23 September, 2022
It’s been great to see the bold decision of Patagonia’s owner to give ownership of the business away to support nature get so much attention.
And for good reason.
While there are already many ways profits get channelled towards positive change (Pledge 1% is one example), Yves Chouinard’s decision takes things many steps further. It’s a change to the very ownership structure of the business, putting it in the hands of a Foundation, and that’s what makes it interesting.
How the ownership of a business is structured strikes to the heart of the way it operates and which voices are at the decision-making table. So it’s a great way to bring stakeholder capitalism into reality. There are some existing models which make this happen – employee-owned businesses like John Lewis are one example, as are other mutual and co-operative models. And there are Foundation owned businesses like Novo Nordisk and, now, Patagonia.
But the truth is that these examples are rather thin on the ground. And that’s in large part because once shareholding is set, there are big financial challenges in transferring ownership.
We’d love to see this shaken up. The world needs more Patagonias, and making it easier for organisations to evolve towards new structural arrangements that embed different decision making priorities could therefore help drive real change.
The Entrepreneurial Giving Pledge is a great starting point for new businesses: it provides a legal framework for businesses to donate a proportion of proceeds to charity right from the beginning of their journey. And while it’s harder for established businesses, as Patagonia shows, it’s possible, and impactful.
By Patrick Bapty