The billionaire founder of outdoor clothing company Patagonia has donated his company to a charitable trust.
Yvon Chouinard stated that any profits not reinvested in the business would be used to combat climate change.
The label has a cult following as a result of sustainability initiatives such as guaranteeing its clothes for life and offering reasonably priced repairs.
It is famous for an advertisement titled “Don’t buy this jacket,” which asks shoppers to consider the environmental costs.
According to the brand’s website, “Earth is now our sole shareholder.”
Mr. Chouinard has always stated that he “never aspired to be a businessman.”
He began by making metal climbing spikes for himself and his friends to wedge into rocks before moving on to clothing and eventually creating a hugely successful sportswear brand with a cult following.
Patagonia, which was founded in 1973, had sales of around $1.5 billion this year, while Mr Chouinard’s net worth is estimated to be $1.2 billion.
But he has always downplayed his wealth, telling the New York Times that he is “horrified to be seen as a billionaire.”
He claimed that profits to be donated to climate causes will total around $100 million (£87 million) per year, depending on the company’s health.
“Despite its vastness, the Earth’s resources are finite, and it’s clear that we’ve reached their limits,” the entrepreneur said of his decision to relinquish ownership.
“Rather than extracting value from nature and converting it into wealth, we are using the wealth created by Patagonia to protect the source.”
The firm’s marketing campaigns, which have centred on asking people to buy only what they need, have not dampened sales, and critics argue that increasing its visibility has encouraged more spending rather than less.
The California-based company was already donating 1% of its annual sales to grassroots activists and was committed to environmentally friendly practices. However, in an open letter to customers, the apparently hesitant businessman stated his desire to do more.
He stated that he had considered selling Patagonia, donating the proceeds to charity, and taking the company public.
However, he stated that both options would have meant relinquishing control of the company. “Even good-intentioned public companies are under too much pressure to generate short-term gain at the expense of long-term vitality and responsibility,” he said.
Instead, the Chouinard family has transferred complete ownership to two new companies. The family-led Patagonia Purpose Trust will continue to be the company’s controlling shareholder but will own only 2% of its total stock, according to Mr Chouinard.
It will direct the philanthropy of the Holdfast Collective, a US charity “dedicated to fighting the environmental crisis” that now owns all of the non-voting stock – or approximately 98% of the company.
“Every year, after reinvesting in the business, the money we make will be distributed as a dividend to help fight the crisis,” Mr Chouinard said.