Patagonia`s New Ownership Structure: Raising Standards in Environmental Responsibility?
| Case Code: CSRS020 Case Length: 12 Pages Period: 2021-2023 Pub Date: 2025 Teaching Note: Available |
Price: Rs.400 Organization: Patagonia Industry: Textiles & Apparel Countries: United Kingdom Themes: Corporate Responsibility, Sustainability,Business Ethics,Socially-responsible ,Business Practices |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Commitment to Sustainability
Patagonia had implemented sustainable and ethical business practices since its inception. Sustainability was at core of the company’s business model. Chouinard prioritized the environment over profits as he believed that businesses had a responsibility to protect the planet. The company’s mission was, “Build the best product, cause no unnecessary harm, use business to inspire, and implement solutions to the environmental crisis.” Patagonia created shared value by prioritizing sustainability .
Patagonia’s New Ownership Structure
In 2017, Forbes magazine included Chouinard to its list of the world’s richest people. For Chouinard who abhorred excessive wealth, it was a sign that he had been unsuccessful in his life’s mission to make the world a better and fairer place. “I was in Forbes magazine listed as a billionaire, which really, really pissed me off,” he said. “I don’t have $1bn in the bank. I don’t drive Lexuses.” The Forbes article, followed by the COVID-19 pandemic, partly set him on a journey to find a way of giving away Patagonia..
Dodging taxes or saving the planet?
According to some experts, Patagonia’s new corporate structure would help the founding family of Patagonia save over US$1 billion in taxes. The Chouinards had paid US$17.5 million in gift taxes for transferring their 2% voting stock to the Patagonia Purpose Trust while they did not pay any taxes on the other 98% of Patagonia shares they donated to the Holdfast Collective, as it was tax-exempt under the US tax law due to its status as a 501(c)(4). Also, the Chouinards did not pay an estimated US$700 million in..
Challenges Ahead
Under the new ownership structure, profits not reinvested back into the business would be distributed by Patagonia as a dividend to the Holdfast Collective to help fight the climate crisis. Patagonia projected that it would pay out an annual dividend of roughly US$100 million to the Holdfast Collective, depending on the health of the business. However, the company did not disclose how exactly the Holdfast..
Exhibits
Exhibit I: Estimated Global Revenue of Patagonia
Exhibit II: Patagonia Apparel Material Sources
Exhibit III: Patagonia’s B Corp Scores
Exhibit IV: Core Values of Patagonia
Exhibit V: Patagonia’s New Ownership Structure
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