Patagonia founder Yvon Chouinard. Photo: Campbell Brewer

Patagonia founder Yvon Chouinard, the climber turned reluctant businessman, has given his company to a trust and a collective that will use profits for projects to tackle the climate emergency.

The outdoor clothing and equipment company said: “Earth is now our only shareholder.”

Patagonia, long noted for its ethical stance on business, said it expects about $100m (£87.2m) to be available annually.

The Chouinard family has split ownership of the global outdoors company between the Patagonia Purpose Trust, which holds all the voting shares – two per cent of the total – and the Holdfast Collective, owning the remaining 98 per cent.

Patagonia said: “Every dollar that is not reinvested back into Patagonia will be distributed as dividends to protect the planet.”

Chouinard, the company’s founder, former owner and current board member said: “It’s been a half-century since we began our experiment in responsible business.

“If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have. As the business leader I never wanted to be, I am doing my part.

“Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source. We’re making Earth our only shareholder. I am dead serious about saving this planet.”

The Ventura, California-based firm said the Patagonia Purpose Trust now owns all the voting stock of the company and exists to create a more permanent legal structure to enshrine Patagonia’s purpose and values.

“It will help ensure that there is never deviation from the intent of the founder and to facilitate what the company continues to do best: demonstrate as a for-profit business that capitalism can work for the planet,” it said.

Chief executive Ryan Gellert. Photo: Bob Smith/grough

Ryan Gellert will continue in his post as chief executive and the Chouinard family will remain on Patagonia’s board, along with its chair Charles Conn, Kris Tompkins, Dan Emmett, Dr Ayana Elizabeth Johnson, and Mr Gellert.

The company said the Chouinard family will also guide its controlling shareholder, the Patagonia Purpose Trust, electing and overseeing Patagonia’s board of directors. They will also guide the philanthropic work performed by the Holdfast Collective. “Acting together, Patagonia’s board and the Patagonia Purpose Trust will work for the company’s continued success over the long term while ensuring it stays true to its purpose and values” it said.

Ryan Gellert said: “Two years ago, the Chouinard family challenged a few of us to develop a new structure with two central goals. They wanted us to both protect the purpose of the business and immediately and perpetually release more funding to fight the environmental crisis.

“We believe this new structure delivers on both and we hope it will inspire a new way of doing business that puts people and planet first.”

The company announced the news first with its employees in a global ‘town hall’ event on Wednesday. It said it will remain a B Corp organisation and continue to give one per cent of sales each year to grassroots activists.

Chair of the board Charles Conn said: “The current system of capitalism has made its gains at an enormous cost, including increasing inequality and widescale uncompensated environmental damage.

“The world is literally on fire.

“Companies that create the next model of capitalism through deep commitment to purpose will attract more investment, better employees, and deeper customer loyalty. They are the future of business if we want to build a better world, and that future starts with what Yvon is doing now.”

In a public statement, Yvon Chouinard said: “I never wanted to be a businessman. I started as a craftsman, making climbing gear for my friends and myself, then got into apparel.

“As we began to witness 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 was done.

“If we could do the right thing while making enough to pay the bills, we could influence customers and other businesses, and maybe change the system along the way.

Yvon Chouinard started the company to manufacture climbing gear. Photo: Tom Frost/Aurora Photos

“We started with our products, using materials that caused less harm to the environment. We gave away 1 per cent of sales each year. We became a certified B Corp and a California benefit corporation, writing our values into our corporate charter so they would be preserved. More recently, in 2018, we changed the company’s purpose to: we’re in business to save our home planet.

“While we’re doing our best to address the environmental crisis, it’s not enough. We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact.

“Truth be told, there were no good options available. So, we created our own.”

He said he had considered the option of selling Patagonia and donate all the money. “But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed.

“Another path was to take the company public. What a disaster that would have been. Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility.”

Board member Kristine McDivitt Tompkins said: “I first met Yvon when he was around 24 and today, he is almost 84. In all those years, his vision has never wavered. He wanted to do things his own way and on his own terms.

“And while he is in good health now, he wanted to have a plan in place for the future of the company and the future of the planet. I believe this plan that he and his family helped create is tectonic.

“It will make the company more competitive and its employees around the world will forever be empowered by purpose.”

• Read grough’s 2018 interview with Patagonia’s Ryan Gellert.