes to the Patagonia Purpose Trust. This is the organization that Patagonia says was “created solely to protect our company’s values and mission” to save the planet. This means that the trust has veto power over decisions such as the composition of the board of directors, its organizational structure and the company’s operations.
So, no longer owning Patagonia, what will Chouinard’s role be in the future? Patagonia’s website says, “The Chouinard family will lead the Patagonia Purpose Trust,” will “continue to sit on Patagonia’s board,” and will “lead the philanthropic work carried out by the Holdfast Collective.”
It appears that while Chouinard is giving up ownership of his company, he is not giving up control. But is what he is doing qualitatively different from the actions of other philanthropic billionaires? These days, like the robber barons of yore, the global elite are lining up to give their fortunes to good causes. Just look at Bill Gates and Warren Buffett’s Giving Pledge, where they and more than 200 other richest people around the world have pledged to give away the majority of their wealth to address problems facing society. Gates’ own foundation spent $6 billion in grants and charitable contracts in 2021.
What makes Chouinard different is that, rather than making an abstract pledge, he has literally given up his possessions. He is no longer a billionaire. With this move, his ambitions are as clear political as environmental. “Hopefully this will affect a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people,” he told the New York Times.
The fact that Chouinard and others are contributing to addressing the climate crisis is definitely a good thing; after all, governments around the world have been failing for decades. However, the problem is that all this is part of a well-developed global system, where the responsibility for dealing with public and social problems is increasingly taken over by private interests. And, as we see with Chouinard, it is an empowered elite that is able to call the shots.
Instead of addressing the underlying political and economic system that creates inequality, billionaire philanthropy gives it a moral justification. They can decide to give their money, but they are still the ones making the decisions. The rest of us just have to passively rely on their kindness. Exactly what Holdfast Collective will spend its $100 million year on is still undisclosed. A key question, however, is whether it will be open to public scrutiny and accountability.
We live in an age in which business owners are taking over as society’s moral arbiters, using their wealth to address what they see as society’s biggest problems. Meanwhile, the wealth and number of billionaires in the world increases and inequality stretches society to the breaking point.
It’s great that Chouinard is putting his company to work for the future of the planet. What is not wonderful is how our lives and our future depend more and more on the power and generosity of the wealthy elite, rather than being ruled by the collective will of the people. As a global society, we cannot stand back and hope that the next billionaires will decide to give their wealth to the service of the planet – there is very little time left for distant luxuries like that.
