Yvon Chouinard, activist, outdoorsman, and, most notably, founder of the Patagonia clothing brand, announced yesterday that he would be donating his company to a newly-created charitable trust.
The ‘reluctant billionaire’ has said that the roughly US$100 million in profit that the company makes each year will now go to the trust, with the money being dedicated to “fighting the environmental crisis and defending nature”.
It’s not out of character for a company that famously ran an ad for a jacket with the slogan ‘don’t buy this jacket’. Patagonia, as it states, has always been in the business of using its commercial power to benefit the planet.
It’s a tricky one to navigate, as the production of goods, including the transportation, packaging, and sale of them, is necessarily wasteful and extractive under a capitalist framework. However, Patagonia, as a brand valued at US$4.5 billion, has long expressed discomfort with this.
Chouinard, in an op-ed on the Patagonia website explaining his decision, writes that “Earth is our only shareholder.”
“If we have any hope of a thriving planet—much less a business—it is going to take all of us doing what we can with the resources we have. This is what we can do,” he wrote.
The move puts Patagonia squarely in the frame of so-called ‘ethical capitalism’, a philosophy whereby the market-driving powers of capitalism are harnessed to direct profit into ethical causes. It also encompasses workers’ rights, the methods of production, and the social impact that a company has.
Ethical capitalism has long been considered by proponents as the ideology that will ‘save’ the planet, although there are many critics of the approach.
Unrestrained capitalism, motivated solely by the desire for financial gain at the expense of all else, has clearly failed humanity and the planet, so the argument goes, and is pushing Earth further down the path of ecological collapse.
Ethical capitalism, with its motives, derived from saving, rather than exploiting, the planet, is a halfway point between the total overthrow of the capitalist system and the current ‘business as usual’ approach adopted by many.
Whether or not this approach has all of the answers to all of the world’s problems is probably beside the point: the current system clearly isn’t working and trying something new would at least limit the impact of what we’re doing to the planet and each other.
Since 1987, Patagonia has given away 1% of its profits to ethical causes and Chouinard was instrumental in the founding of the 1% For The Planet organisation that currently has 3,419 businesses signed up.
Chouinard describes this not as philanthropy but as “a cost of doing business.”
“It’s paying rent for our use of the planet,” he has said.
Their approach is similar to that of the B Corp programme which certifies that companies are acting in ways that limit their impact on the environment and have a positive social impact. Patagonia became a B Corp in 2011.
While it’s certainly a step in the right direction, critics argue that simply smearing the amoral practices of capitalism with the label “ethical” does little to solve the inherent exploitation involved in doing business. It begs the question ‘whos ethics?’ and leaves the solving of the world’s problems to companies that necessarily have to make money in order to survive
Dr Rowan Williams, former Archbishop of Canterbury, has said that capitalism “is not an ethical system.”
“It can plausibly be said to have ethical by-products in certain circumstances, but so long as they are by-products, we have a problem about the basic motivation which can keep going not only the system of capitalist exchange but the institutions of public good in a society.”
That businesses have a significant impact on the world, possibly more so than governments, is obvious. It’s the failure of the world’s governments to design and enforce strict environmental and social regulations that allow businesses to exploit people and the planet.
Patagonia isn’t alone in it’s approach, either. Aside from the B Corps and the 1% For The Planet organisations, other individuals and businesses are stepping up to do their part. Bill Gates, once the wealthiest man alive, announced this year that he plans to “drop off” the world’s rich list by giving all of his money away. He made a US$20 billion donation to his philanthropic fund, although similar promises he’s made before haven’t materialised.
Hut Group CEO Matt Moulding, owner of a number of online beauty and nutrition brands, donated US$114 billion to a charitable foundation after becoming a billionaire last year. He said at the time that he “couldn’t even comprehend the numbers” and wanted to make a difference. He also sacrifices some 97% of his salary and bonuses for charitable organisations.
But not all billionaires are so charitable. Last year, Elon Musk was challenged on Twitter to “solve world hunger” as the richest man on the planet. He got into a debate with the UN’s World Food Programme Director, demanding a costed plan for how his wealth could be used to end hunger before quietly dipping out of that debate.
Ethical capitalism, in this regard, wouldn’t solve the issues created by Musk in the pursuit of his business practices, but it may create “ethical byproducts” that, in some sense, would at least provide a counterweight to the harm he is doing to the planet.
Patagonia stated that “there were no good options available. So, we created our own”. In a choice between going public and selling the company to donate the profits, they undertook a third “new” option, the creation of a trust in which profts would go to help the world. It’s an admirable example of how businesses can be proactively involved in the fight to save the planet that we’re all necessarily engaged in as part of the global capitalist system, but it’s also a choice freely made by the company.
All companies, if they chose, could do the same. Leaving the solution of the world’s problems to businesses that have no ethical or moral obligations to do so isn’t really a viable option. But it’s better than nothing. If all businesses acted the same, there’s no doubt that the world would be in a much greater position than it is today.