January 25, 2024

Doing Business or Owning a Business? The Patagonia Case

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4 minutes

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Opinion

A reflection on Patagonia's communication action regarding its decision to donate the company to the fight for the planet.

In September 2022, a company showed us that not all business formulas have been invented yet, especially when it comes to taking action for the planet. Patagonia took things a step further and, through an ingenious restructuring of its ownership, decided to donate almost all of its shares to climate action while simultaneously protecting its values and people. Yvon Chouinard publicly announced his decision to transfer ownership of the $3 billion company to a trust (Patagonia Purpose Trust) and a nonprofit organization (Holdfast Collective). The first is responsible for decision-making, while the other uses Patagonia’s $100 million in annual profits to fight the environmental crisis, protect nature and biodiversity, and support community development.

Whenever we talk about impactful companies, Patagonia is one of the first names that come up. What makes Patagonia so different from the rest? If we analyze “the letter: the earth is now our only shareholder,” the communication action that explains the company’s restructuring, we see yet another example of its way of doing things. Delicate, direct, and effective, the letter appeals to the emotions that connect this brand with its customers and a much broader audience that identifies with its values and purpose. The letter is published on Patagonia’s website in a visible and prominent place among its stories, which is what they call their publications.

Values

When we began witnessing the extent of global warming and ecological destruction—and our own contribution to it—Patagonia committed to using our company to change the way business is done. If we could do the right thing while still making enough money to pay the bills, we could influence customers and other companies, and maybe change the system along the way.

Since its inception, the brand has demonstrated a commitment to protecting the environment. It has constantly questioned the status quo, evaluating every aspect of its business to drive changes in both its operations and the industry at large. From selecting sustainable materials and adopting lower-impact manufacturing processes to initiatives focused on reduction, repair, and recycling, Patagonia showcases its commitment to the planet’s future in every decision.

Purpose and Mission

We give away 1% of sales each year. We became a certified B Corp and a California benefit corporation, writing our values into our corporate charter to ensure they would be preserved. More recently, in 2018, we changed our company’s purpose to: We are in business to save our home planet…

In addition to founding Patagonia, Yvon Chouinard created 1% for the Planet, a network of businesses and non-governmental organizations working to protect the planet. Participating companies donate at least 1% of their sales directly to environmental actions.

Another key focus is people. This commitment is evident in the fact that, since 2012, Patagonia has been one of the first certified B Corps.

Instead of extracting value from nature and turning it into wealth for investors, we will use the wealth Patagonia creates to protect the source of all wealth.

Transparency

It has been almost 50 years since we started our responsible business experiment, and we are just getting started.

The letter tells a 50-year story of evolving from minimizing harm to dedicating all resources to saving the planet. Another section of the website showcases the History of Our Environmental and Social Responsibility, providing further evidence of Patagonia’s transparency regarding its environmental actions, worker rights, factories, employees, and especially its entire value chain.

Communication

I never wanted to be a businessman. I started as a craftsman, making climbing gear for my friends and myself.

It is no coincidence that one of the main sections of Patagonia’s website is called Stories. These stories are so central to the brand that they sometimes make it difficult to find products in the online store. The company publishes all kinds of stories—from anecdotes about athletes and activists to documentaries, books, and podcasts. It’s impossible not to connect with Patagonia’s origin story. And once you start learning about it, you want to follow their journey up to the present. Each milestone is more inspiring than the last.

Conclusion

I believe this brand communicates masterfully, constantly reflects, and improves. All of this is certainly admirable, but I think what truly sets Patagonia apart is its consistency. It is an extreme case where no one needs to demand that the company lives up to its words—because, in its case, the words follow the actions.

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