Founder of Patagonia Yvon Chouinardhis wife and two adult children irrevocably transferred their ownership of the outdoor apparel business to a collection of trusts and nonprofits.
Now, the company’s profits will fund efforts to address climate change as well as protect wild areas. However, it will remain a private enterprise. According to the first reports of this unusual approach to philanthropy which took place on September 15, 2022, Patagonia is worth around 3 billion Singapore dollars, and its profits, which will be donated in perpetuity, could total $100 million every year.
The Conversation US asked Indiana University Ash Enrici – an academic who studies how philanthropy affects the environment – to explain why this arrangement is so important.
Is this movement part of a trend?
The biggest donors, those giving billions of dollars, are increasingly making climate change a priority. Amazon founder Jeff Bezos, for example, announced in 2020 that he was putting $10 billion in its Earth Fundand Laurene Powell Jobsthe widow of Apple co-founder Steve Jobs said in 2021 that she would dedicate $3.5 billion of her fortune to fighting climate change.
Similarly, major donors are increasing their funding for conservation efforts.
In September 2021, the Earth Fund joined eight other philanthropic powerhouses pledge $5 billion to “support the establishment, expansion, management and monitoring of protected and conserved areas of land, inland waters and sea” worldwide. This initiative aims to maintain 30% of the Earth by 2030.
Within days of Chouinard’s announcement, another glowing climate giveaway emerged, setting a similar precedent. Director Adam McKay said he would donate $4 million he shot from the movie don’t look up, which he wrote, co-produced and directed. Proceeds from his satirical film, which was a metaphor for climate inaction, will fund a climate activism group.
Regardless of the frequency of these donations, it is important to keep in mind that the cost of tackling global environmental challenges is huge and will cost billions of dollars. So while all of these donations are certainly significant in their magnitude, donors and governments will need to do and spend much more.
What sets it apart?
What is unusual about Chouinard’s gift on climate change is its structure. By donating his business and directing that profits be spent long-term to fight climate change in regular installments, he is creating a new model for large-scale giving.
It also sets a notable precedent. Chouinard and his family are giving away the source of their wealth and organizing things in a way that will result in a predictable form of support for work on climate issues – around $100 million a year from Patagonia profits.
I think this is a great example for other business owners and very wealthy people to follow.
How are conservation and climate change efforts linked?
Journalists, academics and the public often treat the fight against climate change and the conservation of ecosystems as two separate priorities. But they are rather closely related. Having ecosystems develop in a way that protects biodiversity is a way to slow the pace of climate change.
Climate change itself will harm ecosystems and contribute to biodiversity loss through, for example, rising temperatures in large bodies of water to the point where established marine ecosystems are so disrupted that many species are dying.
And the flip side is that maintaining healthy ecosystems can help counter climate change. For instance, mangroves are often cut down for shrimp farming and other industries. But protect them offer the potential to retain as much or more carbon than tropical rainforests, while saving animals and plants on land and in water.
What do you think this money should fund?
For me, how they – the new ones Patagonia Purpose Trustwho will own and run the business, and the Collective holdfastthe nonprofit—funded by Patagonia profits—will be just as important as what it funds.
Based on research in which I am engaged, I believe they can do more good by thinking about how they work, hopefully in a way that is both fair and efficient. For example, they may consider highly collaborative approaches, incorporate flexibility to adapt circumstances and long-term funding to match ecological timescales. It is also essential that indigenous peoples living in places affected by environmental works have a say and are heard.
Because the Holdfast Collective is a social support group, rather than A charityhe will be free to focus on policy reform — which I believe should be a top priority.
Government and international aid agencies are often too constrained by bureaucracy be able to adapt and adjust their practices in ways that may be necessary to address pressing environmental challenges.
Philanthropists are freer in terms of operation. This means backers like the Patagonia trust can provide seed money to launch new initiatives that later can be more heavily funded and intensified by governments.
Why are many people confused by gifts like this?
During the last years, philanthropy review of all kinds has increased. Some of the criticism is aimed at big donors, like Bezos, whose sources of wealth contributes to problems their gifts are meant to solve.
Concerns about how philanthropy can perpetuate or excuse discrimination and oppression are also increasing, leading to calls for its “decolonization.”
Even passionate environmentalists are expressing serious concern on the potential drawbacks of this new model. They ask if it could be used to fund causes championed by other wealthy donors with radically different agendas.
Whatever worries you may have about what the Chouinard family has decided to do or about other billion-dollar donations that target climate change, one thing is certain: the the cost of doing nothing at all will surely be far higher than acting, however imperfectly.