Patagonia asks all business leaders to look at themselves in the mirror

B Lab’s Co-Founders on the revolutionary step taken by the longtime B Corp to ensure all future profits are invested in fighting climate change and protecting undeveloped land.
By Andrew Kassoy, Bart Houlahan, and Jay Coen Gilbert, B Lab Co-Founders
September 21, 2022

Yvon and Malinda Chouinard gave away their company, Patagonia, to save our home planet, effectively asking every founder and business leader to look in the mirror and ask: What will be my legacy?

This is the animating question that has inspired the B Corp movement since its beginnings. The original inspiration for the B Corp movement was a brand called Newman’s Own that gives 100% of its profits to charity. Thanks to the wisdom of other early responsible business leaders, the B Corp idea evolved to be not just about charitable giving, but about transforming the economic system through rigorous standards for overall social and environmental performance, public transparency, and legal accountability to balance profit and purpose. 

True to its origin story, the first Certified B Corporation was a company called Untours that gave away 100% of its profits to charity — led by another iconic couple, Hal and Norma Taussig. Hal and Norma were motivated not by the need to address climate change, but to eradicate poverty. Hal famously said, “If capitalism is good, it should be good for the poor.” 

If we look closely, both the Chouinards and the Taussigs were motivated by the same purpose: to save our home planet. If climate change is an external threat to our survival, poverty and inequality are an internal threat to our humanity. 

Over the last 17 years, B Corp has become the go-to standard for better business. Today, there are more than 5,700 Certified B Corporations in 85 countries, and more than 200,000 additional businesses have used the B Corp standards to chart their own path to more positive impact. Certified B Corporations demonstrate that an evolution from a shareholder economy to a stakeholder economy can be credible and scalable. 

Certified B Corporations are legally required to consider the impact of their decisions not just on their shareholders but also on their other stakeholders — their workers, their customers, their suppliers, their communities, and the environment (thus, their children’s children). They are required to meet a minimum standard of performance for overall positive stakeholder impact.  

For true leaders, however, achieving B Corp Certification has always been a starting point, not the end game. The ethos of the B Corp movement is continuous improvement. Every B Corp strives to increase its positive impact year over year as they grow their business and seek recertification. 

Consistent with their history, Patagonia has stretched our imaginations for what is possible. Patagonia was an early leader in transitioning to organic cotton, in making transparent its full environmental footprint, in creating closed loop systems that extend product lifetimes, in supporting grassroots activists, in corporate activism, in regenerative agriculture, in building platforms for collective action, in adopting the new benefit corporation stakeholder governance structure, and now in saying Enough and creating a true legacy business. 

Consistent with the history of the B Corp movement, Patagonia recognizes that despite the awe-inspiring act of generosity in forever giving away 100% of its hundreds of millions of dollars of profits, it must also generate those profits responsibly. Even with a Perpetual Purpose Trust to safeguard its mission to save our home planet, Patagonia retains its benefit corporation stakeholder governance structure to ensure that all its business decisions take into consideration stakeholder impact. Even after ensuring that 100% of its profits will be used to save our home planet, Patagonia retains its commitment to maintain its B Corp Certification, holding itself accountable to high standards in responsible business practices that go far beyond charitable giving. Yet, even after achieving Certified B Corporation status and becoming the first company in California to adopt the benefit corporation stakeholder governance structure, Patagonia asked itself a question every business leader should be asking: what can I do to be of most service right now?

In transferring 98% of its ownership to a 501(c)4 nonprofit, Patagonia’s answer is clear. To save our home planet, Patagonia must not only support environmental organizations with philanthropy, but also get involved in public policy. Patagonia must use its profits to support candidates and policies that address the existential threat of climate change and environmental breakdown. That doesn’t mean Patagonia is partisan; it means Patagonia is political because public policy is essential to save our home planet. That is true whether we’re using our voice and power to ensure our children’s children have clean air, safe water, and wild spaces; great education, meaningful work, and equitable workplaces; or strong and welcoming communities and the freedom to vote so they can help solve our current and future challenges. 

B Lab, the nonprofit behind the B Corp movement, has come to the same conclusion. Having individual companies strive toward ever-greater positive impact through their responsible business practices is necessary, but it is insufficient to achieve our shared vision of an inclusive, equitable, and regenerative economy. In addition to accelerated behavior change, we need system change. We need to reimagine and redesign our economic system so that its purpose is to create shared wellbeing on a healthy planet. To do so requires that we adopt public policies that ensure all businesses and all investors consider the impact of their decisions on all stakeholders, and are incentivized to minimize negative externalities and maximize positive stakeholder impact.

Yvon and Malinda Chouinard have challenged every business leader worthy of the name to ask themselves: What will be my legacy? How much is enough? How can I make a bigger impact right now? 

Andrew Kassoy, Bart Houlahan, and Jay Coen Gilbert are the Co-Founders of B Lab.

B Lab Co-Founders, Patagonia

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