Making Earth the Shareholder

Sometimes a billionaire does something that is not venal, selfish, or self-promoting.  Take note.

This week Patagonia founder Yvon Chouinard and his family announced their plan to place the company valued at over $3 billion into a trust to fund climate change organizing.  This is an inspired act that should be celebrated and emulated.

In a statement, Chouinard explained that the current corporate ownership and governance options for their stewardship goals were limited.

“Instead of ‘going public,’ you could say we’re ‘going purpose,’” he wrote. “Instead of extracting value from nature and transforming it into wealth for investors, we’ll use the wealth Patagonia creates to protect the source of all wealth.”

The ownership of the privately held Patagonia company will be transferred to the Patagonia Purpose Trust. The Trust will hold 100 percent of the company’s voting stock and 2 percent of the value of the company.  All the nonvoting stock and 98 percent of the value of the company will be held by the Holdfast Collective, a 501(c)4 advocacy organization. Profits from the company will be distributed by Holdfast to environmental advocacy organizations.

The Patagonia decision is not a tax dodge, as the for-profit company will continue to pay corporate income taxes. And because the Chouinards donated their shares to a trust, they will pay an estimated $17.5 million in gift taxes, according to The New York Times.

Chouinard’s decision is a contrast to the secretive decision by Barre Seid to donate his private company to bankroll right-wing causes. As my colleague Helen Flannery and I have explained, Seid gave 100 percent of his electronics company, Tripp Light, to a nonprofit organization, dodging an estimated $400 million in capital gains along with additional estate tax reductions.

It is not without precedent to have private companies held in trust for public benefit. The Hershey Trust, formed in 1905, holds a minority shareholder interest in the Hershey’s chocolate company but retains a majority voting interest.  Profits from the for-profit company flow to the Trust that owns a school and other socially beneficial entities.

Chouinard and Deep Ecology

To understand Yvon Chouinard’s decision to transfer the company to a trust, it is helpful to understand his friendship with Doug Tompkins, the philanthropist founder of North Face and Esprit. Tompkins died in 2015 in a kayaking accident in southern Chile. Chouinard was with him in another kayak but was unable to save his friend.

Tompkins sold his stakes in the two companies and put almost $200 million into a foundation for environmental organizing and conservation projects.  Chouinard was a frequent advisor and collaborator who often matched Tompkins’s donations.

By coincidence, I just finished reading Jonathan Franklin’s 2021 book, A Wild Idea: The True Story of Doug Tompkins. Many of us in the anti-corporate globalization and ecology movement personally knew Tompkins, who was the primary funder of the International Forum on Globalization through his Foundation for Deep Ecology.  His efforts to buy and conserve land in rural Patagonia – the region in Chile, not the company – drew its own share of controversy. But Tompkins’s legacy has been the transfer of over 2 million acres of land in Chile and Argentina to national parks. He was posthumously honored with Chilean citizenship.

Tompkins and Chouinard were one another’s best friends and muses.  They started out as self-proclaimed “dirt bag” climbers and surfers. When the surf was up, workers at Chouinard’s mountaineering equipment business closed up shop and hit the waves.

In 1968, Chouinard, Thompkins, and three friends drove a Ford Econoline van stuffed with surfboards and climbing ropes down the Pan American Highway to the southern tip of Chile to climb a mountain they had only seen in a photograph.

I recommend watching Chris Malloy’s 2010 documentary 180 Degrees South: Conquerors of the Useless for an entertaining window into their lives. There is stunning footage of the Patagonian wilderness and insights into Tompkins and Chouinard’s ecological ethic. In several interviews, Chouinard sips a matte through a metal straw while he and Tompkins tease one another about their foibles. You also will meet Kris Tompkins, Doug’s wife who was chief executive at Patagonia.  She carries on the work and is one of the current Patagonia trustees overseeing the company’s transfer to the trust.

These are dirt bag business founders who never wanted to be big business owners. Chouinard was an accidental billionaire.  Their ecological values were always their first priority.  Chouinard’s decision this week is the logical extension of his lifelong commitment to defending the earth.