Yvon Chouinard said any profit not reinvested in running the Patagonia business would go to fighting climate change. The label has amassed a cult following due to sustainability moves like guaranteeing its clothes for life and offering reasonably priced repairs.
It is famous for an advert titled “Don’t buy this jacket” asking shoppers to consider costs to the environment.
The brand’s website now states: “Earth is now our only shareholder.”
A rock climbing fanatic, he started out as making metal climbing spikes for himself and his friends to wedge into rocks, before moving into clothing and eventually creating a hugely successful sportswear brand with a cult following.
Founded in 1973, Patagonia’s sales were worth around $1.5bn this year, while Mr Chouinard’s net worth is thought to be $1.2bn.
But he has always shied away from his wealthy status, telling the New York Times he was “horrified to be seen as a billionaire”.
He claimed that profits to be donated to climate causes will amount to around $100m (£87m) a year, depending on the health of the company.
“Despite its immensity, the Earth’s resources are not infinite, and it’s clear we’ve exceeded its limits,” the entrepreneur said of his decision to give up ownership.
Prices are relatively high with jumpers, for example, costing around £200 and T-shirts around £40, but the company argues that the cost reflects the fact its clothes are meant to last a lifetime.
The Californian firm was already donating 1% of its annual sales to grassroots activists and committed to sustainable practices. But in an open letter to customers, the apparently reluctant businessman said he wanted to do more.
Chouinard said he had initially considered selling Patagonia and donating the money to charity, or taking the company public. But he said both options would have meant giving up control of the business and putting its values at risk.
Instead, the Chouinard family has transferred all ownership to two new entities. The Patagonia Purpose Trust, led by the family, remains the company’s controlling shareholder but will only own 2% of its total stock, Mr Chouinard said.
It will guide the philanthropy of the Holdfast Collective, a US charity “dedicated to fighting the environmental crisis” which now owns all of the non-voting stock – some 98% of the company.
“Each year the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis,” Mr Chouinard expressed.
Part of the brand’s attraction comes from the fact that its environmentally conscious stance isn’t new. It was preaching eco-awareness years before sustainable fashion became fashionable.