Three years in, Patagonia says its radical ownership model is paying off for the planet

Three years ago, Patagonia’s founder Yvon Chouinard made an unprecedented move: he and his family gave away the company. Instead of selling the multibillion-dollar retailer or taking it public, they created a new trust and nonprofit that would use the company’s profits to fight climate change and protect nature.

In a new report that looks at company’s impact over its 52-year history, Patagonia shares how the change has amplified its environmental work.

While the company’s day-to-day internal work hasn’t changed significantly, “we’re giving away a lot more money to protect the planet,” says Corley McKenna, Patagonia’s chief impact officer.

The company has a long history of environmental giving. It pioneered an “Earth tax” in the 1980s to give 1% of its profits to environmental causes, later formalized as 1% for the Planet, an organization that thousands of companies have now joined. But the company’s new structure enables giving at a much greater scale.

Each year, as much as 98% of its profits can now be spent on climate action, after subtracting any funds needed for reinvestment in the business. (The company hasn’t shared exactly how much cash goes back to the business itself, but it needs some funds for building retail stores, buying inventory, and having some money in a bank to weather unexpected events like a pandemic.)

The remaining 2% of profits fund the company’s “purpose trust,” designed to ensure that the company makes all decisions in line with its purpose to help save the planet, even long after Choinard and his family are gone. “It’s really designed to lock in the values of the company,” McKenna says. A future CEO “can’t go rogue and take the company in a totally different direction.”

Since the company restructured in late 2022, Patagonia has given $180 million to the Holdfast Collective, a group of five nonprofit trusts that the company created to fund environmental work. That’s compared to the $10-$15 million a year that the company gives away through 1% for the Planet.

The funding has enabled many more of the type of projects that the company already supported. In Alabama, for example, it contributed $2 million this year to help conservation groups buy 8,000 acres in Georgia’s Okefenokee swamp, a unique ecosystem with rare and endangered animals, which was at threat for development of a new mine. In Alaska, it spent $3.1 million at a critical moment to prevent the development of another mine in the Bristol Bay watershed. In Australia, it helped purchase 92,000 acres of land.

As Patagonia issues dividends to the Holdfast Collective, the funds are essentially spent right away. “The goal is for hold fast to move that money to urgent needs quickly,” says McKenna. “A lot of philanthropies are creating endowments and they want to really save that money. The Chouinards’ feeling is the planet needs the money now. So [Holdfast] is trying to move it as quickly as possible.”

All of this adds to the work that Patagonia’s environmental activism team was already doing to support grassroots nonprofits working on issues like land protection, sustainable agriculture, and climate. That team works closely with the nonprofits, looking for ways not just to give money but for the company to elevate specific issues to get support from its customers—like helping establish Bears Ears National Monument, and then fighting the first The President administration when it shrank the size of monument.

The environmental activism team is strategic about what it supports. This year, it worked with a coalition to fight against part of the reconciliation bill to sell off hundreds of thousands of acres of public lands in the U.S. “That was a big win at a tough time,” says McKenna. “I think we wouldn’t be able to have these successes if we were trying to do everything, if we were trying to win every battle. We just can’t do that.”

The company also continues to work to reduce its own environmental footprint, though the report acknowledges the challenges it still has as it reaches for climate goals. (Some 2025 targets, like a goal for half of its synthetic fabric to be made from waste, won’t be met on time.)

It’s critical, the company says, for other businesses to also focus on climate action—both in internal operations and in philanthropy—at a moment when politics are moving in the other direction. “What we realize is it cannot just be Patagonia out here trying to do business differently,” says McKenna.

Businesses “definitely need to exist to do more than enrich a handful of individuals,” Choinard writes in the report, as he says that he’s been “working harder than an 87-year-old should” since giving away Patagonia.

Companies can and should exist to solve problems. Corporate influence already crosses borders and shapes government policy everywhere. Imagine what could happen if interest groups and lobbyists prioritized planetary and human health over environmental deregulation. Or if even just a few multinational mega-corporations dedicated some of their profits toward doing good beyond what can be written off their taxes. Similarly, if enough companies join together and decide our planet takes precedence over profit, we can change the world. We could change capitalism for good.

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