How this ‘dirtbag’ billionaire chose to do capitalism differently

From an Australian perspective, there are lessons to learn given growing environmental and climate concerns, while both corporate giving and corporate distrust have surged in the past decade.

The wild early years

Chouinard prefers the “dirtbag” label to that of businessman or billionaire. It’s a reference from his 1960s lifestyle, a term for someone who sleeps rough, roams widely and disdains material possessions.

As a young climber chasing adventures with friends on rock faces, rivers and waves, Chouinard lived frugally. He ate cat food, squirrels and porcupines.

In these years, inventive Chouinard revolutionised climbing. Using a junkyard forge, he hand-crafted innovative, reusable, softer metal spikes to drive into rock faces. At first selling from his car boot, he built up a US and international customer base.

But, faithful to his environmental values, Chouinard then risked the company by ditching his original top-selling metal spike that damaged rock faces for one that did less harm to the cliff face.

Along the way he employed many fellow climbing, surfing and kayaking enthusiasts, prioritising employee wellbeing and engagement in the business. This was decades before employees were seen as a stakeholder, or internal culture was considered important in a business.

A clash of values

However, with the success of his Patagonia clothing business formed in 1973, Chouinard the conservationist had entered a highly capitalistic sector. The retail market was based on trend-driven overconsumption and exploitative labour and environmental practices.

His quest to do capitalism differently is instructive. Despite higher costs, Chouinard moved the company into organic cotton use and encouraged regenerative topsoil practices. The principled actions built customer trust and loyalty. His approach also inspired others who saw decisions that put environmental considerations above profit were good business all round.

As Patagonia grew into a billion-dollar company, he maintained a policy of donating 1% of sales (not just profit) to the environment, no matter how tight the times.

Chouinard co-established 1% for the Planet in 2001 as an accrediting body to encourage companies worldwide to donate 1% of their sales to environmental organisations. Since founding, over 11,000 companies in 110 countries have donated a total of US$823 million (A$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 keep wilderness reserves safe from oil and gas exploration and land development.

One of the first B Corps

In another leadership move, Patagonia in 2012 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, live up to independent performance standards and consider worker, society and environmental interests.

Then, aged 83 in 2022, Chouinard established a pioneering succession trust structure and nonprofit collective for the business. This would see Patagonia continue as an independent, environment-led activist company rather than be floated or sold and have its values and foundations diluted.

This organisational restructure supercharged Chouinard’s philanthropy.

The family retains a voice, while giving away 100% of their estimated US$3 billion and all of Patagonia’s future profits that are not reinvested in the business. (US$100 million in 2022).

Even the legendary industrialist and philanthropist Andrew Carnegie only gave away 90% of his fortune.