{"id":84413,"date":"2022-10-05T16:02:07","date_gmt":"2022-10-05T20:02:07","guid":{"rendered":"https:\/\/newsroom.carleton.ca\/?post_type=cu_story&#038;p=84413"},"modified":"2025-08-19T09:37:08","modified_gmt":"2025-08-19T13:37:08","slug":"patagonia-gold-standard-business-responsibility","status":"publish","type":"cu_story","link":"https:\/\/carleton.ca\/news\/story\/patagonia-gold-standard-business-responsibility\/","title":{"rendered":"Has Patagonia defined a new gold standard for business responsibility?"},"content":{"rendered":"\n<section class=\"w-screen px-6 cu-section cu-section--white ml-offset-center md:px-8 lg:px-14\">\n    <div class=\"space-y-6 cu-max-w-child-max  md:space-y-10 cu-prose-first-last\">\n\n        \n                    \n                    \n            \n    <div class=\"cu-wideimage relative flex items-center justify-center mx-auto px-8 overflow-hidden md:px-16 rounded-xl not-prose  my-6 md:my-12 first:mt-0 bg-opacity-50 bg-cover bg-cu-black-50 pt-24 pb-32 md:pt-28 md:pb-44 lg:pt-36 lg:pb-60 xl:pt-48 xl:pb-72\" style=\"background-image: url(https:\/\/carleton.ca\/news\/wp-content\/uploads\/sites\/162\/patagonia-1200x900-1.jpg); background-position: 50% 50%;\">\n\n                    <div class=\"absolute top-0 w-full h-screen\" style=\"background-color:rgba(0,0,0,0.600);\"><\/div>\n        \n        <div class=\"relative z-[2] max-w-4xl w-full flex flex-col items-center gap-2 cu-wideimage-image cu-zero-first-last\">\n            <header class=\"mx-auto mb-6 text-center text-white cu-pageheader cu-component-updated cu-pageheader--center md:mb-12\">\n\n                                    <h1 class=\"cu-prose-first-last font-semibold mb-2 text-3xl md:text-4xl lg:text-5xl lg:leading-[3.5rem] cu-pageheader--center text-center mx-auto after:left-px\">\n                        Has Patagonia defined a new gold standard for business responsibility?\n                    <\/h1>\n                \n                            <\/header>\n        <\/div>\n\n                    <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"absolute bottom-0 w-full z-[1]\" fill=\"none\" viewbox=\"0 0 1280 312\">\n                <path fill=\"#fff\" d=\"M26.412 315.608c-.602-.268-6.655-2.412-13.524-4.769a1943.84 1943.84 0 0 1-14.682-5.144l-2.276-.858v-5.358c0-4.876.086-5.358.773-5.09 1.674.643 21.38 5.84 34.646 9.109 14.682 3.59 28.935 6.858 45.936 10.449l9.874 2.089H57.322c-16.4 0-30.31-.16-30.91-.428ZM460.019 315.233c42.974-10.074 75.602-19.88 132.443-39.867 76.16-26.791 152.063-57.709 222.385-90.663 16.7-7.823 21.336-10.074 44.262-21.273 85.004-41.688 134.719-64.193 195.291-88.413 66.55-26.577 145.2-53.584 194.27-66.765C1258.5 5.626 1281.34 0 1282.24 0c.17 0 .34 27.596.34 61.3v61.299l-2.23.375c-84.7 13.718-165.93 35.955-310.736 84.931-46.494 15.753-65.427 22.076-96.166 32.15-9.102 3-24.814 8.198-34.989 11.574-107.543 35.954-153.008 50.422-196.626 62.639l-6.74 1.876-89.126-.054c-78.135-.054-88.782-.161-85.948-.857ZM729.628 312.875c33.229-10.985 69.248-23.523 127.506-44.207 118.705-42.223 164.596-57.709 217.446-73.302 2.62-.75 8.29-2.465 12.67-3.751 56.19-16.772 126.94-33.597 184.17-43.671 5.07-.91 9.66-1.768 10.22-1.875l.94-.161v170.236l-281.28-.054H719.968l9.66-3.215ZM246.864 313.411c-65.041-2.251-143.047-12.11-208.432-26.256-18.375-3.965-41.73-9.538-42.202-10.074-.171-.214-.257-21.38-.214-47.046l.129-46.618 6.654 3.697c57.313 32.043 118.491 56.531 197.699 79.143 40.313 11.521 83.459 18.058 138.669 21.059 15.584.857 65.685.857 81.14 0 33.744-1.876 61.306-4.93 88.396-9.806 6.396-1.126 11.634-1.983 11.722-1.929.255.375-20.48 7.769-30.999 11.038-28.592 8.948-59.288 15.646-91.873 20.147-26.36 3.59-50.015 5.627-78.35 6.698-15.584.59-55.209.59-72.339-.053Z\"><\/path>\n                <path fill=\"#fff\" d=\"M-3.066 295.067 32.06 304.1v9.033H-3.066v-18.066Z\"><\/path>\n            <\/svg>\n            <\/div>\n\n    \n\n    <\/div>\n<\/section>\n\n<p>This article is <a href=\"https:\/\/theconversation.com\/has-patagonia-defined-a-new-gold-standard-for-business-responsibility-191250\" rel=\"noopener noreferrer\" target=\"_blank\">republished<\/a> from The Conversation under a Creative Commons licence. All photos provided by <a href=\"https:\/\/theconversation.com\" rel=\"noopener noreferrer\" target=\"_blank\">The Conversation<\/a> from various sources.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><\/p>\n\n\n\n<p><iframe loading=\"lazy\" style=\"width: 100%; height: 100px; border: none; position: relative; z-index: 1;\" allowtransparency=\"\" allow=\"clipboard-read; clipboard-write\" src=\"https:\/\/narrations.ad-auris.com\/widget\/the-conversation-canada\/has-patagonia-defined-a-new-gold-standard-for-business-responsibility\" width=\"100%\" height=\"400\"><\/iframe><\/p>\n\n\n\n<p>Patagonia&#8217;s founder <a href=\"https:\/\/www.cnbc.com\/2022\/09\/14\/patagonia-founder-donates-entire-company-to-fight-climate-change.html\">Yvon Chouinard made headlines recently<\/a> with the decision to give his family&#8217;s $3 billion company, and its future profits, to the fight against climate change. In his words, &#8220;<a href=\"https:\/\/fortune.com\/2022\/09\/21\/patagonia-family-control-shares-charity-climate-change\/\">Earth is now the company&#8217;s only shareholder<\/a>.&#8221;<\/p>\n\n\n\n<p>Climate policy advocates <a href=\"https:\/\/www.nytimes.com\/2022\/09\/16\/climate\/yvon-chouinard-patagonia-philanthropy.html\">celebrated the decision<\/a>. Each year, $100 million in company profits <a href=\"https:\/\/www.the-spin-off.com\/news\/stories\/The-Brands-Patagonias-owner-yields-the-company-to-non-profit-company-Holdfast-Collective-16667\">will go to the Holdfast Collective<\/a>, a U.S. nonprofit working for climate action and policy advocacy. Its legal status as a <a href=\"https:\/\/www.irs.gov\/charities-non-profits\/other-non-profits\/social-welfare-organizations\">501(c)(4) social welfare organization<\/a> allows it to directly lobby on U.S. climate policy.<\/p>\n\n\n\n<p>Patagonia has always been a pathbreaker. Since 1985, the outdoor clothing company has <a href=\"https:\/\/www.patagonia.ca\/one-percent-for-the-planet.html\">donated one per cent of its sales to environmental causes<\/a>. In 2002, it helped found the business alliance <a href=\"https:\/\/onepercentfortheplanet.org\">1% for the Planet<\/a> to inspire other companies to follow suit. <\/p>\n\n\n\n<p>Patagonia has also shared product innovations, like its <a href=\"https:\/\/sustainablebrands.com\/read\/collaboration-cocreation\/patagonia-sharing-proprietary-biorubber-to-advance-sustainable-surf-industry\">plant-based neoprene<\/a>, with its competitors in hopes of accelerating more sustainable practices. Other initiatives include its <a href=\"https:\/\/www.patagonia.com\/b-lab.html\">certification as a B Corporation<\/a>, certifying Patagonia as a company that is committed to the common good, and its used apparel marketplace <a href=\"https:\/\/wornwear.patagonia.com\">Worn Wear<\/a>.<\/p>\n\n\n\n<p>But its recent decision is on another scale entirely. Could it help redefine the gold standard of business responsibility? <\/p>\n\n\n\n<h2 id=\"profit-vs-sustainability\" class=\"wp-block-heading\">Profit vs. sustainability<\/h2>\n\n\n\n<p>Tensions between profits and the planet abound in business. <a href=\"https:\/\/doi.org\/10.1111\/j.1468-2370.2009.00275.x\">Much management scholarship<\/a>  has focused on identifying win-win scenarios <a href=\"https:\/\/hbr.org\/2011\/01\/the-big-idea-creating-shared-value\">where profit and sustainability coincide<\/a>, including <a href=\"https:\/\/hbr.org\/2016\/10\/the-comprehensive-business-case-for-sustainability\">getting eco-conscious consumers to pay more for sustainable products<\/a> and saving costs by making operations more resource efficient. <\/p>\n\n\n\n<p>In many instances, however, a win-win scenario is not an option. Companies then <a href=\"https:\/\/doi.org\/10.1177\/1086026615575047\">face tough choices<\/a> about <a href=\"https:\/\/doi.org\/10.1007\/s10551-017-3587-2\">striking a balance<\/a> between profit and sustainability.<\/p>\n\n\n\n<p>Patagonia has long grappled with this trade-off, often in public and eye-catching ways. Its 2011 Black Friday ad implored customers not to buy its best-selling jacket due to its environmental impacts. (Ironically, <a href=\"https:\/\/bettermarketing.pub\/dont-buy-this-jacket-patagonia-s-daring-campaign-2b37e145046b\">the ad quadrupled the company&#8217;s sales<\/a>). Patagonia continued this pattern in 2020 when it ran an ad in the New York Times about the need to tackle the climate crisis.<\/p>\n\n\n\n<p>Chouinard mused in a <a href=\"https:\/\/web.archive.org\/web\/20131216005158\/http:\/\/www.patagonia.com\/us\/patagonia.go\">2013 blog post<\/a> that &#8220;making things in a more responsible way is a good start, but in the end we will not have a \u2018sustainable economy&#8217; unless we consume less.&#8221; He also expressed the hope that &#8220;Patagonia can find a way to make decisions about growth based on being here for the next 200 years \u2014 and not damaging the planet further in the process.&#8221;<\/p>\n\n\n\n<h2 id=\"foundation-owned-companies\" class=\"wp-block-heading\">Foundation-owned companies<\/h2>\n\n\n\n<p>A major barrier for sustainable companies is the <a href=\"https:\/\/dx.doi.org\/10.2139\/ssrn.3444050\">assumption of shareholder primacy<\/a> \u2014 that managers must maximize profits on behalf of the company&#8217;s owners. Shareholder primacy is particularly pronounced in publicly listed corporations. This is a <a href=\"https:\/\/www.patagonia.com\/ownership\/\">major reason why Chouinard avoided taking Patagonia public<\/a> and put a purpose trust in charge instead.<\/p>\n\n\n\n<p>A trust or foundation running a for-profit company is <a href=\"https:\/\/www.forbes.com\/sites\/timabansal\/2022\/09\/20\/chouinards-donation-of-patagonia-is-big-and-bold-but-not-new\">not a new idea<\/a>. In Denmark, and other Northern European countries, foundation-owned companies like <a href=\"https:\/\/www.carlsberggroup.com\/who-we-are\/the-carlsberg-family\/the-carlsberg-foundation\/\">Carlsberg<\/a> and <a href=\"https:\/\/www.ikea.com\/ca\/en\/this-is-ikea\/company-information-pubf1695191\">Ikea<\/a> are much more common. Studies show that the performance of foundation-owned companies is often <a href=\"https:\/\/doi.org\/10.1093\/jla\/laaa005\">on par with investor-owned companies<\/a>.<\/p>\n\n\n\n<p>Foundation-owned firms are rare in the U.S. Regulations introduced in 1969 to <a href=\"https:\/\/doi.org\/10.1007\/BF02354015\">reel in the perceived power of foundations<\/a> imposed a <a href=\"https:\/\/www.politico.com\/agenda\/story\/2017\/11\/24\/newmans-own-tax-break-000585\/\">stiff tax on foundations that owned over 20 per cent<\/a> of a for-profit company. But in 2018, the <a href=\"https:\/\/nonprofitquarterly.org\/newmans-philanthropic-exception-now-law-will-consequences\/\">Philanthropic Enterprise Act<\/a> removed these obstacles under specific conditions.<\/p>\n\n\n\n<p>These legal changes set the stage for Patagonia&#8217;s model. Ownership of the company is divided to give the voting stock to the <a href=\"https:\/\/www.forbes.com\/sites\/matthewerskine\/2022\/09\/16\/yvon-chouinard-and-the-patagonia-purpose-trust-what-is-it-and-will-it-work\/\">Patagonia Purpose Trust<\/a>, while the non-voting stock (which receives the company&#8217;s annual profits) goes to the Holdfast Collective. <\/p>\n\n\n\n<h2 id=\"the-perils-of-philanthro-capitalism\" class=\"wp-block-heading\">The perils of philanthro-capitalism<\/h2>\n\n\n\n<p>But this new model comes with potential risks. If it becomes widely adopted, it could be used as much to oppose progressive climate policy as to advance it. Dedicating profits to an organization that can advocate for political causes and candidates may be viewed as a new version of <a href=\"https:\/\/doi.org\/10.1007\/s12115-015-9945-8\">philanthro-capitalism<\/a> where ultra-rich individuals donate money to advance the causes they care about. <\/p>\n\n\n\n<p>The growing influence of <a href=\"https:\/\/www.philanthropy.com\/article\/democracy-endangered-when-philanthro-barons-try-to-tip-courts\/\">philanthro-barons<\/a> and <a href=\"https:\/\/doi.org\/10.1057\/s41309-018-0044-2\">private foundations as interest groups<\/a> in U.S. politics could undermine democratic processes.<\/p>\n\n\n\n<figure class=\"wp-block-image align-center\"><img decoding=\"async\" src=\"https:\/\/images.theconversation.com\/files\/488143\/original\/file-20221004-26-g14tso.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip\" alt=\"A senator points to an infographic with a quote from a Washington Post article about how a conservative activist raised millions of dollars to promote conservative judges and causes\"\/><figcaption class=\"wp-element-caption\">\n              <span class=\"caption\">Sen. Sheldon Whitehouse discusses how nonprofits can influence politics through undisclosed donations during Ketanji Brown Jackson&#8217;s Supreme Court nomination hearing in March 2022. <span class=\"source\">(AP Photo\/Jacquelyn Martin)<\/span><\/span><br>\n            <\/figcaption><\/figure>\n\n\n\n<p>The influence of private money on U.S. politics has only accelerated since the 2010 <a href=\"https:\/\/www.brennancenter.org\/our-work\/research-reports\/citizens-united-explained\">Citizens United Supreme Court decision<\/a> that struck down bans on private funding of election campaigns. It <a href=\"https:\/\/campaignlegal.org\/update\/how-does-citizens-united-decision-still-affect-us-2022\">facilitated billions of dollars of spending by corporations and other outside groups<\/a> in recent U.S. elections. <\/p>\n\n\n\n<p>Companies purely dedicated to advocating for their political cause might further accelerate this arms race on both sides of the political spectrum.<\/p>\n\n\n\n<h2 id=\"a-new-model-for-responsibility\" class=\"wp-block-heading\">A new model for responsibility?<\/h2>\n\n\n\n<p>Can Patagonia&#8217;s model truly solve the tension between profit and the planet? Could it become a new gold standard for business responsibility? This will depend on the balance between its environmental impacts and the social good created via its products and advocacy. <\/p>\n\n\n\n<p>Patagonia&#8217;s next moves will determine the actual impact of Chouinard&#8217;s decision. Will Patagonia experience pressure to grow its profits to further fund the Holdfast Collective? How will the Purpose Trust interpret the company&#8217;s stated purpose of being &#8220;in business to save our home planet?&#8221;<\/p>\n\n\n\n<p><a href=\"https:\/\/www.patagonia.com\/ownership\/\">The company acknowledges the new ownership model<\/a> &#8220;is not an excuse to ignore the real tension we&#8217;ll continue to face between growth and the environmental impact of our operations.&#8221; For now, this recognition and transparency positions it as a clear model that raises the standard for how to think, talk and act about business responsibility.<\/p>\n\n\n\n<p>&#8212;<br>\n<a href=\"https:\/\/newsroom.carleton.ca\/\">Carleton Newsroom<\/a><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/counter.theconversation.com\/content\/191250\/count.gif?distributor=republish-lightbox-basic\" alt=\"The Conversation\"\/><\/figure>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Patagonia&#8217;s founder Yvon Chouinard made headlines recently with the decision to give his family\u2019s $3 billion company, and its future profits, to the fight against climate change. In his words, &#8220;Earth is now the company&#8217;s only shareholder.&#8221;<\/p>\n","protected":false},"author":410,"featured_media":84415,"template":"","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"cu_story_type":[1623],"cu_story_tag":[],"class_list":["post-84413","cu_story","type-cu_story","status-publish","has-post-thumbnail","hentry","cu_story_type-expert-perspectives"],"acf":{"cu_post_thumbnail":false},"_links":{"self":[{"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/cu_story\/84413","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/cu_story"}],"about":[{"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/types\/cu_story"}],"author":[{"embeddable":true,"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/users\/410"}],"version-history":[{"count":3,"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/cu_story\/84413\/revisions"}],"predecessor-version":[{"id":84561,"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/cu_story\/84413\/revisions\/84561"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/media\/84415"}],"wp:attachment":[{"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/media?parent=84413"}],"wp:term":[{"taxonomy":"cu_story_type","embeddable":true,"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/cu_story_type?post=84413"},{"taxonomy":"cu_story_tag","embeddable":true,"href":"https:\/\/carleton.ca\/news\/wp-json\/wp\/v2\/cu_story_tag?post=84413"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}