How this ‘dirtbag’ billionaire chose to do capitalism differently
Few people worldwide have influenced business, sports, the environment and philanthropy as much as Patagonia founder Yvon Chouinard.
Chouinard’s inventive approach to these areas makes The New York Times journalist David Gelles’ recent biography Dirtbag Billionaire an intriguing read.
Review: Dirtbag Billionaire: How Yvon Chouinard Built Patagonia, Made a Fortune, and Gave It All Away – David Gelles (Text Publishing)
The anti-authoritarian entrepreneur started making basic rock climbing equipment. He went on to build a business reputation based on ethical trading and eventually gave his company away, pledging all profits to fight the climate crisis.
From an Australian perspective, there are lessons to be learned given growing environmental and climate concerns as both corporate donations and corporate distrust have increased dramatically over the past decade.
The wild early years
Chouinard prefers the “dirtbag” label to that of businessman or billionaire. It’s a reference to his 1960s lifestyle, a term for someone who sleeps poorly, moves around a lot and disdains material possessions.
As a young climber chasing adventures with friends on cliff faces, rivers and waves, Chouinard lived frugally. He ate cat food, squirrels and porcupines.
During these years, the inventive Chouinard revolutionized climbing. Using a junkyard forge, he hand-crafted innovative, reusable, softer metal nails for driving into rock walls. Initially selling out of his trunk, he built an American and international customer base.
But true to his environmental values, Chouinard then risked the company by ditching his original, best-selling metal spike, which damaged the rock walls, for a pin that caused less damage to the rock wall.
Ilya S. Savenok/Getty Images
Along the way, he employed many fellow climbing, surfing and kayaking enthusiasts, prioritizing employee well-being and commitment to the company. This took decades before employees were seen as stakeholders, or internal culture was considered important in a company.
A clash of values
However, with the success of his clothing company in Patagonia, founded in 1973, conservationist Chouinard had entered a highly capitalist sector. The retail market was based on trend-driven overconsumption and exploitative labor and environmental practices.
His quest to approach capitalism differently is instructive.
Despite higher costs, Chouinard transitioned the company to using organic cotton and encouraged regenerative practices in the topsoil. The principled actions built customer trust and loyalty.
His approach also inspired others who saw that decisions that put environmental concerns ahead of profit were a good thing in every respect.
As Patagonia grew into a multi-billion dollar company, he maintained a policy of donating 1% of sales (not just profits) to the environment, no matter how tight times were.
Chouinard founded 1% for the Planet in 2001 as an accreditation body to encourage companies around the world to donate 1% of their sales to environmental organizations. Since its inception, more than 11,000 companies in 110 countries have donated a total of US$823 million ($1.2 billion).
Chouinard also actively called out corporate greenwashing, and Patagonia was a corporate activist on multiple issues. This included suing US President Donald Trump in 2017 to protect natural areas from oil and gas exploration and land development.
Yente van Eynde/Unsplash
One of the first B corps
In another leadership move, in 2012 Patagonia became the first California company to become a certified Benefit Corporation, better known as a B Corp.
This is a legally binding, transparently measured commitment to act sustainably, meet independent performance standards and take into account the interests of employees, society and the environment.
Then, in 2022, at the age of 83, Chouinard created a groundbreaking succession trust structure and a nonprofit collective for the company. This would allow Patagonia to continue as an independent, environmentally led activist company, rather than being marketed or sold and its values and foundations diluted.
This organizational restructuring boosted Chouinard’s philanthropy.
The family retains a vote while giving away 100% of their estimated $3 billion and all of Patagonia’s future profits that are not reinvested in the company. ($100 million in 2022).
Even legendary industrialist and philanthropist Andrew Carnegie gave away only 90% of his fortune.
Lessons for future philanthropists
My previous research records the top five motivations for Australian philanthropists as:
- make a difference
- giving back to the community
- personal satisfaction
- align with moral or philosophical beliefs, and
- set an example.
Chouinard’s philanthropy touches on all these aspects.
American philanthropy researcher Paul Schervish uses the term ‘hyperagency’ to represent the character and capacity that some individuals have to achieve the outcomes they deem important for society.
Schervish suggests that such changemakers build their own worlds rather than staying within the constraints of traditional approaches.
Chouinard built his own version of capitalism. He continues to argue that Earth is the only resource base for business, and therefore the most important business stakeholder. Without this there are no customers, shareholders, employees or companies.
Patagonia’s core mission became: “We are in business to save our home planet.” The company established Earth as a major shareholder.
A message in Dirtbag Billionaire for small and large givers, individual and corporate, is that authentic giving is about values.
Such authentic giving across the lifespan, using money, time, voice, networks, workplaces and ethical principles, is rarely better reflected than in the life of Yvon Chouinard.
