MMaking bold statements about tackling the climate crisis has become de rigueur in the corporate world over the past few years. But that was taken to a whole new level when Patagonia outdoor apparel company founder and owner Yvon Chouinard announced that his family was transferring 98% of the company’s stock to a new non-profit organization. profit dedicated to the fight against the climate. breakdown.
Chouinard has been applauded for “giving away” his company for the planet. He himself claimed that he was “in the process of overthrowing capitalism”. Widespread admiration for Chouinard is a telltale sign of popular discontent with the excesses of the global corporate economy and its billionaire bosses. But the question remains: is does this gift mark a fundamental change in the system?
The announcement was the conclusion of Chouinard’s 50-year commitment to being in business to save the planet. In a letter he released last week, titled “Earth is Now Our Sole Shareholder,” he laid out the next chapter for Patagonia. Ownership of the business will be transferred from the Chouinard family to two entities: a trust and a not-for-profit organization. The stated objectives of this audacious approach are to “protect the values of the company”, to fight against the environmental crisis and to defend nature.
In practical terms, Chouinard’s plan means that each year around $100 million in retained earnings will be donated to the nonprofit, called Holdfast Collective. Holdfast will own 98% of Patagonia, and all of it in non-voting shares. The exact nature of the work that Holdfast will carry out has not been specified, apart from the very general idea of its environmental purpose. Patagonia describes this goal as “addressing the environmental crisis, protecting nature and biodiversity, and supporting thriving communities.”
Holdfast is a recognized tax-exempt organization under the US tax code 501(c)(4). This means that, unlike public charities, it is legally permitted to engage in political activity.
Meanwhile, only 2% of the company, but all of the voting stock, goes to the Patagonia Purpose Trust. It’s the organization that Patagonia says was “created solely to protect our company’s values and mission” to save the planet. This means that the trust has veto power over decisions such as the composition of the board of directors, its organizational structure and the operations of the company.
So, no longer owning Patagonia, what will Chouinard’s role be in the future? Patagonia’s website states, “The Chouinard family will guide the Patagonia Purpose Trust”, “will continue to serve on the Patagonia Board of Directors”, and “will guide the philanthropic work carried out by the Holdfast Collective”.
It would seem that, while Chouinard cedes ownership of his business, he does not cede control. But is what he does qualitatively different from the actions of other billionaire philanthropists? These days, like the robber barons of old, the global elite are lining up to donate their fortunes to good causes. Just look at Bill Gates and Warren Buffett’s Giving Pledge, where they and over 200 other of the world’s wealthiest people pledged to give most of their wealth to solve the problems facing society. Gates’ own foundation disbursed $6 billion in charitable grants and contracts in 2021.
What differentiates Chouinard is that, rather than making an abstract pledge, he literally renounced his property. He is no longer a billionaire. With this move, his ambitions are as explicitly political as they are environmental. “Hopefully it will influence a new form of capitalism that doesn’t end up with a few rich and a bunch of poor,” he told The New York Times.
That Chouinard and others are helping to solve the climate crisis is undoubtedly a good thing; after all, governments around the world have failed for decades. The catch, however, is that this is all part of a well-developed global system where the responsibility for dealing with public and social problems is increasingly being taken by private interests. And, as we see with Chouinard, it is an empowered elite that is capable of making the decisions.
Rather than attacking the underlying political and economic system that creates inequality, billionaire philanthropy provides a moral justification for it. They can decide to give their money, but they are always the ones who make the decisions. The rest of us just have to rely passively on their benevolence. Exactly what the Holdfast collective will spend on their $100 million a year has yet to be revealed. A key question, however, is whether it will be open to public scrutiny and accountability.
We live in a time when business owners are taking over as the moral arbiters of society, using their wealth to solve what they see as society’s greatest problems. Meanwhile, wealth and the number of billionaires around the world are rising and inequality is pushing society to the breaking point.
It’s great that Chouinard puts his company at the service of the future of the planet. What’s not great is that our lives and our future increasingly depend on the power and generosity of the wealthy elite, rather than being ruled by the common will of the people. As a global society, we cannot sit back and hope future billionaires decide to give their wealth away in service of the planet – there is far too little time left for such wacky luxuries.