Patagonia, the outdoor apparel company, has implemented an unconventional ownership structure to align with its environmental commitments. Founded by Yvon Chouinard in the 1970s, the company has long focused on sustainability, but Chouinard sought a more permanent way to ensure its profits support environmental causes. After considering several options, including selling the company or going public, Patagonia adopted a purpose trust model in 2022. This move redirected company profits toward environmental initiatives while retaining the brand’s core values. The decision reflects an increasing interest in alternative ownership models aimed at balancing profitability with social responsibility.
Other companies have also explored similar ownership models. In Europe, firms like Carlsberg and Rolex have operated under foundation ownership for decades. Novo Nordisk, the Danish pharmaceutical company, follows a similar stewardship approach, ensuring that business decisions prioritize long-term sustainability. Compared to these well-established examples, Patagonia’s approach is still in its early stages, but it represents one of the most prominent cases in the U.S. of a company shifting ownership to serve a specific mission beyond financial gain.
Why Did Patagonia Choose a Purpose Trust?
Chouinard and his team explored multiple alternatives before settling on the purpose trust model. Options such as introducing minority investors or transitioning to employee ownership were considered but did not fully align with the long-term vision. Selling the company could have compromised its mission, while an IPO might have shifted priorities toward shareholder returns. Eventually, Patagonia transferred its voting shares, approximately 2% of total stock, to the Patagonia Purpose Trust to ensure adherence to its core principles. The remaining 98% of non-voting shares were allocated to the Holdfast Collective, a nonprofit organization overseeing environmental funding.
How Is the Holdfast Collective Utilizing Patagonia’s Profits?
Holdfast Collective, led by Greg Curtis, directs Patagonia’s profits toward environmental projects. Since its establishment, over $100 million has been allocated to conservation efforts. The organization funds various initiatives, including land preservation, climate policy advocacy, and legal actions supporting environmental protection. Curtis emphasized the ongoing nature of this approach, stating,
“We are totally thinking about it like an experiment. We’re building the wings of the plane as we fly it.”
One of the notable contributions from Holdfast Collective was a $5.2 million donation to the Nature Conservancy for acquiring nearly 8,000 acres of land in Alabama. Another $1 million was given to the Rodale Institute to assist underserved farmers in California. These donations illustrate the practical impact of Patagonia’s restructuring, as company profits actively support conservation and sustainability initiatives.
While some companies adopt purpose-driven models gradually, Patagonia’s complete shift to a mission-driven ownership structure sets a distinct precedent. The long-term effectiveness of this model remains to be seen, but it challenges conventional corporate structures that prioritize shareholder profits. If successful, other companies may follow similar paths, particularly those with strong commitments to social and environmental causes.
The purpose trust model presents both opportunities and challenges. Unlike traditional corporations, Patagonia’s structure prioritizes environmental impact over financial returns for investors. However, long-term sustainability will depend on the company’s ability to maintain profitability while supporting its initiatives. The effectiveness of this framework could influence other businesses considering ethical and mission-centered ownership models. Patagonia’s move highlights a growing trend where companies look beyond profit generation to address global challenges through alternative governance structures.
