Patagonia founder Yvon Chouinard, his wife, and their two adult children are giving up their ownership in the clothing company he founded 50 years ago, donating all profits to projects and organizations that will protect wild land and biodiversity and fight the climate crisis.

According to the New York Times, the company is worth around $3 billion.

Choiunard wrote about “reimagining capitalism” in a letter about the decision, which was published on the Patagonia website on Wednesday.

“While we’re doing our best to address the environmental crisis, it’s not enough. We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact. One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed.

Another option was to go public with the company. That would have been a disaster. Even well-intentioned public companies are under too much pressure to maximize short-term profits at the expense of long-term vitality and responsibility.

To be honest, there were no viable alternatives. So we made our own.”

The stock of the privately held company will now be owned by a climate-focused trust and a group of nonprofit organizations called the Patagonia Purpose Trust and the Holdfast Collective, respectively, according to a statement from the company, noting that “every dollar that is not reinvested back into Patagonia will be distributed as dividends to protect the planet.”

The trust will receive 100 per cent of the voting stock, or 2 per cent of the total, and will use it to establish a “more permanent legal structure to enshrine Patagonia’s purpose and values.” It will be overseen by family members and close advisors.

The Holdfast Collective owns all of Patagonia’s non-voting stock, which amounts to 98 per cent.

Depending on the health of the business, Patagonia expects to generate and donate approximately $100 million per year. The company now sells new and used outdoor apparel, camping and fishing equipment, and food and beverages made from sustainable sources.

Patagonia, a certified B-Corp and California Benefit Corporation, has already donated one per cent of its annual sales to grassroots activists and intends to continue doing so. Only about 6,000 businesses worldwide have been certified as B-Corps. To obtain certification, they must adhere to strict environmental, social, and governance standards and benchmarks established by B Labs.

Following the apparel maker’s expanded philanthropic strategy, Ryan Gellert will remain as CEO, and the Chouinard family will remain on the board. After informing its employees about the change on Wednesday, the company updated its website to state that “Earth is now our sole shareholder.”

(Adapted from CNBCTV18.com)