September 22, 2022 | Micky Tesfaye
Last week, Yvon Chouinard, the founder of Patagonia – the onetime maker of the uniform of choice for finance bros – announced he was giving away his $3 billion company.
In an open letter that starts with the simple sentence ““Earth is now our only shareholder”, Chouinard outlined plans that would see ownership of Patagonia transferred to a non-profit organization to direct all the company’s profits – around $100 million annually – in the fight against climate change.
Even for a company like Patagonia, which has long been revered for its unrelenting commitment to sustainability – who can forget their audacious ‘Don’t Buy This Jacket Ad’ released during black friday a decade ago? – this news has upped the ante of ‘walking the walk’ on corporate environmental responsibility massively. Because, whether you were inspired or skeptical, there’s no doubt, you’ve seen this story everywhere. It got us all talking.
For the fintech industry, Chouinard’s announcement offers an important lesson and opportunity. Here’s why.
The impact of purpose
Consider this: Across the last month, the term ‘Patagonia’ typically averaged less than 50 article mentions per day. On the 14th of September, the day of the announcement, that figure shot up by more than 2500% to over 1300 mentions.
While we can extract various takes from this, one thing is certain: sustainability and responsible business has impact. And I can confidently say that most of us are already very aware of this. Indeed, even before Patagonia’s news, there’s been mounting evidence of the increasing importance customers are placing on sustainability and corporate responsibility and how it factors in their buying decisions. In the US, for example, nearly half of customers said they altered their activities or purchase behavior to help address climate change, according to Deloitte.
What customers want and expect though stands in stark contrast to what we’re increasingly seeing in the corporate world. In recent years, under the umbrella of ESG, we’ve seen corporations large and small pledge to make a difference and place responsibility front and center of their strategy. Yet, often these pledges have turned out to be mere marketing ploys designed to tap into the valuable PR responsible business garners – aka greenwashing.
Shifting all profits to confront the climate crisis facing us is a move too far that we can’t realistically expect to be matched by others, in the fashion industry or afar. Not least, in the financial services industry, that for all intents and purposes appears to still be driven by the Milton Friedman school of thought (“The Social Responsibility of Business Is To Increase Its __Profits__”). Even if practitioners in the industry deny this, actions speak louder than words.
Patagonia has just moved the goalposts on sustainability in a big way. Of course, every big bank and financial institution isn’t going to immediately be inspired to follow suit. But Chouinard has redefined what the benchmark for responsible business looks like. In doing so he and his company are going to inspire a whole generation of entrepreneurs and innovators that have and are growing up with the looming threat of climate crisis and importance of social injustice.
For financial services firms and leaders that fail to properly reconcile their own company’s conduct and structures, they’ll be steps behind the curve. They already are, this just makes it more acute. The world has changed and is changing. It’s a new game with a growing demographic that’s acutely aware of the reality of the existential threats we face.
Patagonia offers a simple message to those still on the fence, concerned with cultivating an ESG-first image without the actions to back it up: Get on ship, or get left behind!