Clothing company Patagonia’s announcement this week that “Earth is now our only shareholder” has lit up screens around the world. Founder Yvon Chouinard and his family have transferred complete ownership of the company, valued at US$3 billion, to two new entities.
The Patagonia Purpose Trust, created to protect the company’s values and overseen by the family, will own just 2 percent of stock but all voting rights, while 98 percent of stock with no voting rights has been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature, whose work the family will also guide. The shift in ownership will cost US$17.5 million in gift taxes. This is an act of unparalleled philanthropy by the family and a how-to guide for socially and environmentally conscious entrepreneurs who want an exit strategy that fits their values.
The new legal structure was chosen to avoid two unacceptable counterfactuals: a new owner who they “couldn’t be sure would maintain our values or keep our team of people around the world employed”, or worse, stock market flotation. As Chouinard writes: “What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility.”
Chouinard, at 83, has ensured that the business will continue to reflect his values in perpetuity, with the nonprofit expected to receive about US$100 million per year, depending on company profitability. This means that Patagonia’s operational model and owner-philanthropy will continue, uninterrupted, under the new structure. In effect, Patagonia won’t change.
Patagonia is a virtuous business. Naomi Klein describes it as “an attempt to challenge the culture of consumption that is at the heart of the global ecological crisis”. Yet, there can’t be much doubt that sales will increase following this latest announcement, as they did in 2011 when the company’s Black Friday plea “Don’t Buy This Jacket” was heard and then ignored by its adoring, well-off customer base of “hale young adventure athletes, living righteously in Edenic locales”.
It’s 2022, one third of Pakistan is under water and we seem to be heading toward a future Hothouse Earth, unless we slam on the brakes.
Producing an estimated US$1.5 billion in annual sales of socially unnecessary goods for rich consumers, no matter how sustainably, is not a business model that Earth can tolerate any longer, even as a recipient of Patagonia’s largesse.
It’s hard to imagine Earth saying to Patagonia, you make more stuff for rich people, then use the proceeds to help clean me up. If Patagonia really wants to make a difference, it should set a degrowth example.
Growth is the enemy of sustainability. To become sustainable, the business sector must learn how to operate without growth. Perhaps Patagonia and other organisations that live outside capitalism could already operate in a post-growth economy. But, more urgently, the world needs some large businesses to show the way into degrowth, because a post growth economy will need to be a smaller economy if it is to operate within planetary boundaries. Patagonia, somehow, has always seemed poised to pioneer a degrowth transformation, continually disappointing when it fails to step into it.
Economic anthropologist Jason Hickel, author of Less Is More, defines degrowth as “a planned, democratic reduction of less necessary forms of production in rich countries to bring economies back into balance with the living world in a safe, just and equitable way.” In a nutshell, degrowth is about businesses fulfilling people’s needs within planetary boundaries.
One of the most obvious ways for Patagonia to become more degrowth compatible is to stop producing luxury consumer goods and focus instead on producing a no-more-than-sufficient volume of socially necessary goods and distributing them equitably and affordably, perhaps using a pricing model that charges richer customers more to subsidise others. Patagonia’s approach to making durable, repairable products could also strengthen from its excellent base of repairing more than 100,000 garments in 2020.
Refocusing output might cut the company’s profit, reducing the surplus available for Patagonia’s environmental benefit purpose, but degrowth-compatible businesses tackle environmental degradation head on, aiming to operate within local planetary boundaries throughout the supply chain. Patagonia certainly has the right skills inhouse to attempt this. According to the company’s website, almost 100% of its products contain recycled material, including factory floor scraps, 100% of its virgin cotton is organic and it has converted 884 tonnes of discarded fishing nets into gear. Measuring the impact of the business against a range of contextual targets would be necessary to demonstrate that it is operating below the ecological ceiling.
Patagonia has already adopted degrowth-compatible wage practices and needs to continue expanding these: 39% of its supply chain factory workers are paid a living wage and 88% of its products are Fair Trade sewn, supporting 75,000 workers. The company’s new steward-ownership model, attracting all the attention this week, is designed to protect purposeful businesses from extractive capital, but another more equitable model that the Chouinard family could have considered is exit-to-community, donating the business to stakeholders, such as a worker cooperative, including some apparel factory workers. This could have involved fragmenting the business into a trading network of not-for-profit cooperatives, distributing the power to make locally appropriate decisions about work hours, wages, outputs and environmental limits. Perhaps these outcomes can still be pursued in some other ways.
Patagonia is practiced and successful at lobbying and supporting environmental causes. These are problems caused by economic growth. Patagonia could shift its focus to the root cause and use its experience to argue for degrowth policies, such as universal basic income, reduced work time, banning product obsolescence, limiting advertising in public places, cancelling student debts, a global South debt jubilee and global climate equity.
Yvon Chouinard blazed a spectacular 20th century trail with Patagonia. But its new legal structure seems to lock in its old green growth ways, begging the question of whether the company has any designs on becoming a 21st century degrowth trailblazer. It would be a shame to disappoint its only shareholder.
Featured image by Malik Skydsgaard on Unsplash.