Prof. Knut Ims, NHH Norwegian School of Economics, Bergen
Prof. Laszlo Zsolnai, Corvinus University of Budapest; Blackfriars Hall, University of Oxford, Chairman of the European SPES (Spirituality in Economics and Society) Institute
In September 2022 Yvon Chouinard, Buddhist entrepreneur and founder of American outdoor clothing retailer Patagonia, made an extraordinary proclamation. He said that “Earth is now our only shareholder”. This statement has wide-ranging implications, not just for his company but also for business in general.
Shareholders are those entities for whose benefit a capitalist firm should be managed and to whom the company management is responsible. If a company considers the earth as its only shareholder, it means that the whole operations of the company should serve the flourishing of human and non-human life on earth.
Yvon Chouinard is not just advocating for earth-centered business, he actually practices it: Instead of “going public”, he made Patagonia “going purpose.”. Instead of extracting value from nature and transforming it into wealth for investors, they are using the wealth Patagonia creates to protect the earth.
As a teenager, Yvon Chouinard was inspired by Zen Buddhism and had an entrepreneurial spirit. He realized that business is a perfect place to apply Zen philosophy, and that compassion and mindfulness can make doing business a pleasure for himself and a gift to his employees and the world. Chouinard embedded Buddhist values in his own company, Patagonia, which evolved into an excellent product-driven global organization. From being a rebel and practicing a simple and frugal living, Chouinard walked his talk. By 2022 his company is valued USD 3 billion.
Chouinard was born in 1938 from French-Canadian parents who moved to California. Chouinard became a loner and an outdoor enthusiast teenager, and in close collaboration with some friends, without any education in economics, he step by step developed his business venture into a successful global company.
One of Chouinard’s favorite sports was mountain climbing. Through his skills and personal experience, he became aware of the need for better tools for mountain climbing that do not destroy the natural environment. Thus, he learned the skill of a blacksmith and forged new, lighter, enduring, reliable, cleaner, simpler and reusable tools. First, he forged pistons that could be reused, and later aluminum chocks that could be wedged to a crack in the rock rather than pistons hammered in and out of crevices. He also made stronger carabiners. Other mountain climbers wanted those tools, too, and Chouinard started to produce more tools to supply his friends with the very best.
The same pattern was repeated for Chouinard’s entrance into the gear business. Together with his small group of friends he developed innovative, trendy and sustainable sports gears. His company grew and later they realized that employees were getting sick due to the formaldehyde used as the finish on their cotton clothes to prevent shrinkage and wrinkling. In 1991, Patagonia investigated the environmental impact of all the fibers they used in their clothing. What they learned was devastating. As a result, Patagonia in 1994 committed to switching over their entire line of cotton clothing to organic cotton. However, not enough organic cotton was available, so they started to work directly with farmers around the world and convinced vendors to clean their machines before and after processing. In 1996, every piece of Patagonia’s cotton clothing was made from organic cotton and repairable.
Patagonia was awarded a number of prizes. Fortune en Working Mother magazines named Patagonia as one of the 100 best companies in the USA to work for. Patagonia has donated (in cash and in kind) more than USD 140 million since 1985. One of their initiatives was to support the health of the oceans, and it pledges 1% of sales to the preservation of and restoration of the natural environment.
Patagonia has developed its own philosophy for different domains, including products, promotion, and environmental policy. It represents an ecology of values, where all is equally important.
(I) The product design philosophy states: Make the best product and strive for it to be functional, multifunctional, durable, repairable, fit for the customer, simple, easy to care for and clean, authentic, beautiful and zero harm.
(II) The environmental philosophy is the most complex and far-reaching of Patagonia’s philosophies. It is summarized in six points: 1. Lead an examined life. 2. Clean up our own act. 3. Do your penance. 4. Support civil democracy. 5. Do good. 6. Influence other companies.
Point (I) and (II) involve supporting grassroots activists by paying an Earth Tax. This funding started in 1985. In addition to giving 1 % of its sales revenues, the employees can work up to 320 hours for environmental groups while receiving their full salary from Patagonia. One program helps oppose the construction of new dams and supports the transition towards lower impact energy and water sources that cause no harm.
Point (5) includes making products that “cause less environmental harm than their counterparts”. A related motto is “Repair is a radical act”. In one of Patagonia’s advertisements the text reads: “To make one of our best-selling jackets requires 135 liters of water, so by repairing it you will save many natural resources, CO2 emissions and waste. Don’t buy what you don’t need. Think twice before you buy anything”.
Patagonia’s goal is to switch to 100% renewable electricity in its global owned-and-operated facilities by the end of 2022. By 2025, it plans to be a zero-waste-to-landfill company.
Today, Yvon Chouinard gives us a new example of his limitless generosity by giving away the company he founded 49 years ago. In the future, Patagonia will serve the earth.
Here’s how it works: 100% of the company’s voting stock is transferred to the Patagonia Purpose Trust, created to protect the company’s values; and 100% of the nonvoting stock is given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. Each year, the money Patagonia makes after reinvesting in the business will be distributed as a dividend to help fight the environmental crisis.
Yvon Chouinard believes that we can save our planet if we commit to it. But we need to do business differently. (See https://www.patagonia.com/home/)
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