No commercial, no billboards, no campaign — when Patagonia founder Yvon Chouinard announced this week he would be donating all company shares to charitable causes, he wrote a letter. The humble display follows suit to the founder’s anti-consumerism mindset, but further, it serves as a reminder to marketers that values shouldn’t rest at the surface.
“Yet again Patagonia and the family who own it have demonstrated their selflessness and commitment to combating climate change,” said Jack Bedwani, founder and CEO of agency New Moon in an email. “This time in the most powerful and irrevocable way.”
On Sept. 14, Patagonia announced the restructuring of the business, allowing Chouinard to redisperse company shares. Ninety-eight percent of the company’s non-voting stock will be transferred to environmental nonprofit Holdfast Collective. The remaining 2% is voting stock and will be used to fund the Patagonia Purpose Trust that will work to develop a legal structure that helps encapsulate the brand's values. Every dollar not reinvested into Patagonia will be used to protect the planet.
This structure also allows Patagonia to avoid a $700 million tax bill, Bloomberg reports.
Patagonia’s moves in recent years around sustainability have been big, and its latest push is no different. The company projects it will pay out an annual dividend of about $100 million a year, per the release. Despite Chouinard describing himself as the business leader he never wanted to be, his announcement has strong odds of bolstering brand loyalty among key audiences.
Sustainability has long been a focus of Patagonia, a priority increasingly shared with consumers. This year, 94% of consumers report that they want to live a sustainable lifestyle, according to Kantar’s 2022 Sustainability Sector Index. Further, 49% report they believe buying sustainable products is a demonstration of who they are and 57% say a clear explanation of how a brand is bettering the environment would drive them to buy.
"U.S. consumers [want] businesses to prioritize combatting socially charged sustainability issues, there are pockets of consumer groups that show greater interest in addressing environmental issues — namely Xers, primary and higher educated (college and university-level) consumers, urban dwellers, and the financially comfortable — all of whom align well with Patagonia’s core target audience,” Carlyn Kelly, senior director, Futures Practice at Kantar wrote via email.
Patagonia’s efforts may also shine a light on what the future of sustainable business could look like, though it’s likely unrealistic for consumers to expect to see other brands follow suit to the brand’s latest move. Even in two to three decades, the decision will likely be viewed as the exception, not the rule, New Moon's Bedwani said.
“The fact is Patagonia has raised the bar so incredibly high, it's going to be difficult for other brands to get close,” he said. “At this point in time, any and all efforts to promote sustainability and push forward progress in the climate change agenda is good.”
Patagonia for years has made its intentions around the topic clear. In a 2011 Black Friday edition of the New York Times, the retailer ran a full page ad that read “Don't buy this jacket" in a push to fight consumerism. The ad detailed how, despite the jacket being made primarily with sustainable materials, it would leave behind two-thirds its weight in waste. In 2015, the brand launched its “Worn Wear Wagon,” a mobile garment repair shop that promoted keeping clothing versus ditching it for something new. In a more direct effort, it sued the Trump administration after it moved to dramatically reduce the size of two national monuments in Utah.
Marketers taking on smaller sustainability efforts than Patagonia couldn’t hurt as they appeal to consumer sentiments, though such efforts would be unsuccessful without coming from a place of authenticity, said Ken Beaulieu, senior vice president of the ANA Center for Brand Purpose in an email. As sustainability has risen as a priority, many brands have used it as a marketing tool but failed to take any sort of true action, known to critics as “greenwashing.”
“It’s a case of all talk and no action, and that has led to charges of purpose washing. Brands need to understand that if they want to play in the sustainability space,” said Beaulieu. “If they want to have the sway of a Patagonia, they must consistently and authentically demonstrate their reason for being beyond turning a profit.
Patagonia’s shakeup could also run the potential for companies to be held accountable for making false promises to shoppers as they chase profits, and in many ways, the spotlight could also remain on the brand as some await to see if they will use a move praised for its modesty in more profit-driven ways.
“What I’ll be keenly observing over the following months is how and if Patagonia will choose to speak about this decision in their marketing and communications,” Bedwani said. “I see a risk that marketing campaigns connected to this decision could land as overly preachy or self congratulatory.”
“Patagonia to date wouldn’t ‘brag’ about the good they are doing. However we (the general public) have notoriously short memories,” he added. “I’m curious to see how the brand threads the needle.”