The Future of the Responsible Company

PREFACE TO THE 2023 EDITION

In the decade since we wrote The Responsible Company: What We’ve Learned From Patagonia’s First 40 Years, dramatic shifts have taken place in the world and at Patagonia. This new edition, which marks our 50^th year in business, reflects these changes. The aim of the book, however, remains the same: to articulate the elements of business responsibility for our time—when everyone working at every level has to face the unintended consequences of a 250-year-old industrial model that can no longer be sustained ecologically, socially, or financially. 

Yvon has said that Patagonia— any company for that matter—should behave as though it will be around in 100 years. You don’t pump up and hollow out a company meant to stay in business for a good long time. This once standard American business ethos was eclipsed in the 1960s by Milton Friedman’s doctrine of shareholder primacy, wherein the sole purpose of a business is to maximize profits. That objective helps keep a stock’s price high but doesn’t work in the long run for society, the planet, or even the health of a business. In the 1950s, the average corporation survived to celebrate 61; now it barely makes it to 20. 

Business founders don’t live forever. And a 50-year-old company that wants to live responsibly for another fifty years needs a succession plan that involves far more than a change of who sits at the head of the table. In 2012, Patagonia became a California benefit corporation, which allowed us to enshrine into our business charter our core values and practices, including an annual gift of one percent of sales to grassroots environmental organizations. The company’s long-time purpose statement— “Build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis” —could now legally outlast our original ownership. To dissuade anyone of different values from buying in, we now required a vote of 100 percent of the company shares to alter the charter. 

Dismayed by the deepening of the crisis, and the ineffective response from businesses and governments, Yvon rewrote our statement in 2018 to reflect a sharper focus: “We’re in business to save our home planet.” 

It had been nearly 30 years since Patagonia first committed to “inspire and implement solutions,” 30 years of effort to “reduce unnecessary harm.” We were proud of our work and the products that resulted, but whatever we did each day to roll the rock uphill, it came tumbling back down. Global economic activity trespassed ever more of the planet’s physical boundaries: greenhouse gases climbed, storms intensified, rivers dried at the mouth, soil turned to dust, and species continued to disappear at a thousand times their natural rate. 

Our sharpened purpose meant more than a race against the doomsday clock. We’d learned something new and promising over the last decade from Patagonia Provisions, our venture into the food business. Regenerative organic practices to cultivate food and fiber could restore topsoil; slow the depletion of groundwater and pollution of rivers; draw carbon from the atmosphere deep into the soil; restore habitat; improve biodiversity; and along the way, help revive the health of rural communities. 

In 2016, we introduced organic Long Root Ale made with Kernza, a perennial wheatgrass with roots that descend ten feet or more, where they create the proper conditions for microbes and fungi to generate topsoil. Two years later, we began working with smallholder farmers in India to grow organic cotton with regenerative practices, including companion planting of turmeric to discourage harmful insects and generate a second source of income.

Patagonia Provisions pointed our apparel business toward a new north star. We could do better than doing less harm or becoming carbon neutral. We could give back to Earth as much or more than we take. We could do positive good.

In 2022, the Chouinard family committed the entire value of the company—monetary and moral—to our new purpose. The family donated 100 percent of the company’s stock to two entities—an irrevocable Patagonia Purpose Trust and a 501 (c) (4) charitable organization, the Holdfast Collective, that commits Patagonia’s annual profits to groups working to save the life of our home planet. Earth is now our sole shareholder.

Vincent remembers being ushered, a few years back, into the office of a dean of a small liberal-arts college after giving a talk there. A man in his sixties in a gray suit and tie, the dean was responsible for helping graduates find their first real jobs. He had a real problem, he said, lowering his voice to an anguished whisper: “None of them will go to work for bad companies.” 

That’s a good problem to have. If the elements of business responsibility have not changed much in the past decade, their cultural context certainly has. Young people now want to work for responsible companies; business students know there is no longer a convincing financial case to be made for being a bad company.

Drawing on our experience at Patagonia (the only company we know in any depth), we hope to write usefully for all people who see the need for deep change in business practices and who may work in companies quite unlike ours. Although we mainly address companies that make things, or, like us, design things made by others, this book is germane to all businesses, as well as civic organizations and nonprofits, that want to treat their people well, and improve the environmental performance of their operations. Although of particular interest to business leaders and managers, this book is for anyone who wants to engage their best, deepest self in the working life that stretches ahead.