METERMaking bold statements about how to tackle the climate crisis has become de rigueur in the corporate world in recent years. But this was taken to a whole new level when the founder and owner of outdoor clothing company Patagonia, Yvon Chouinard, announced that his family would transfer 98% of the company’s shares to a non-profit organization. newly created dedicated to combating climate change. breakdown.
Chouinard was applauded for “giving away” his company for the planet. He himself claimed that he was “turning capitalism on its head”. The widespread admiration for Chouinard is a telltale sign of popular dissatisfaction with the excesses of the global corporate economy and its billionaire bosses. But the question remains: Does this draw mark any fundamental changes 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 published last week, titled “The Earth is now our sole shareholder,” he outlined the next chapter for Patagonia. Ownership of the company will be transferred from the Chouinard family to two entities: a trust and a non-profit organization. The stated goals of this bold move are to “protect company values”, fight the environmental crisis and defend nature.
In practice, Chouinard’s plan means that about $100 million of non-reinvested earnings will be given each year to the nonprofit organization called the Holdfast Collective. Holdfast will own 98% of Patagonia, and all of it in non-voting shares. The exact nature of the work Holdfast will do has not been specified, other than the very general idea of its environmental purpose. Patagonia describes this purpose as “combating the environmental crisis, protecting nature and biodiversity, and supporting prosperous communities.”
Holdfast is a recognized tax-exempt organization under the US Internal Revenue code 501(c)(4). This means that, unlike public charities, it is legally authorized to engage in political activity.
Meanwhile, only 2% of the company, but all of the voting shares, go to the Patagonia Purpose Trust. This is the organization that, according to Patagonia, has been “created solely to protect the values and mission of our company” of saving the planet. That means 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 the owner of Patagonia, what will be Chouinard’s role in the future? Patagonia’s website says, “The Chouinard family will guide the Patagonia Purpose Trust,” “continue to serve on Patagonia’s board of directors,” and “guide the philanthropic work done by the Holdfast Collective.”
It would seem that while Chouinard is giving up ownership of his company, he is not giving up control. But is what he is doing qualitatively different from the actions of other philanthropic billionaires? 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 more than 200 of the world’s richest people have pledged to donate the majority of their wealth to address problems facing society. Gates’ own foundation shelled out a staggering $6 billion in charitable grants and contracts in 2021.
What makes Chouinard different is that instead of making an abstract promise, he has literally given up his assets. He is no longer a billionaire. With this move his ambitions are as explicitly political as they are environmental. “Hopefully this will influence a new form of capitalism that doesn’t end up with a few rich people and a lot of poor people,” he told the New York Times.
That Chouinard and others are helping to address the climate crisis is certainly a good thing; after all, governments around the world have failed for decades. The problem, however, is that this is all part of a well-developed global system where the responsibility for addressing public and social problems is increasingly being assumed by private interests. And, as we see with Chouinard, it is an empowered elite that can call the shots.
Instead of addressing the underlying political and economic system that creates inequality, multi-million dollar philanthropy provides a moral justification for it. They may decide to give away their money, but they are still the ones making the decisions. The rest of us just have to passively trust his benevolence. Exactly what the Holdfast Collective will spend its $100 million a year on has yet to be revealed. However, a key question is whether it will be open to public scrutiny and accountability.
We live in an era where business owners are assuming the role of society’s moral arbiters, using their wealth to address what they see as society’s biggest problems. Meanwhile, the wealth and number of billionaires in the world grows, and inequality pushes society to the limit.
It’s great that Chouinard is putting his company to work for the future of the planet. What’s not great is how our lives and futures are increasingly dependent on the power and generosity of the wealthy elite, rather than the common will of the people. As a global society, we cannot stand back and hope that future billionaires decide to give away their wealth in service of the planet: there is very little time left for far-fetched luxuries like that.