What Does it Mean that the Earth is Now the Sole Shareholder of Patagonia?

Just under two weeks ago, Patagonia founder Yvon Chouinard and his family made Earth the sole shareholder of the company in a bold move aiming to save the planet.

Patagonia has had a long history of strong corporate sustainability values, but Chouinard believed it was time to fully commit to the company's values.

Originally considering selling the company ad donating the profits to charity, he was concerned the company would find its way into the wrong hands and be steered away from its values and governing principles. Chouinard also considered taking the company public but also decided against that.

Chouinard, along with his wife and two children, has now moved Patagonia into a trust and not-for-profit.

“Instead of ‘going public', you could say we’re ‘going purpose’”, Chouinard explained. “Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all wealth.”

While this drastic step towards creating a better future for all is not for all companies, it does raise an interesting question about the next steps in the corporate sustainability journey.

The idea of corporate responsibility stems from the fact that companies not only have a moral responsibility but a practical need to protect the planet from which they take their resources to create their wealth. The Chouinard family will go from one of the wealthiest families in the United States to a family noted in history books. Patagonia has now gone beyond the confines of corporate responsibility into corporate philanthropy. This will set a new precedent as to how organisations should be working towards safeguarding the planet.

Chouinard has an impressive history of pioneering new approaches to corporate philanthropy. In 1986, Patagonia began to donate 10% of its profits to efforts to save the planet. This increased in the coming years to 1% of all sales. In 2002, Chouinard founded a movement under the name ‘1% for the Planet’ to encourage other companies to follow suit and also donate 1% of all sales to safeguarding our planet. 20 years later, 1% for the Planet has active pledges from over 4,800 businesses across 60 countries.

Chouinard described this 1% not as philanthropy but as ‘paying rent’ for conducting business on the planet.

This latest move has gone a step further, transferring all company voting stock (approximately 2% of shares) to a trust to ensure that Patagonia remains true to its values in years to come. The other 98% of shares have been donated to a new not-for-profit with a focus on fixing climate change.

While it is extreme for other companies and small-to-medium-sizes enterprises (SMEs) to adopt this same approach, there are still ways companies can get involved. The first way to support Chouinard’s vision of protecting the planet is by pledging 1% for the Planet. This can be done by both large companies and small businesses alike.

For businesses not looking to take that major financial plunge just yet, the creation of a sustainability commitment is a great first step. This commitment can then be used as a foundation to generate sustainability goals, and sustainability reports among other documents and opportunities for your business to make a greater impact in the safeguarding of our planet.

If you are interested in starting this journey, contact a member of the Strategic Sustainability Consultants team today!

This article was originally published on the Strategic Sustainability Consultants website.