“capitalism can be good”
John Elkington meets Patagonia’s billionaire boss Yvon Chouinard
The founder of Patagonia on capitalism, being an Elder, missing the sixties and why we should ban the word “organic”
Editor’s update: 14 Sept 2022
Yvon Chouinard has today announced that he has given away Patagonia to a charitable trust. Any profit not reinvested in running the business will go towards planet Earth by fighting climate change. This could amount to around $100m (£87m) a year. Yet again the Patagonia founder sets a new example in environmental corporate leadership: “We’ve always been dead serious about saving our home planet – and now we’re putting the entire business where our mouth is.”
“Earth is now our only shareholder. Instead of going public, you could say we’re going PURPOSE.”
I love a good conversation. Many of our daily exchanges wash past, spent mayflies on a fast-flowing mountain stream. But other times they eddy and swirl, surfacing new ideas, even previously unthinkable thoughts. Or they can startle with moments of unexpected stillness, offering fleeting glimpses of new possibilities.
We spoke by Zoom rather than by the Pacific waves which he learned to surf decades ago, but my conversation with Yvon Chouinard was a reminder of why, every now and then, a conversation can be a lifelong gift.
Any change agent trying to navigate today’s currents, tides, waves and reefs must know where they’re starting from, where they’re headed and what potentially stands in their way. They need maps, landmarks and lighthouses to guide them through storms and other hazards. As I suspect is true for many people, Patagonia founder Yvon Chouinard has played that role throughout my working life.
His has truly been a road less travelled. As Patagonia tells the tale, Chouinard began his business life as a blacksmith – designing, manufacturing and selling rock climbing equipment back in the late 1950s. His tinkering led to an improved ice axe that would become an inspiration for modern ice axe design.
In 1964 he produced his first mail order catalogue, advising potential customers not to expect fast delivery during the climbing season. Not that it put people off: today Patagonia is valued at over $1 billion.
And it would be tempting to put a much higher value on its impact over time, with Chouinard constantly agitating for change. In 2001, for example, he started One Percent for the Planet – an alliance of businesses that contribute at least 1% of their net annual sales to carefully selected environmental organisations.
I had reached out to him because I was trying – and still am – to get a better grip on where the next decade could take us. Sometimes I do that by looking forward, sometimes by looking back. Since 1994, for example, I have tracked five increasingly powerful societal pressure waves that have impacted governments, business and now, increasingly, financial markets.
The series of waves that people like me have surfed began to build early in the 1960s. The first peaked in 1970, a year that saw the first Earth Day mobilising perhaps 20 million Americans in support of environmental action. The peak period of that first wave also saw the first global environment conference in 1972, followed by the first oil shock in 1973.
As it happens, Patagonia was founded that same year, 1973, in Ventura, California. For a sense of the company’s evolution, take a look at this online history. Ever since, Chouinard and his company have surfed each successive wave – and, increasingly, worked out how to shape them.
John Elkington: So Yvon, let’s turn back the clock. I sense that we both recall the sixties as some sort of Golden Age. The environmental movement was growing like topsy. Almost anything seemed possible. Do you miss those days?
Yvon: Yeah, but that was also the high point of the fossil fuel age. You could buy a car for 15 dollars and gasoline was 20, 25 cents a gallon. You could drive down from California to Mexico for almost nothing. Live on the beach, go surfing. There was a lot of fat in society – and we lived off that fat. It seemed like we had absolute freedom. At the time, I was just starting out in business, making climbing equipment. Yeah, well, I miss those days!
John: I recall you comparing entrepreneurs with juvenile delinquents? [The exact quote, from Chouinard’s book, Let My People Go Surfing, was: “If you want to understand the entrepreneur, study the juvenile delinquent. The delinquent is saying with his actions, ‘This sucks. I’m going to do my own thing.”]
Yvon: True. I have always been a reluctant businessman. I started out with falconry and climbing. Then, I guess when I was about 16, I started surfing. And diving. Then I was a spear fisherman – and went on to kayaking and other sports. So I like to say that when we set up Patagonia and located near the ocean, we left the door open to adventure.
Photo by Jeff Johnson
John: Later on, in 2004, Patagonia ran a series of ads that impressed me at the time. They asked, “Who are businesses really responsible to? Their customers? Shareholders? Employees? We would argue that it’s none of the above. Fundamentally, businesses are responsible to their resource base. Without a healthy environment there are no shareholders, no employees, no customers and no business.” That was seriously ahead of the curve. You were talking about a much deeper version of the sustainability agenda. About the need not only for environmental protection but for environmental regeneration.
Yvon: Well, yeah, regeneration has kind of replaced sustainability – that’s a word I really hate. Nobody knows what it means!
When we set up Patagonia and located near the ocean, we left the door open to adventure.
When we set up Patagonia and located near the ocean, we left the door open to adventure.
John: OK, the word has been degraded. But having set up the company SustainAbility back in 1987, I’m rather more optimistic about the long term. I think sustainability will join words like democracy and liberty as societal compass points. But, people being people, it’s obvious that all such terms become diluted, distorted, as they mainstream. People tailor them to their needs. Surely now there’s the same risk with regeneration?
Extract from Let My People Go Surfing
Before we are entitled to encourage other companies to act responsibly we have to do so ourselves. There’s only one way to lead, and that’s by being in front and leading by example… When we act positively on solving problems instead of ignoring them or trying to find a way around them, we are further along the path toward sustainability. Every time we’ve elected to do the right thing, it’s turned out to be more profitable.
Yvon: It’s already happened with regenerative agriculture. Companies like General Mills are claiming they’re regenerative when they mean organic. They’re not the same. They’re merely not using deadly chemicals and they’re calling that regenerative. So it’s watered down already. Same thing’s happened with organic. You can buy hydroponically grown strawberries that the producers say are organic. They grow them with chemicals – so they’re translucent, you can almost see right through them. And there’s a link with taste: a small wild strawberry explodes in your mouth. It probably has more nutrients than those hydroponic giants.
John: I loved your book Let My People Go Surfing. Read it in 2005 or 2006, I think. In the foreword, you said, “We have always considered Patagonia an experiment in doing business in unconventional ways. None of us were certain it was going to be successful, but we did know that we were not interested in ‘doing business as usual.” In each of the four companies I have co-founded since 1978, I have pursued what I dubbed “business-as-unusual” in my 1997 book Cannibals With Forks. Patagonia has always been an inspiration in terms of what that might mean – and how it might be done. Then something else you said in the book was that the only way to lead is by example. You said that when you have done that it has always worked out.
So can we take cotton, that greedy little plant, as one challenging area where Patagonia faced many challenges? In your book, you had a lot to say on the subject – most of it critical.
Extract from Let My People Go Surfing
When we first started looking for alternatives, organic cotton was available from a few family farmers in California and Texas. We experimented. At first we made only T-shirts with organic cotton. Then, after several trips to the San Joaquin Valley, where we could smell the selenium ponds and see the lunar landscape of cotton fields, we asked a critical question: How could we continue to make products that laid waste to the Earth in this way? In the fall of 1994, we made the decision to take our cotton sportswear 100 percent organic by 1996.
Yvon: Yeah. You know, our mission statement used to be to make the best product and cause no unnecessary harm. I supported that, but it didn’t say anything about doing good. Really, what were we doing growing cotton when that same land, those cotton fields, could be used to grow food for people who need it? And if you’re going to grow cotton, growing it organically isn’t enough. You need to grow it regeneratively. Organic doesn’t necessarily grow topsoil – and we have to do that. The way we’re going, we’ll be out of topsoil by 2050. So we began to experiment in India. Started with 650 farmers, using cover crops like turmeric and chickpeas. So the farmers were getting two crops – and we were paying them an extra 10% for growing regeneratively. Now it’s over 1500 farmers. The thing is, though, it can’t be done on an industrial scale. A family can have a good life with an acre and a half of regenerative crops. And that’s good news, because with millions of people around the world with nothing to do you can see a future where we have to get back to small-scale farming. You can’t turn everyone into computer programmers!
John: We haven’t mentioned COVID – how do you see that impacting the agenda?
Yvon: Well, yeah, that’s accelerated everyone’s thinking about global warming, among other things. But, you know, the elephant in the room that no-one is talking about is over-population. That has to be a factor in why we’re getting these viruses. It’s what happens when you crowd animals together. The problem is that there are too many of us – and we’re consuming too much, or many of us are.
John: Which was the Zen-like reasoning behind Patagonia’s Don’t Buy This Jacket ad?
Yvon: Yeah, it was. But you know I’ve got grandchildren, and I’m very pessimistic about whether we are going to get a handle on this climate emergency, or not. This globalism of recent decades has been an empire. And we now live in a time when I personally think the American empire is finished. It’s like the break-up of the Soviet Union. You’re going to have to get back to growing a garden, growing your own food. The people who did best as the Soviet Union collapsed were those who went out to the countryside and learned to feed themselves. This will be a time of mass illegal migration. The numbers are so dire, I feel sorry for young people who are going to have to live through this.
John: And yet you keep on keeping on! It seems you didn’t read the dictionary definition of retirement?
Yvon: Truth is, I’m proud of what we’ve done. Patagonia is now a billion dollar company, over a billion dollars, and it still has the same values. It pretty well goes on without me, you know. So that’s the ultimate test of a teacher. And the secret of our success has been quality, absolute quality. We never compromise on that.
John: But definitions change over time, don’t they? New issues come up, like pollution by nanoparticles. You said earlier that you see your role as constantly reminding colleagues about the need to keep pushing on the quality front. Where did your passion for quality come from?
Yvon: From my father. He was a tradesman. He could build an entire house by himself. The electrics, plumbing, carpentry, everything. And he always insisted on having the very best tools. So I’m a critical craftsman. I can look at anything and see how it could be done better.
I’m a critical craftsman. I can look at anything and see how it could be done better.
A master at work | Photo by Tim Davis
John: But you don’t like computers?
Yvon: No. My wife sets up these Zoom calls for me. Generally, I like to be in control – and computers and autonomous cars, they take control away from you. It’s completely out of control when some Russian teenager can take this country down. I’m trying to live a simple life and if I had to deal with computers on my own, it would drive me crazy!
John: You’re in your eighties now, Yvon. What’s it like being an Elder?
Yvon: Yeah, well, I’m 82. I’m retired from day-to-day micromanaging. And I have enjoyed teaching; there’s a time in your life when you have to be a teacher. I used to go around universities and colleges – was even offered a fellowship at Yale at one point. So I got a high school qualification and could have ended up as a professor at Yale! But I also discovered that business schools were ignoring the environment. I remember giving a speech at Harvard Business School, some 20 years ago, and a young guy said, “I believe everything you’re talking about – but it’s the exact opposite of what they’re teaching us.” I don’t do much teaching now, I’m too much of a pessimist. They need mentors who are optimistic, like you.
John: Oh I could probably run you a good race on pessimism. But times like these force change. They can make things that seemed impossible both possible and then almost inevitable. But we can’t just hand over this mess to the young. It’s going to need all age groups putting their hands to the pumps. So what are you still involved in that would give us a sense of where genuine hope for the future can be found?
Yvon: Well, I’m working with a friend who is pulling together a portfolio of investments in five companies that are working together symbiotically. The first company is doing salmon farming on land. Normal salmon farming uses feed based on anchovies and sardines fished from the ocean, which is mining, really. It’s a disaster. So this company started growing fish in rice paddies in California. They’re not allowed to burn rice stubble in the fields any longer, so they flood them in winter and the stubble breaks down. Microbes and plankton flourish, and are eaten by the fish. The fish go into a salmon farm – and you end up with salmon with unusually high levels of omega-3 fats. Plus the fish poop means the farmer use 40% less fertiliser. The rice paddies end up capturing more CO2 than an equivalent area of Amazonia.
Then, another part of the puzzle, there’s a new type of recycling plant, already operational in Nova Scotia, that takes waste from 90,000 people – and they’re recycling 97% of it. It’s brilliant. They recycle every piece of plastic, using a spectrograph to identify and separate different materials. They’re based right at the dump, so no problems with raw materials if the garbage trucks go on strike. And the wet, organic waste they feed to soldier flies, whose larvae are then fed into chicken farms. The guy running the soldier fly farm is actually a rocket scientist – he developed instruments that are going to Mars. And he’s constantly looking for new streams of value, like melatonin extracted from salmon skin. These sorts of solutions, with different types of company working together synergistically, can be set up pretty much anywhere. It’s a new kind of capitalism.
John: OK, no-one’s going to persuade me you’re any kind of pessimist, Yvon. Whatever spurs you on, we should be bottling it!
Yvon: Well, yeah, I approach every problem pretty much the same way. I just jump into it, to see how it feels. But you don’t want to take stupid risks. Back to surfing. You don’t throw yourself into surfing big waves – you work your way up to that. That’s what we need to do with these new experiments in capitalism.
What’s so good about this?
Patagonia proves that doing the right thing when it comes to environmental regeneration can be profitable. And we know money makes the world go round. With more attitudes like Yvon Chouinard’s, it just might go round for longer.
Meet the writer
Known to many as the ‘Godfather of modern sustainability’, John Elkington has been a pioneer of the sustainability movement for well over 30 years – since well before the concept was properly birthed – and is responsible for the concept of the ‘triple bottom line’ (people, planet, profit). The grit-in-the-corporate-oyster has co-founded four companies since 1978, including Volans, and is the prolific author of 20 books, the latest being Green Swans: The Coming Boom in Regenerative Capitalism. In 2021, Elkington was presented with the World Sustainability Award, so he’s come a long way since raising money for the infant World Wildlife Fund with his pocket money back in 1961. Follow @volansjohn.