The founder of outdoor fashion brand Patagonia donated his company to a charitable trust.
Yvon Chouinard said any profit not reinvested in running the business would go to combat climate change.
The label has garnered a cult following for sustainability moves such as guaranteeing its clothes a lifetime and offering affordable repairs.
It is famous for an ad called “Don’t buy this jacket” asking shoppers to consider environmental costs.
The brand’s website now says: “The Earth is now our only shareholder.”
Mr. Chouinard always said that he “never wanted to be a businessman”.
He was a fan of rock climbing, and started making metal climbing spikes for himself and his friends to wedge into rocks, before moving into clothing and eventually creating a very successful sportswear brand with a cult following.
Founded in 1973, Patagonia’s sales this year were worth about $1.5bn, while Mr Chouinard’s net worth is estimated at $1.2bn.
But he has always hidden away from his rich status, telling the New York Times that it was “horrible to be seen as a billionaire”.
‘Chrome beyond borders’
He claimed that the profits to be donated to climate causes will be around $100m (£87m) per year, depending on the health of the company.
“Despite its gravity, the Earth’s resources are not infinite, and it is clear that we have exceeded its limits,” said the entrepreneur about his decision to give up ownership.
The firm’s marketing campaigns – which focused on asking people to buy only what they want – did not dampen sales and critics argued that it encouraged more spending, rather than less, by raising its profile.
Prices are relatively high with jumpers, for example, costing around £200 and T-shirts around £40, but the company insists that the cost reflects that its clothes are meant to last a lifetime.
Patagonia chairman Charles Conn acknowledged the higher prices but said cheap fast fashion was “anathema” for the brand.
“We invest to ensure that we use the least water, the least dangerous chemicals and dyes, and use the least carbon in the production of our products, which often means they cost less more,” he told the BBC.
Sandra Halliday, UK editor for FashionNetwork.com, a global fashion news website, told the BBC Mr. Chouinard’s move could ironically end up increasing his sales.
However, she said the “maverick” founder was always more committed to the environment than “making money”.
“If this was just a marketing ploy it would be an inspiring one, but it’s not, it’s a serious move to try to do something better for the planet.”
People who gave their wealth
The founder of Microsoft, Bill Gates, promised this year to “fall off” the world’s rich list as he donated $20bn to his philanthropic fund. The tech mogul, who is worth an estimated $118bn, pledged to give his fortune to charity in 2010 but has since doubled his net worth.
Last year the boss of the Hut Group, which owns a range of online beauty and nutrition brands, gave £100m to a charitable foundation after becoming a billionaire when his firm was listed. Matthew Molding said of his newfound wealth that he “couldn’t even fathom the numbers” and wanted to make a difference.
In 2019, Julian Richer who founded the Richer Sounds hi-fi chain gave the team more than 60% of the business
The Californian firm was already donating 1% of their annual sales to grassroots activists committed to sustainable practices. But in an open letter to customers, the similarly reluctant businessman said he wanted to do more.
Mr. Chouinard said he first thought about selling Patagonia and donating the money to charity, or taking the company public. But he said both options would mean taking control of the business and jeopardizing its values.
Instead, the Chouinard family has transferred all ownership to two new entities. The family-led Patagonia Aim Trust remains the company’s controlling shareholder but will hold just 2% of its total stock, Mr Chouinard said.
He will lead the philanthropy of the Holdfast Collective, a US charity “committed to combating the environmental crisis” which now owns all the non-voting stock – about 98% of the company.
“Every year the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis,” said Mr. Chouinard.
Patagonia combines high-end outdoor fashion with its own brand of environmental and social activism. It’s a dominant mix that’s sure to appeal to loyal, if mainly well-heeled, fans.
Part of the attraction comes from the fact that his environmentally conscious stance is nothing new. He was preaching eco-awareness years before sustainable fashion emerged.
But it’s hard enough to save the planet, if your business depends on selling things, however much recycled or renewable products you use.
By foreclosing future profits for environmental reasons, Patagonia’s founder, Yvon Chouinard, has done his best to square that circle.
But it is clear that he wants to ensure that the Patagonian brand is safe for the future and that it will never fall into the hands of the types of companies he has accused of greenwashing in the past.
And if that doesn’t appeal to rich outdoorsy types with a social conscience, nothing will.