Patagonia – a new corporate governance model?

Great news! Patagonia boss just gave aways the whole company to fight climate change. It is worth $3B!

So many dire and depressing news on global warming are nonstop these days. The unprecedented flood in Pakistan is one case in point.  This brings some comfort and hope. I should go buy something from Patagonia right away. 😊 I love their philosophy to help customers maintain their purchased items as long as possible to preserve the resource and reduce the burden on the environment.

They considered whether to sell the company or go public to raise fund, but they shut both down after much evaluation. If they sell it, the new owner will most likely change the corporate culture which is very rare and socially-responsible. If they go public, they are afraid that the chasing quarterly results forced by the short-term investors will derail the company from its long-term vision and commitment. How wise!

They decided to keep it private. Direct quote from Yahoo finance “All decision-making authority and 2% of stock has been donated to a trust that will oversee Patagonia’s mission and values. The remaining 98% of stock will go to a non-profit organization dedicated to fighting the environmental crisis and protecting nature.”

Love it! Is this a new corporate governance model? Will this start a trend? Too bad that I cannot invest in it. Perhaps, they can inspire a new ESG model. Say only long-term investors are allowed in. This can start a revolution to provide an alternative to the short-term nature of current quarterly result driven investing. Please! Someone must have thought of this and worked on this already. We need long-term investors to ensure the long-term corporate strategy to be carried out. Actually this should be ESG’s target. There should be more rigorous standards for those companies that seek long-term investments and commit to their long-term ESG goals.  Perhaps investors’ confidence is key. Their patience should not be abused by mismanaged and dishonest corporations. Therefore, regulators should work with industry to create laws to protect long-term investors.

We need a revolution. Hope Patagonia is a start!

Published by Worthfy

Financial literacy and counselling

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