Is Patagonia Pioneering ‘Ethical Capitalism’?

By: Linh Do

Ethical capitalism sounds like an oxymoron, and you’re right to be skeptical. With news about growing class inequities and billionaires taking joy rides to outer space, it’s hard not to condemn the economic system that is responsible for issues like our climate crisis.

So how is Yvon Chouinard, founder and (now ex-) owner of Patagonia, disrupting our ideas of capitalism?

In an open letter to customers, Chouinard addresses the reasons for his decision to step down as Patagonia’s owner and donate the company’s profits toward socio-environmental causes. If you visit the Patagonia website, there’s a video of Chouinard humbly dressed in a yellow plaid shirt writing one succinct message: “Earth is now our only shareholder.”

Even before Chouinard decided to give up the company, Patagonia had been a disruptive force in the clothing industry. As far back as 2011, the brand made headlines for their [anti] Black Friday ad in the New York Times, challenging people to resist overconsumption on a holiday built around it. While still an advertising campaign designed to generate attention around the brand, you can’t deny its creative ability to kill save two birds with one stone ad/jacket.

Whether he means to or not, Chouinard’s decision is a direct challenge to other businesses to redistribute wealth into projects that promote the well-being of our home planet rather than generate a never-ending stream of wealth for a few shareholders.

What does this look like for Patagonia’s future? His open letter explains it simply: “every year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the climate crisis”. Chouinard explains the specificity of this decision as opposed to selling the company to another owner, where there are often drastic changes in the company’s values and organization, or going public, which often forces businesses to be at the mercy of market pressures.

In a system that often feels like a trap of never-ending economic growth, Chouinard’s decision may stand to inspire young entrepreneurs and leaders in the business world today, and show them that creative business leadership may help shift our current model toward one of conscious capitalism.