OPINION: Making Earth your shareholder – why Patagonia’s decision gives businesses a big opportunity

Wednesday 05 October 2022

While the country was distracted during the national period of mourning last month, a landmark deal took place, with the founders of Patagonia turning the business over to a charitable trust to pursue environmental goals.

Marc Lainé, Managing Director of ESI Monitor, which offers corporate sustainability solutions, shares his thoughts on what it might mean for businesses.

"Instead of “going public,” you could say we’re “going purpose.”

Patagonia, the well-known outdoor clothing and equipment brand, has been turned over to a charitable organisation with the express purpose to fight the environmental crisis, protect nature and biodiversity, and support thriving communities, as quickly as possible. Yvon Chouinard, the company’s founder, explained that the decision was borne out of the desire to see Patagonia continue to do good, even after he had taken a step back into retirement.

Handing over a huge and successful business like Patagonia is not straightforward, but of course with success comes the resource to achieve results like this. Many organisations and businesses will be looking at this news and thinking, ‘should I be doing the same?’.

Committing to being a better business means engaging with Environmental, Social, and Governance or ESG. Making a bold move like Patagonia cannot be done overnight, it as baked into the DNA of a business. Which means if you can see something like this in your future, the best time to start working on it is now.

So, what can businesses do? Most businesses will fall into two camps – those with the capability to transform themselves into a ‘purpose’ business, and those that are needed to support that process.

To prepare your business for a purpose-led transformation there are a few critical things to remember:

• 1. Have clear goals – Patagonia’s new goals reflect their values and they have planned for every eventuality
• 2. Measure and review your current position and assess where you need to reach to make this goal realistic – our FutureTrack tool can help articulate your current environmental performance and what needs to change before you could be considered a ‘purpose-first’ organisation
• 3. Look for trusted partners – one of the reasons Patagonia has gone down the ‘not-for-profit’ route is to ensure that its interests are met in the future. Accreditations, governance and oversight should be essential for any move such as this

Interestingly for many of clients in the financial services world, there is an important role to play in the structuring and management organisations such as this. Trusts and similar structures have long been used to set parameters for the future use of wealth and, perhaps unsurprisingly considering the critical situation the world is in, more and more Trust structures are established with environmental concerns at the forefront of their responsibilities. Trustees and the like are therefore well-placed to provide proper governance and decision making for purpose-driven businesses – provided they report openly about their climate impact and their aspirations towards Net Zero. All organisations should be measuring (and reducing) their climate impact, and to provide services in

the purpose space this is even more essential. Prospective clients will be making decisions based on this.

Above all, the decision by Yvon Chouinard, and the rest of the Patagonia board, shows us what is possible when a successful international business decides to do something about the climate emergency. It gives us all something to aspire to and helps us all think more clearly about what we want our role in this transition to be."