Will Other Brands Follow Patagonia Into the Green Vortex?

Patagonia founder Yvon Chouinard sent ripples through the business world following his family's decision to give away the company nearly 50 years after founding it. A self-described “reluctant businessman,” Chouinard has consistently raised the bar for sustainable and ethical business practices. But giving away a $3 billion company pushed the boundaries so far that it took his legal team two years to devise a way to execute his plan. In his explanation of his unprecedented move, Chouinard cited the uphill climb to fight climate change. Still, the question remains: Will other brands lace up their hiking boots and join the trek? The fine print The Chouinard family transferred all of Patagonia's nonvoting stock (98% of its total stock) into the Holdfast Collective, a 501(c)(4) nonprofit dedicated to fighting the environmental crisis and defending nature. All of its voting stock was transferred into the Patagonia Purpose Trust protecting the company's values. From here on out, Patagonia will send the money it makes after reinvesting in its business to the nonprofit as a dividend. The Purpose Trust will be overseen by family members and their closest advisers, according to The New York Times. "It’s been nearly 50 years since we began our experiment in responsible business, and we are just getting started," Chouinard said in a statement. "If we have any hope of a thriving planet—much less a thriving business—50 years from now, it is going to take all of us doing what we can with the resources we have." Concerts Have Always Left Hidden Wastelands. This Music Festival Puts Sustainability on the Main Stage Accelerating the green vortex Last year, The Atlantic’s Robinson Meyer coined the term green vortex. It describes a tipping point in climate tech, policy, investment and action that could lead to drastic reductions in greenhouse gas emissions—putting us on a path to avoid the worst impacts of climate change. As renewable energy and climate tech get cheaper and become better business prospects, Meyer predicts it will kick off a cascade of actions that could spell a much rosier climate future. By reimagining the corporate business model as Patagonia has with this transfer of company control, Chouinard is effectively accelerating the brand’s path within the green vortex—as he repeatedly has throughout his career. Setting sustainability standards Chouinard’s decision was far from the first time that Patagonia has set a new standard for sustainable business. It has led the industry on everything from on-site child care and flexible work hours for employees to ethical and sustainable supply chains and branded resale. Every time we’ve elected to do the right thing, it’s turned out to be more profitable.Yvon Chouinard, founder, Patagonia “While many companies aim to be more sustainable, Patagonia aims to be fully sustainable,” Aron Cramer, president and CEO of sustainable business group BSR, told Adweek. Chouinard’s choice to forgo the profit of a sale or even the tax benefits of organizing the transfer through a charity “raises questions that should be discussed in every boardroom,” Cramer added. “‘What is our purpose? What are we trying to accomplish? Are we making good on our aspirations on social, economic and environmental matters?’” In 2011, Patagonia took out a full-page ad in The New York Times telling consumers: “Don’t Buy This Jacket.” The move was meant to bring attention to the company’s Common Threads Initiative, which allowed consumers to buy or trade in used Patagonia apparel. “That was a new standard,” said CB Bhattacharya, H.J. Zoffer chair in sustainability and ethics at the University of Pittsburgh. “Urging consumer activism and pretty much the first instance of ‘demarketing’ one’s own brand." When the Trump administration’s tax breaks left the company with an extra $10 million in its coffers in 2018, Patagonia donated the surplus to environmental groups fighting climate change. Bhattacharya called that another “industry first,” demonstrating what it means for a company to lead by example. With Sustainability a Priority for Consumers, SodaStream Sees a Chance to Shine Ripple effects As they have in the past, Chouinard’s recent actions could have a meaningful impact on several brands in the outdoor apparel category. "Patagonia has made an unprecedented commitment that will challenge not only the outdoor industry, but businesses everywhere, to do more for the planet," Stuart Haselden, CEO of outdoor gear brand Arc'teryx, told Adweek. Fellow outdoor gear retailer REI Co-op also applauded the move. “The actions taken this week by the Chouinard family are an inspiring example of leading with purpose, and we applaud their ongoing dedication to fighting the climate crisis,” Ben Steele, REI evp and chief customer officer, told Adweek. As a cooperative without the pressures of a publicly traded company, REI’s structure lends it a measure of flexibility similar to Patagonia when it comes to purpose-driven decision making. Steele told Adweek that REI has always given 100% of profits not reinvested in the business back to members, employees and nonprofit partners. The brand said it follows two pillars: fighting the climate crisis and working toward a more equitable society. Though REI has taken steps to making a positive impact, the brand came under fire earlier this year for taking an oppositional stance to its New York SoHo location's attempt to unionize. The store employees ultimately voted to form a union in March, and workers at a second store in California also unionized last month. This Study Shows Gen Z Doesn’t Live Up to Its Reputation on Valuing Brand Purpose and Sustainability A brand steeped in the environment Patagonia’s dedication to the environment goes beyond the varying definitions of sustainable business that have increasingly buzzed their way into industry events and corporate PR announcements over the last several years. It’s rooted in a more classic understanding of conservation that has evolved to include the complex impacts of its business, and a deep knowledge of climate science and its implications. Back in 1985, the brand began donating 10% of its profit to conservation groups. Four years later, Patagonia founded the Conservation Alliance along with REI, The North Face and Kelty. As part of 1% for the Planet, Patagonia has also been donating 1% of its net revenues to environmental nonprofits since 1985. The brand plans to eliminate virgin petroleum fiber in its products and have 100% reusable, home compostable, renewable or easily recyclable packaging by 2025. Watering the roots Under the leadership of the Patagonia Purpose Trust, all of the brand’s profits will be diverted to climate groups. As climate newsletter Heated’s Emily Atkin pointed out on Twitter, that’ll make it a powerful arbiter of climate-related funding. Currently, it grants funding to more than 1,000 grassroots environmental groups across the globe, which can be found through its Patagonia Action Works website. The $10 million it got in tax cuts in 2018 was all diverted directly into this pot of money, allowing more generous grants, according to a spokesperson. In his 2006 book, “Let My People Go Surfing: The Education of a Reluctant Businessman,” Chouinard outlined the philosophy that underpins the way he thinks about his company. “Before we are entitled to encourage other companies to act responsibly, we have to do so ourselves,” he wrote. “When we act positively on solving problems instead of ignoring them or trying to find a way around them, we are further along the path toward sustainability. Every time we’ve elected to do the right thing, it’s turned out to be more profitable.” If the green vortex is going to sweep us up into its humanity-saving whirlpool, we’d best hope that’s true. Outdoor Retailers Strive to Make Nature More Accessible to Marginalized Groups

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Did Patagonia's Founder Just Launch Us Further Into the Green Vortex?

By giving away his company, Yvon Chouinard is upping the ante for sustainability

Kathryn Lundstrom

Rafael Canton

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Kathryn Lundstrom

Rafael Canton