“Truth be told, there were no good options available, so we made our own.” — Yvon Chouinard
In mid-September, Yvon Chouinard, CEO and founder of outdoor gear company Patagonia, along with his family, made the decision to bring in a new shareholder: Earth. The goal is heady and erudite. Its mission is to continue Chouinard’s lifelong work fighting the environmental crisis by making Earth its beneficiary. It is a cause Chouinard — and his company — have long and unapologetically championed for years. Patagonia has always known what it stands for. It’s unwavering in its commitment and leadership to a purpose that is bigger than the company itself.
Patagonia’s story is a well-known case study in business classes and a model for hopeful social entrepreneurs and impact investors. It’s a story arc worthy of a Netflix series: a rough-hewn rock-climbing CEO, a planet that needs saving and a beloved brand known round the globe. It’s a philanthropic story that dips into the philosophical side of business and legacy. The move is a tectonic shift in the notion of living your values — even after your death.
To those of you familiar with Chouinard and his 50-year-old “experiment in responsible business,” the move is not entirely surprising, but the structure probably is. For years, the company has been unabashedly political in its messaging and steadfast in its mission, consistently positioning itself as a voice for the planet. It’s heady stuff and, frankly, it’s a foundational lesson in leadership.
In his letter to shareholders and the world, Chouinard explains how the new financial structure will work, with Earth as the primary beneficiary:
100% of the company’s voting stock transfers to the Patagonia Purpose Trust, created to protect the company’s values. 100% of the nonvoting stock goes to Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. The funding comes from Patagonia. Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.
Tracey Gillespie, head of the business ownership advisory for Wells Fargo Wealth & Investment Management, thinks this is a watershed moment for family businesses. “What we’re seeing here is a shift. With the rising generation we are frequently seeing heirs not wanting to assume the responsibility of a family business and yet wanting to do good and meaningful things. There’s a pivot toward reinventing family businesses as more purposeful in their operations.”
Gillespie says that the rising generation can play a pivotal and formative role in supporting this shift, as responsible shareholders and NextGen leaders of family enterprises. “For owners and families, resources for supporting their ‘purpose-driven’ transition will become more abundant as visibility and demand increases.”
The Patagonia story is many things, but it is first and foremost a story about intentional, values-driven leadership. The lessons? A great leader enables others to feel a sense of connection to a cause or a calling. A great leader brings opportunities. And a great leader incentivizes and inspires others to be a part of something bigger and more important than themselves.