Climber, surfer, fly fisherman, innovator, and entrepreneur Yvon Chouinard has been described as “the pioneer in corporate social responsibility” with a “legacy in business, philanthropy, and environmentalism that has and will change the world for better, forever” by environmental blog Opportunity Green, and a man who “walks the walk more than anyone else I know in American business,” by veteran newsman Tom Brokaw. He has also been called “arguably the most successful outdoor industry businessman alive today” by Fortune magazine, which also declared Patagonia – the Ventura, California-based outdoor clothing company that Chouinard founded in 1973 – “The Coolest Company on the Planet” on its cover.

Chouinard attracts such praise in recognition of his tireless commitment to the environment and corporate stewardship. Patagonia’s mission, he says, is to “build the best product, cause no unnecessary harm, and to use business to inspire and implement solutions to the environmental crisis.” Rejecting economist Milton Friedman’s philosophy that a corporation’s only social responsibility is to increase profits, Chouinard has consistently risked or sacrificed profit in pursuit of his goal to “create the best quality with the least impact.” But as he noted wryly in Inc., “Every time I have made a decision that is best for the planet, I have made money.” Last year, the privately held Patagonia grossed $540 million in annual revenue.

Eager to reach beyond the apparel and outdoor industries and influence the next generation of business leaders, Chouinard has announced the launch of “$20 Million & Change,” an internal fund that will provide seed money to like-minded, responsible start-up companies who bring about positive benefit to the environment in five critical areas: clothing, food, water, energy, and waste. In addition, Chouinard has reorganized Patagonia and its other businesses (including its Patagonia Provisions® food division) within a new holding company called Patagonia Works, which is dedicated to a single cause: using business to help solve the environmental crisis. It has been organized primarily to incubate new companies or investments that share the common values of quality, environmentalism, corporate transparency, and not being bound by convention.

“$20 Million & Change” and Patagonia Works are a natural progression from the many environmental initiatives Chouinard has introduced over the years, including instituting an earth tax, through which Patagonia has committed one percent of sales or ten percent of profits (whichever is greater) to grassroots environmental organizations. Since 1985, Patagonia has contributed over $55 million in cash and in-kind donations to environmental groups. Chouinard is also the co-founder of 1% for the Planet®, a group of more than 1,400 companies worldwide who had adopted Patagonia’s practice.

In 1989, Chouinard co-founded The Conservation Alliance with the heads of REI, Kelty, and The North Face. The Alliance now boasts over 170 member companies that give money to environmental organizations. In 2007, Patagonia created its “Footprint Chronicles,” which, in keeping with Patagonia’s commitment to transparency, shines a light on the company’s own environmental damage and the ways in which it is dedicated to doing better. In 1996, Chouinard committed Patagonia to the exclusive use of organic, pesticide-free cotton.

In 2010, Chouinard led the initiative to partner with other major brands, such as Gap, Nike, Walmart, Levi Strauss, and Adidas, to create the Sustainable Apparel Coalition (SAC). Now an industry-wide group of over 80 leading apparel and footwear brands, retailers, suppliers, nonprofits, and NGOs, SAC’s focus is the Higg Index – a quantifiable set of standards for environmentally responsible and sustainable clothing production. In 2012, Chouinard registered Patagonia as a benefit corporation in California, which enables it to declare that its fiduciary duty includes considering society and the environment, in addition to profit, in its decision-making process. It was the first company in the state to register.

“The reason I am in business is I want to protect what I love,” Chouinard has said. “I used to spend 250 days a year sleeping on the ground. I’ve climbed on every continent. I’m old enough to see the destruction.” Now 74, Chouinard was born in Lewiston, Maine, to French-Canadian parents who moved the family to Burbank, California, when he was seven. A self-taught blacksmith and mountain climbing enthusiast, he sold pitons out of the trunk of his car, eventually parlaying his venture into a company that became the world’s largest supplier of climbing hardware. Once he realized, however, that his products were causing harm to the rock, he made his first major business decision on behalf of the environment and created a new, less harmful product line and successfully promoted its use.

Chouinard’s story is filled with such tales of innovation. The seeds of Patagonia were planted in 1970 when he bought a regulation team rugby shirt to wear on a winter climbing trip in Scotland and began importing them to sell to other climbers. From this modest start, Patagonia has created a series of beloved products, redefined the relationship between the company and its customer, and helped other businesses introduce initiatives that reduce environmental harm. Chouinard has chronicled his remarkable journey in his 2005 book Let My People Go Surfing (subtitled The Education Of A Reluctant Businessman) and provides a step-by-step guide to implementing progressive change in business practices in his 2012 book The Responsible Company (What We’ve Learned From Patagonia’s First 40 Years).

In this way, and with “$20 Million & Change” and Patagonia Works, Chouinard is primed to have a significant impact on the future of business. “I don’t like to think of myself as a businessman,” he says. “I’ve made no secret that I hold a fairly skeptical view of the business world. That said, Patagonia, has grown up to be – by global standards – a medium-size business. And that bestows on us a serious responsibility. It is time for Patagonia to enter a new phase and use business to inspire solutions to the environmental crisis outside of the apparel industry.” Chouinard has created the first “holding company for the environment.” This isn’t revolutionary business, in his opinion. It is just the next logical step.

[May 2013]