19 September 2022 |

Praise for Patagonia?


This week’s deal in focus is an unorthodox one. Yvon Chouinard, rock climber and founder of Patagoniagave away the company this week, transferring all voting stock to Patagonia Purpose Trust and all non-voting stock to Holdfast Collective, a climate change nonprofit. Chouinard, long-time environmentalist, wants all future profits from the business to flow towards climate solutions, likely with a focus on conservation and nature-based solutions. 

What do we know about Holdfast Collective? Not much, because it’s new. Rather than bless existing nonprofits with proceeds from Patagonia profits, it seems Chounaird and co wanted to start fresh. Patagonia will continue business as usual but will issue dividends with cash sourced from Patagonia profits not reinvested in the business to Holdfast. 

Holdfast’s mandate is to protect the planet. Patagonia nets ~$100M in profit annually. If that run rate continues and / or grows, that’ll make Holdfast one of the more prominent climate philanthropies in the world. It’s not likely that much of the money will flow into venture capital-type fundraising for private climate tech companies. 

Given how broad of a charge ‘protecting the planet’ is, Holdfast didn’t just become one of the most powerful climate nonprofits overnight. It became a bellwether that people will look to for ideas on the highest impact forms of climate action. Protecting vital ecosystems? Running political campaigns to elect climate-friendly candidates? Buying and abandoning fossil fuel assets? There are all kinds of ways to run that playbook.

The former is most likely. Based on Chouinard’s environmentalism, I’d hazard he’s interested in supporting nonprofits focused on conservation, ecosystem restoration, environmental justice, etc…

Kereng Bangkirai and its surrounding forests and peatlands is the type of ecosystem Holdfast may divert resources to for conservation (credit to Barkah Wibowo for the pic)

The net-net

First of all, ignore folks whose first reaction is to try to find fault with this move. For instance, that Chouinard’s primary responsibility is to shirk taxes. He ends up with less financial benefit by giving all of the company away than had he sold it in another manner and taken a tax hit. Instead … be happy! This is a great example of philanthropic giving and climate leadership.

It’s fair to have some reservations. Patagonia isn’t perfect – all their products use petrochemical plastics. Neither is Chouinard. But then again, who is?

Secondly, the people running Holdfast will have a lot of power. Their investments and donations will also become a litmus test for projects, practices, and ideas. How they allocate capital has the potential to drive significant impact, not just because of the dollar values but because their influence and implicit stamp of approval on projects will likely come to hold sway, too. Nature-based solutions Holdfast funds will also come under a lot of scrutiny; while nature offers fantastic ways to combat climate change, many nature-based projects have their pitfalls. All that said, and before we get too ahead of ourselves, I will say that it’s worth seeing how this money is managed and what solutions get funding.

Lastly, here’s to hoping Chouinard’s move inspires a lasting corporate model that others adopt! The potential for copycat moves from other wealthy business owners might be the most significant lever for impact in this whole story and could make philanthropy an even more prominent component of the climate and climate tech capital stack in years to come.