Patagonia must remain competitive for climate donation to work: CEO
A Patagonia store signage is seen on Greene Street on September 14, 2022 in New York City. Yvon Chouinard, founder of Patagonia, his spouse and two adult children announced that they will be giving away the ownership of their company which is worth about $3 billion. The company’s privately held stock will be now be owned by a climate-focused trust and group of nonprofit organizations, called the Patagonia Purpose Trust and the Holdfast Collective, and all the profits that are not reinvested into the business will be used to fight climate change.
Michael M. Santiago | Getty Images News | Getty Images
Patagonia founder Yvon Chouinard, and his family are giving away their ownership in the outdoor apparel maker they started five decades ago to benefit climate change. But that does not mean company is going to become any less competitive or aggressive in meeting its business objectives.
“I think what people fail to understand about Patagonia, both the past and today and the future, is that we are unapologetically a for-profit business,” CEO Ryan Gellert told CNBC’s “Squawk Box” on Wednesday.
“We are extremely competitive. The Chouinards are extremely competitive about the business. We focus on making high-quality products, standing behind that product for the usable life of it. We compete with every other company in our space, aggressively. I don’t think we have lost that instinct,” Gellert said.
That also means that pay and compensation of employees will not suffer, Gellert said.
“I think this whole thing fails if we don’t continue to run a competitive business and included in that is taking care of our people,” Gellert told CNBC.
Ryan Gellert, now the CEO of Patagonia, speaking at the Copenhagen Fashion Summit 2019 at DR Koncerthuset on May 16, 2019 in Copenhagen, Denmark.
Lars Ronbog | Getty Images Entertainment | Getty Images
The conversations that led to the decision started a couple of years ago internally.
If Patagonia had taken the company public or sold either a majority or minority of the company, “we had very little confidence in meeting with quite a few potential investors that the integrity of the company would be protected,” Gellert said.
Instead, Patagonia opted to put the shares of the company into two trusts, the Patagonia Purpose Trust, which holds all the voting shares (2% of the total), and the Holdfast Collective, which holds the remaining, non-voting shares. The Patagonia Purpose trust is dedicated to maintaining the company’s values and the Holdfast Collective is a “nonprofit dedicated to fighting the environmental crisis and defending nature,” Chouinard wrote in a statement describing the decision.
By transferring the overwhelming majority of the company to a social benefit trust, Patagonia avoids paying a large tax bill — an issue which was discussed immediately and loudly on the heels of the announcement that the Chouinard family was giving the company away.
Patagonia leadership was expecting the discussion of the tax benefit of…
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