Is Patagonia’s “Effective Altruism” For Climate Crisis The End Game Of Business Models?

Well, hey, if a company wants to give away all it’s profits, feel free. What could possibly go wrong?

Is Patagonia the end game for profits in a world of climate change?

Many brands are aligning profits with purpose, but Patagonia’s decision in September to convert its for-profit business to one under which all the profits flow through to fighting climate change is the most complex move yet by a U.S.-based company in the realm of sustainable capitalism. Is it a model for other companies to pursue in the future?

For the family founded firm, it’s in some ways a natural evolution. Patagonia has long been on the vanguard of responsible business practices. As far back as 1985, Patagonia deployed portions of its profits to the environment, via an “Earth tax.”

It’s far from the only well-known U.S. brand to be structured in a way that allows profits to be donated to charitable causes. Newman’s Own, the food brand founded by Hollywood icon Paul Newman, is perhaps the most familiar. Since 1982, Newman’s Own has given 100% of profits to charity, now totaling half a billion dollars in contributions. But that business, with a pure non-profit structure, was more of a “first generation” model for sustainable business, says Tensie Whelan, founding director of the NYU Stern Center for Sustainable Business. “The Patagonia model is a little more sophisticated.”

Yet while Patagonia made headlines in the U.S. for being a novel marriage of capitalism and charity, similar corporate structures are already in use with several large family-controlled European companies, from Carlsberg to Ikea and Novo Nordisk. “Nothing new in this model,” said Morten Bennedsen, professor of family enterprise at INSEAD and the academic director of the Wendel International Centre for Family Enterprise.

It’s all well and good until the sh*t hits the fan and they have no backend money to cover it. And lots of these “effective altruism” companies have a lot of issues with controlling where that money goes. Consider crypotcurrency company FTX, though, admittedly, that is an extreme case.

There are less extreme options for values-driven founders than the paths chosen by Yvon Chouinard and Paul Newman. “Most founders like to maintain control and have for-profit (less altruistic) sensibilities,” Whelan said.

B-Corp status, employee-ownership, and mutual organizations and cooperatives are all models that allow more focus on creating stakeholder value, in addition to shareholder value.

“We are seeing significant growth in these alternative models,” Whelan said.

We’ll see how long it lasts. And, how much of this altruistic money gets pissed away. Who’s going to audit them?

“The tension between growth and environmental impact is one we know well,” Curtis said. “We would be ignoring our commitment to responsible growth if we just maxed out sales for the purpose of giving away more money.  Further, it is important to resist the assumption that our value comes from the money we give away. We don’t think about it like that,” he said. “Our value comes from being a for-profit business and a Benefit Corporation.”

Yet, interestingly, they still have a lot of operations that use a lot of oil. Weird, right?

Yes, that’s North Face, but, Patagonia is the same.

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2 Responses to “Is Patagonia’s “Effective Altruism” For Climate Crisis The End Game Of Business Models?”

  1. Doom and Gloom says:


    Conservatives don’t wake up every day and say, let us see how much garbage we can throw on the roads or into the Oceans, LIKE CHINA AND BRAZIL, or how much acid rain we can make to create havoc. I know let’s create as much smog as we can so our kids can’t breathe. America was selling its Garbage to Russia to dispose of and Russia was just tossing it in the ocean.

    Conflation is the name of the game when the AGW NAZIS refer to CLIMATE CHANGE AS THE ENVIRONMENT. CO2, a building block of nature, is an evil world-ending molecule 10X’s worse than COVID-19. It’s our century’s Black Plague.

    I do not care if this business wants to send all its money to save the world. That is its choice.

    But until we are in a position to continue producing the world’s greatest societal resource and turning it into a way to make the world a better place, then we should slow our roll on ending coal and gas-fired power plants, gasoline cars and diesel trucks to deliver food to the people, in favor of windmills and solar panels…ALL BUILT IN CHINA…..for the sake of saving a few molecules of co2.

    We have the constitution, but we also have a democratic party that is all about eroding individual liberty and freedom with a constant barrage of laws, regulations, and EOs that has slowly eroded Americans’ freedoms. In the EU and UK and Australia, they make no bones about it.


    Someone said of the 2022 election. IF the Democrats win it will take 10 years to turn America Socialist. If the GOP wins it will take 15 years.

    LEGISLATE>>>>REGULATE>>>>LITIGATE!!!!! ITS the BEDROCK of the leftist assault on individual freedoms and the constitution be damned.

  2. Professor Hale says:

    Pategonia isn’t giving their money to charity. They are giving it to a foundation that they control, and evading taxes by doing it. Evading corporate taxes, income taxes, and estate taxes. The foundation employs the family members in perpetuity. And they funnel money to politicians (democrats), so they are buying influence with tax free money. And they still get to feel smug about saving the planet while they live like royalty. Tax-free royalty.

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