Control to the Trust, Cash to the Collective: Patagonia’s Ownership Pivot

Whether you’re a seasoned alpinist or a loyal corporate soldier, you are probably familiar with Patagonia.[1] Its Gore-Tex hard shells can be seen at the highest peaks and its vests behind Bloomberg terminals at activist hedge funds.[2] This contrast shows up not only in its customer base, but also in its governance.[3] While Patagonia was always run with an eye toward conservation, already being a certified B Corp and a California benefit corporation, the company went even further with its efforts in 2022.[4] Patagonia founder Yvon Chouinard and his family transferred 100% of Patagonia’s equity, with its voting shares going to the Patagonia Purpose Trust and its non-voting shares going to the Holdfast Collective—a 501(c)(4) nonprofit, social welfare organization.[5] The company now operates with the mission of being “in business to save our home planet.”[6] 

What started as a blacksmith shop forging climbing hardware has now morphed into a $3 billion outdoor behemoth.[7] From its inception, Chouinard wanted to make the company one that did the hard thing to take care of the Earth, even if it came at the expense of profits; he went so far as to cease production of his climbing hardware because they damaged the rock faces.[8] At every step, Patagonia’s actions have reflected what Chouinard believed a responsible business should be doing for the environment, and the Chouinard family’s recent gift of their entire equity stake will ensure the company continues to materially contribute to making that vision a reality.[9]

B Corp vs. Benefit Corporation

Patagonia is both a B Corp and benefit corporation; while there is significant overlap between these titles, there are also a few key differences.[10] The major distinction is that a benefit corporation is a for-profit corporation that elects to become one by amending its charter and filing with an individual state, and its requirements are enforced by statute.[11] On the other hand, a B Corp is a third-party certification earned by for-profit legal entities from the non-profit B Lab, which enforces its requirements.[12] However, both require (1) a stakeholder-governance model that their boards are accountable to uphold, (2) a stated purpose to create a public benefit, and (3) reports on their progress of achieving that benefit.[13] 

Becoming a certified B Corp is more complex than becoming a benefit corporation.[14] First, a company must score at least 80 out of 250 points on the B Impact Assessment, which aims to help companies improve their performance for the environment, communities, customers, and employees. [15] Next, they must make a legal commitment to their stakeholders, meaning if they reside in a state that recognizes benefit corporations, they must become one if they are not already.[16] Additionally, companies are “expected to continuously improve their impact” and must be re-certified every three years by demonstrating they are complying with B Lab’s evolving standards in areas including human rights, fair work, and climate action.[17]

2022 Restructure

Patagonia’s commitment to conducting business with the good of the planet in mind has been a longstanding one; since 1985 it has donated 1% of its sales to the preservation of the natural environment, totaling over $140 million.[18] However, Yvon Chouinard wanted to go further.[19] Patagonia remains a taxpaying, for-profit corporation, but all voting stock is now held by the Patagonia Purpose Trust and its non-voting stock by the nonprofit Holdfast Collective.[20] The Patagonia Purpose Trust elects the board and is mandated to protect the company’s value and mission.[21] The Holdfast Collective, on the other hand, is a 501(c)(4) organization, which allows it to engage in unlimited lobbying efforts related to its defined purpose and some political activity; this type of entity is a perfect fit for Chouinard’s vision to use Patagonia to take radical steps to address the environmental crisis.[22] Each year, after reinvesting in the business, all excess profits—roughly $100 million depending on the success of the business—are paid to the Holdfast Collective as dividends for its work fighting the environmental crisis.[23] Transferring ownership of Patagonia in this manner allowed Chouinard to enshrine his company’s values in a more permanent legal structure while also giving more money to environmental causes without taking the company public.[24]

Altruism or Savvy Tax Planning?

While the 2022 restructuring allowed Chouinard to realize a long-standing goal of giving more money to environmental causes, it also allowed him and his family to avoid an estimated $1 billion in estate and gift taxes he would have incurred by leaving the company to his heirs.[25] The only taxes Chouinard incurred were $17.5 million in gift taxes when transferring his voting shares to the Patagonia Purpose Trust, which is not exempt like the Holdfast Collective.[26] With this arrangement, Chouinard gets the immediate benefit of increased donations to environmental causes, as well as certainty that his wishes will be carried out in perpetuity by the Patagonia Purpose Trust.[27] For someone who built his career and company on protecting the environment, this seems to be the ideal outcome for Chouinard.[28] By aligning Patagonia’s mission with its ownership structure, he set the precedent for how other founders can leverage unique governance structures to meet their long-term goals.[29] 

With its unique governance structure, Patagonia has gone beyond what is required of a benefit corporation and certified B Corp in order to make substantial contributions to environmental causes.[30] By making use of initiatives like B Lab’s B Corp certification to hold itself accountable, Patagonia set the stage for a radical change in governance that not only enshrines its founder’s vision for the future, but may inspire other founders to take similar steps as well.[31]

[1] See David Gelles, The Irony of Corporate America’s Many Patagonia Vests, N.Y. Times (Sep. 13, 2025), https://www.nytimes.com/2025/09/13/business/dealbook/patagonia-founder-finance.html.

[2] See id.

[3] See id.

[4] See Yvon Chouinard, Earth is Now our Only Shareholder, Patagonia (Sep. 14, 2022), https://www.patagonia.com/ownership/.

[5]  See id.

[6] Id.

[7] Company History, Patagonia, https://www.patagonia.com/company-history/ (last visited Sep. 28, 2025).

[8] See id.

[9] See Chouinard, supra note 4.

[10] See Benefit Corporations, B Lab, https://usca.bcorporation.net/benefit-corporation/ (last visited Sep. 14, 2025).

[11] Benefit Corporation vs. B Corp, B Lab (Feb. 20, 2023), https://usca.bcorporation.net/benefit-corporation-vs-b-corp/.

[12] Id.

[13] Id.

[14]  See id.

[15] Id.

[16] Id.

[17] Explore the New B Lab Standards, B Lab, https://www.bcorporation.net/en-us/standards/performance-requirements/ (last visited Oct. 8, 2025).

[18] 1% for the Planet, Patagonia, https://www.patagonia.com/one-percent-for-the-planet.html (last visited Sep. 29, 2025).

[19] See Chouinard, supra note 4.

[20] Id.

[21] See id.; Patagonia, Purpose Group, https://purpose-economy.org/en/companies/patagonia/ (last visited Sep. 30, 2025).

[22] See Chouinard, supra note 4; 501(c)(4) Organizations: Giving with an Edge, Patterson Belknap (Mar. 7, 2024), https://www.pbwt.com/publications/501c4-organizations-giving-with-an-edge#:~:text=A%20501(c)(4)%20organization%20is%20easy%20to%20establish,are%20prohibited%20for%20private%20foundations).

[23] Patagonia’s Next Chapter: Earth Is Now Our Only Shareholder, Patagonia Works (Sep. 14, 2022), https://www.patagoniaworks.com/press/2022/9/14/patagonias-next-chapter-earth-is-now-our-only-shareholder.

[24] See id.

[25] See Andrew Ross Sorkin et al., Philanthropy, the Billionaires’ Way, N.Y. Times (Sep. 16, 2022), https://www.nytimes.com/2022/09/16/business/dealbook/philanthropy-patagonia-billionaires-way-taxes.html.

[26] Id.

[27] See Chouinard, supra note 4.

[28] See Alexandra Tremayne-Pengelly, Patagonia Nonprofit Head Explains Why Its Owner Yvon Chouinard Gave Away the Company, Observer (Mar. 13, 2025), https://observer.com/2025/03/patagonia-nonprofit-head-explain-purpose-trust/.

[29] See Sorkin, supra note 25.

[30] See B Lab, Patagonia, https://www.patagonia.com/b-lab.html (last visited Oct. 2, 2025).

[31] See David Gelles, Billionaire No More: Patagonia Founder Gives Away the Company, N.Y. Times (Sep. 21, 2022), https://www.nytimes.com/2022/09/14/climate/patagonia-climate-philanthropy-chouinard.html.