Yvon Chouinard, the 83-year-old founder of the outdoor clothing and equipment company Patagonia, announced that he has placed 100% of the shares of his $3 billion company in a trust, which will direct future profits of the company to efforts to protect the environment and combat climate change.
“Earth is now our only shareholder,” Chouinard wrote in an open letter describing the decision, which places all of the voting stock in the company under the control of the Patagonia Purpose Trust, and all of the non-voting stock under the control of the Holdfast Collective, a nonprofit “dedicated to fighting the environmental crisis and defending nature.”
Under the plan, the Chouinard family will control the Patagonia Purpose Trust, and through it will exercise control over the company’s operations. The family will also “guide the philanthropic work performed by the Holdfast Collective,” according to a release issued by Patagonia.
Under the new structure, the company will continue to function and to invest in its operations, but all profits not reinvested in the company will be distributed as dividends to the Holdfast Collective, which will direct them to environmental causes.
Avoiding ‘disaster’
The move adds Chouinard to the list of billionaires, including Berkshire Hathaway founder Warren Buffett, Microsoft founder Bill Gates and former Wipro Limited chairman Azim Premji, who have promised to give large shares of their personal wealth to charity.
Chouinard said that he made the decision after considering other options, including selling the company and donating the profits. “But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed,” he said.
Likewise, he dismissed the idea of taking the company public, writing, “What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility.”
Former mountaineer
Chouinard was born in Lewiston, Maine, in 1938, but moved with his family to Southern California in 1947. It was in California that he became deeply involved in rock climbing and eventually, alpine climbing.
As a young man, Chouinard taught himself blacksmithing in order to make some of his own climbing equipment, and the sales of his handmade pitons — spikes driven between rocks in order to create points of stability — were the beginning of the business that would eventually become Patagonia.
The company has long been environmentally active. In the early 1970s, when it became clear that the widespread use of its pitons was damaging mountain faces, Patagonia invented a hexagonal aluminum “chock” that could be used as a non-damaging alternative. Since the 1980s, it has dedicated 10% of profits to environmental causes.
Billionaires and charity
In turning over the profits of his company to a charitable organization, Chouinard is far from the only extremely wealthy person in the world to surrender the bulk of their wealth to philanthropic pursuits, but doing so isn’t the norm, either.
In 2010, Gates and Buffett announced the launch of the Giving Pledge campaign, an effort to persuade the world’s wealthiest people to commit to giving away at least 50% of their net worth at or before their deaths.
To date, 236 individuals, the vast majority of them billionaires, have signed the pledge. However, they represent a small fraction of what Forbes magazine estimates to be the approximately 2,700 billionaires in the world.
Around the world
Some of the world’s wealthiest people have, with or without signing a formal pledge, donated considerable sums to charity.
Premji, the Indian billionaire who built Wipro, has reportedly donated well over 25% of his net worth, including $7.6 billion worth of shares in his company, to charitable causes, including education initiatives in his native country.
Sheik Sulaiman bin Abdulaziz bin Saleh Al Rajhi, a native of Saudi Arabia who earned his fortune in Islamic banking, announced a decade ago that he would give away most of his $7.7 billion fortune, and has spent large sums endowing a university, among other efforts.
Huang Zheng, founder of Chinese online shopping giant Pinduoduo and one of the wealthiest people in China, has given away billions of dollars, including a recent donation of $1.85 billion to a charitable foundation.
Strive Masiyiwa, the Zimbabwean telecommunications billionaire, has funded many large philanthropic efforts in his home country and around the world, and is also a signatory of the Giving Pledge.
Some giving deferred
Forbes, which has long tracked the wealth of the richest citizens in the United States, has developed a philanthropy score, which tracks, on a scale of one to five, how much the country’s wealthiest have given away.
Those who score a five are among the most charitable, having given away 20% or more of their net worth. Those who score a one, meaning they are among the least charitable, have given away less than 1% of their net worth.
In 2021, the magazine found that 156 of the 400 richest Americans scored in the lowest quintile, while just 19 were in the top two quintiles, meaning they had given away at least 10% of their net worth.
Notable names among those scoring in the lowest quintile include America’s two wealthiest men, Amazon.com founder Jeff Bezos and Tesla and SpaceX founder Elon Musk. Also listed as having donated less than 1% of their net worth were Google founders Larry Page and Sergey Brin, and Oracle founder Larry Ellison.
Bezos stepped up his philanthropic activities in 2022, and others, including Musk and Ellison, have signed the Giving Pledge, indicating that at some point, they plan to make substantial philanthropic donations.
