July 23, 2025 • 25 mins
Patagonia is known for putting the planet before profit, including a landmark decision to make Earth “our only shareholder.” Learn more about Patagonia’s unique ownership structure as CEO Ryan Gellert joins Shaheen Contractor, senior ESG analyst at Bloomberg Intelligence, on this week’s episode of ESG Currents. They discuss unique challenges and opportunities in leading a mission-driven company, along with Gellert’s personal journey, leadership philosophy and vision for Patagonia’s future.
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Speaker 1 (00:09):
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social megats Bounting regulatory attention and pressure from other stakeholders,
The rapidly involving landscape has become inundated with acronyms, buzzwords
and lingo, and we aim to break this down with
(00:30):
industry experts. Welcome to ESG Currents, your guide to navigating
the evolving ESG space, one topic at a time, Brought
to you by Bloomberg Intelligence, part of Bloomberg's research department,
with five hundred analysts and strategists working across all major
world markets. Our coverage includes over two thousand equities and credits,
(00:51):
as well as outlooks on more than ninety industries and
one hundred indices, currencies and commodities. I'm Shahin Contractor, senior
year as she analysts for Bloomberg Intelligence, your host for
today's episode, and today we're recording from the Bloomberg Green
Conference in Seattle, which aims to unite leaders for climate
action and a recalibration towards net zero. We're joined today
(01:15):
by Ryan Geller, the CEO of Patagonia, a company famously
known for putting the planet before profit. Now. Ryan stepped
into this position in September of twenty twenty, and I'm
particularly excited to get his perspectives as the leader of
a mission driven in company. Ryan, thank you so much
for joining us. It's really an honor.
Speaker 2 (01:36):
It's wonderful to be here with you. Shahin, so thank you,
of course, thank.
Speaker 1 (01:39):
You, Sarhan. I was reading a little bit into Patagonia's
history and its mission. I think the one statement that
stood out to me is that the Earth is your
only shareholder. That's very interesting, I believe, and correct me
if I'm wrong. There's an ownership structure that helps facilitate that.
If so, can you tell us a little more about
(02:00):
the structure and how it influences your day to day.
Speaker 2 (02:03):
Yeah, let me, if you don't mind, I'll be a
little long winded here for a second and just sort
of roll back and give contexts. The company was started
by Yvonne Schnard in nineteen seventy three, so we're fifty
two years old now, and you know, yvon got his
start in business by hand forging pitons. He was a climber,
(02:24):
He had a lot of friends who were climbers, and
he felt like the quality of pitons, which are in
essence the nails that people that climbers used to kind
of at the time to ascend large rock walls, were
not of the quality that they could be. So he
taught himself to forge and that was the beginning of
Snardicuet Equipment, which was a hard goods company. Fast forward
(02:46):
to nineteen seventy three he added apparel that was the
birth of Patagonia. Through the fifty two year history of Patagonia,
Yvonne has become increasingly clear eyed on the degrading health
of the planet and the role that businesses can play
in getting, you know, and just finding solutions to the
(03:06):
climate and ecological crisis, doing their part to scale those solutions.
So that's a bit of the backdrop and a little
bit of the sort of philosophy of our founder. One
of the things that Yvonne wrestled with for decades was
he never wanted to be a businessman. That's just not
wasn't a motivation of his. He does not somebody that
really values money the same way many people do. And
(03:28):
so one of the things he wrestled with was how
can I have the biggest impact using Patagonia. And you know,
he had a mentor, Doug Tompkins, who made money in business,
also in apparel, and sold that business and then moved
down to Chile and Argentina and started creating national parks
which he would then he would buy land and degraded land,
(03:50):
often from sheep farming, and then he would combine them
into large tracks, build some light infrastructure for national parks,
donate them to the governments of Chile and Argentina. So
that was the idea that Yvonne thought, Okay, maybe that's
what I'll do. What he came to understand though, was
that by running a company Patagonia that had a unique
(04:10):
way of making decisions, keeping, you know, thinking about more
than just how much money can we make, he felt
like that can have maybe an outsized impact above and
beyond the money. So that brings us to twenty twenty.
And in twenty twenty, Yvonne decided it was finally time
to figure out the future ownership of Patagonia, and so
(04:31):
after about a year of conversations with the family, what
became clear where there were two things that the family
felt very strongly about number one, they wanted Patagonia to
continue to exist run according to the values they'd imbued
it with. And number two, they wanted to give more
money away to fighting the climate ecological crisis right now.
And so to your question now about the structure, what
(04:54):
we put in place was a structure that has two pieces. First,
a perpetual purpose which sits above the board of directors
in essence make sure that leadership and the board of
directors don't drift from the values that they've created. In theory,
that should be a very inactive part of the structure
unless we're getting it wrong. The second part is a
(05:16):
series of five oh one c fours that we call
the hold Fast Collective, And at the end of each
year for the last three years and going forward, we
look at how much money we make running the business,
how much of that money we need to either reinvest
in the business or just hold back to ensure our
ongoing independence. And then the rest of it we grant
(05:37):
over to the hold Fast Collective and they put that
money to work in a variety of different ways.
Speaker 1 (05:43):
That's a very unique structure, I think, given that your
shareholders are the planet, and given this structure, have there
ever been any tradeoffs so between profit and the planet,
any additional costs over the years.
Speaker 2 (05:59):
You know, I would say, I'm gonna draw a line
of demarcation between the structure and just trying to balance
running a more responsible business. I would say the structure
hasn't imposed any new restrictions or trade offs on us.
I think one of the challenges, you know, every year
is figuring out where we need to reinvest in the
business first and foremost. That's a perpetual issue. I think
(06:20):
when you're giving money away, it creates this sort of
visual around Okay, are you investing everything that the business needs?
And I can tell you after three years agoing through this,
absolutely we're very committed to Patagonia continuing to exists for
one hundred years, building the best product via performance, lowest footprint,
all the rest of it. I think some of the
(06:41):
trade offs that we have historically made and continue to
make are things like you know, we we don't advertise
with meta platform. We have felt like we're just our
values and theirs and what that platform represents it's just inconsistent,
so we've opted out of that. I would say that
we probably do a lot less marketing than any of
our competitors as an example. But yet we do a
(07:03):
lot more investing in making our product as responsibly as
we can, decarbonizing our supply chain, creating models where other
companies can do the same, paying fair trade premiums, using
responsible largely recycled organic materials, scaling our resale and repair businesses,
on and on and on. So those are some of
(07:23):
the costs that we incur impose upon ourselves. And I
think you know it's we know that all those things
pay back, but we never know exactly when and where.
Speaker 1 (07:34):
I guess a simple way to put it is, do
any of these costs have a lead to a premium
quote on good being charged for your products?
Speaker 2 (07:42):
I would say that the quality that we engineer into
our product and the services that we provide in partnering
with our customers to help them keep their product in
use as long as possible. I don't feel like customers
are paying a premium for our product at all. We rarely,
if ever are setting the price ceiling in our industry,
(08:05):
first of all, and second, I'll stand behind everything I
just said that makes sense.
Speaker 1 (08:09):
So I think that's a classic quote unquote business case
for sustainability, right.
Speaker 2 (08:14):
I think ultimately we have got to create models. So
I would tell you that initially when we put new
programs in place, there are at times significant costs until
we can find ways to scale them. And so that
is that's generally how we work through.
Speaker 1 (08:31):
That's just economies of skill and going down the learning curve. Okay,
that makes sense. And you mentioned all these investments, the
supply chain investments, the sustainability investments. What has had the
biggest bang for your book? I'm just curious if there's
any one particular initiative that you can say, oh, this
(08:53):
actually made the impact.
Speaker 2 (08:55):
I would probably pick two, despite your ten. That one
is my information. The first is our commitment starting in
nineteen eighty five two and this came from Yvonne. He
had an insight that no matter what decisions we made
in minimizing our footprint as a business, running Patagonia still
(09:18):
had a negative impact on the planet, and so initially
in the mid eighties he required that the company pay
an Earth tax. It was either one percent of revenue
or ten percent of profits, whichever was greater. In two
thousand and two he co founded the independent organization one
Percent for the Planet, and since that time we have paid.
We have contributed one percent of our revenue, regardless of
(09:40):
how profitable we are or are not, in any given year,
to small grassroots organizations working to fight the climate ecological
crisis around the world. I think the other that I
would point to is the transition from conventionally grown cotton
to organic cotton in starting in the mid nineties, we've
not used anything but organic cotton or cotton in conversion
(10:02):
since that time.
Speaker 1 (10:03):
That's super interesting. Any key innovations on the cards that
maybe has a similar bank fail buck, Yeah.
Speaker 2 (10:11):
I mean, I think when I think about innovation, I
think about how we serve our customers. I think about
it in product. I also think about it within footprint,
which which we're talking about. So I'll start with footprint.
I think a couple of the areas that I'm really
excited about are scaling, resale. You know, our product is
built to last a very long time, and it's increasingly
designed for repair ability, and so sometimes the product lasts
(10:32):
a lot longer than somebody's interest in using the same
piece and they want to upgrade, change colors, whatever it is.
It's a shame to think that that product either would
sit idly in somebody's closet or end up in an
even worse situation. And so we have not just pioneered
kind of buying back product and selling secondhand. We've really
put it right in the center of the business. And
so we made a lot of technical advances and you basically,
(10:55):
you come to Patagonia today, you're looking for a black
medium nanopuff jacket, will show it to you and new,
and we'll show it to you used. And if you're
paying whatever you're paying for that product new, you will
know that there's a market for that product. On the
back end, we'll buy it back from you. So I
think that's one of the more interesting ways that we're
engaging with our customers. As far as performance, innovation and product,
(11:18):
we got a lot of things going on right now
that I'm really excited about. Active insulation, really lightweight insulation products.
Nanoware Ultra Light's one of my favorites. And then we've
got new Capeline Sun sun Protection UPF protection product coming
out in spring of next year, which I'm really excited about.
We've got a great fabric package that is really cool
(11:38):
against the skin and it doesn't wash out like a
lot of the competitor's product. So yeah, we got a
lot of things going on in that space.
Speaker 1 (11:44):
Any unique challenges or rewards when it comes to leading
a mission driven company.
Speaker 2 (11:53):
I think as far as rewards got, the list is long.
I mean, I'd start with the fact that I get
to work every day with the best people in the industry,
best people probably in any industry. I think people that
are great at their job, passionate about driving solutions, and
you know, whether there are people that come to the
company through sport and wanting to make the best ice
climbing jackets or pants for people that come through the values. Ideally,
(12:14):
it's a it's a cross between the two. I think
we've just got amazing human beings. I think that you know,
feeling like you're perhaps making a little detent in the
universe in doing the work that we do, particularly at
a time like or now where I think it's never
been more needed, and I candidly see a lot of
companies moving in the other direction. I think is really rewarding.
(12:35):
I think on challenge is probably the single biggest is
we've got a really finely tuned bullshit detector. We know
what's real and what's not, and we're our own toughest critics,
and we've got a really high standard that we hold
for ourselves. And you know that I think every day
is sort of okay, here's something we accomplish. What's the
next challenges? Keep moving and that you know, it takes
a certain disposition and resilience to kind of navigate through that.
Speaker 1 (12:58):
That makes sense. And you know, over the past few years,
we've had a number of challenges, one being the energy crisis,
the second being tariffs. I'm just curious if any of
that is exasperated in your business model and how you
deal with it.
Speaker 2 (13:13):
Yeah, I mean, I would say that we are so
we're unapologetically a for profit business and so and we're
in the apparel business, and our sales are global, as
is our sourcing, and so you know this tariff landscape,
I mean, have been pretty consistent since April of this
year internally and talking about this, which is despite the
cost of these terraffs, which to be clear, are really
(13:36):
significant for our business, the biggest issue is uncertainty. You know,
this administration can define the teriff rates, they can't claw
back the uncertainty that they are allowing to ripple through
the global economy, So that's that's a huge concern. As
I said here today, we're recording in mid July, i'd
make exactly the same statement as of right now. I
think we've got more certainty about the impacts of tariffs
(13:58):
on our business, and we calculate through the balance of
our fiscal year it's about eighteen percent new costs in tariffs,
but on a full twelve month basis, it's probably closer
to twenty two percent. So that normally would be a
really significant challenge, and it is. But I think the
uncertainty piece is really the big story.
Speaker 1 (14:19):
Eighteen percent is quite significant. It's huge. Maybe going back
to happier topics, the rewards, as you mentioned, the ability
to work with such passionate people, how do you instill
this culture throughout your organization of you know, being passionate
about sustainability about the planet, especially as you grew. You
(14:39):
mentioned that in a Paragonia you aim to keep it
alive for hundreds of years, So how do you instill that?
Speaker 2 (14:44):
Yeah, Well, I think the long term thinking that Yvonne
has instilled in the business, and he's been incredibly consistent
about this on a couple of things. Number one, He's
always said, you know, I never wanted to be a
business person, but if I'm going to own a business,
I want to own one I respect. I want it
to be an exp speer in doing business differently, and
I want it to exist for one hundred years or more,
because that's that's the challenge, that's the experiment. And so
(15:07):
he's always had this long term vision of what he
wanted to create. And so I think, to answer your question,
it starts with nesting the decisions that we make within that.
And I think that means making decisions that serve us best,
not just for today or tomorrow, but for the long term.
That means making tough decisions, when making tough decisions is
required and not just taken sort of the easy and
(15:30):
current path. I think that, you know, I think keeping
people inspired. Candidly, it's been a little bit more challenging
in the last couple of years as a couple of
things have been sort of cycling through culture. One is
just this post COVID environment I think has been really
destabilizing for people. And number two, I think just the
level of economic uncertainty that people are feeling I think
(15:52):
has been equally so I think people, and you know,
this describes the vast majority of our employees who really
are concerned about the fragile state of our planet and
see what's happening from this administration. I think are also
feeling kind of beat up and discouraged and trying to
figure out where the hope is. And you know, to
(16:14):
quote Yvonne again, you know, the cure for depression is action.
And I think that that's also something that we fall
back on at Patagonia, which is, Okay, what are the
things we can do, what are the things we can control,
and that includes the service that we provide to our customers,
the quality of the product that we make, and what
we do with our business, both what we represent and
(16:35):
stand for, and also how we use the resources that
the business as.
Speaker 1 (16:40):
This makes a lot of sense and it's quite motivating.
I mean, given the environment, as you mentioned, Ran, I'd
love to shift to your journey, your goals as a leader.
I'm curious as to what inspired you to take this
career path and are there any particular leadership principles that
(17:01):
stand out that you've learned along the way.
Speaker 2 (17:04):
I think that as first taking this role on, it
certainly not something I ever planned for. It was not
something I ever sort of worked towards. I was really
happily looking after the business in Europe and enjoyed it immensely.
It was a great opportunity, you know, taking all the
best parts of Patagonia in an environment like that, in
a landscape like that where I think there was a
(17:25):
lot of receptivity, and my family and I loved living
over there as well. So taking this job, it's definitely
it's been a big lifestyle change, not just living in California,
but also you know, the stress and the twenty four
to seven nature of it's been vastly different. You know.
I believe then and i'd like to believe now that
I could make a difference and have an impact on
(17:45):
this business and help to continue to move forward Yvonne's
vision of what a company, in this case Patagonia can
really represent. I don't think I fully appreciated the times
we're living in and how challenging some aspects of that
would be. So, you know, a lot of lessons learned,
but we continue to move forward. I think as far
as leadership principles, it's just staying in constant motion and
(18:07):
being as transparent, approachable as possible. So I think, if
in doubt, tell the truth and stay really humble, and
stay really hungry, and I think those are things that
I try to fall back on.
Speaker 1 (18:19):
I like to stay hungry, but always be curious is
something that I'm.
Speaker 2 (18:24):
Also Yeah, yeah, I think you know it's funny. I
know we're here talking at this Bloomberg Green event here
in Seattle, and Jane Fondes spoke last night, and she
reminds me, I think, eighty seven years old. If I'm
not mistaken a lot, she reminds me quite a bit
of a number of people I know, Yvonne, our founder,
being one of them, who are in their eighties and
(18:44):
are seemingly as curious and therefore energetic and passionate as
they probably were ten, twenty, thirty, forty fifty years ago.
And I think that appears to me to be a
life well lived very much.
Speaker 1 (18:56):
So I think I've always said that it's never too
late to learn something, right. Yeah, well, Son, you stand
by that. I guess you say, any one piece of
advice you would give to maybe a founder looking to
start a sustainability business or young professionals in the space, I.
Speaker 2 (19:13):
Think, as simple as it sounds the first thing I'd say,
and again, depending on which of those it is, it
might it might ring true differently. But just do something.
Just get started. I think sometimes people can kind of
just get stuck, sort of all right, where do I begin?
And I think the answer is begin somewhere, and you know,
you probably have a list of six different things, if
not sixty, So get started is part of that. I
(19:33):
think if it's the business context that you asked, probably
the best piece of advice I can give is consider
becoming a B corp and the be Corp movement. In
that process, A certification is quite rigorous. It's also quite
broad and exhaustive in the things, the questions that it
asks and the requirements it imposes for you to understand
your business and build your business in a way that
(19:56):
I think has got you know, some great learnings from
a cross industry. Will also use this as an opportunity
to just mention Andrew Kassoy, who was one of the
three founders of b Lab and therefore the BE court movement,
who just passed away just less than a month ago,
way too early. And Andrew, along with his other two
(20:19):
co founders, Jay and Bart, really believed that what was
problematic about capitalism as we know it today was just
the lack of care and concern for people in planet.
And I think he you know, he gave a huge
portion of his life to creating a different outcome and
I's want to acknowledge that as well.
Speaker 1 (20:38):
Thank you, and what aspirations do you have for Patagonia's
future and also just you as a leader.
Speaker 2 (20:48):
I think for Patagonia in the time that I have remaining,
however long that is, I think it's distilling things down
to the basics, and it's building the best product, and
that's performance, innovation and performance. So product it's best in
class for what it's intended to do, regardless of what
product that is the same in footprint, make that product
with is soft to touch on the planet and our
(21:11):
resources as possible, take every learning that we have and
scale those solutions across the industry, and then use everything
we've got our people, our community, our money, our voice
to advocate for you know, for protecting our home planet.
And I think that's what makes Patagonia Patagonia, and I
think those things have never been more needed than they
(21:33):
are right now. And you know, to get a little
more granular and what that can look like. I think
it is as I talked about before, you know, encouraging
people not to buy product that they don't need. When
you buy product by quality, and when you buy quality,
see yourself as an owner, not a consumer. And I
think I can, you know, sort of make those comments.
But what's most important is when we both design the
(21:55):
product with that in mind and then design the systems
that support that where it may it easy or at
least reasonable for people to participate in that. And that's
why product repair is so important to us, and that's
why resale is so important to us, and why we've
invested so much money in time ahead of the curve
in enabling those services.
Speaker 1 (22:16):
And it's really interesting that you say, you know, you
don't encourage people to buy more product. How do you
balance that with being a for profit business, one that
is dependent on consumerism. I know you mentioned your bed
and you know ensuring that these products live along life,
but just balancing.
Speaker 2 (22:35):
The two well, I would say it's a tricky balance
at times, but I don't think the two things are
totally in conflict. And so mistake food maybe as a
slightly more benign example. People need to eat often three
times a day. They don't need to eat excessively. They
should eat quality food that's good for them. And so
I sort of think about apparel and equipment the same way.
(22:57):
You know, people need raincoats, and so when you need
a coat by the most responsibly made by the best performing,
by quality, and then take care of that product, keep
it in use as long as possible. If you've got
a raincoat, you may not need three more just because
you saw a new color that you like. And so
I think that that's kind of the sort of razor's edge.
I suppose that we rude.
Speaker 1 (23:18):
I like that, buy what you need. I'm very guilty
of the latter what you mentioned.
Speaker 2 (23:25):
Ran.
Speaker 1 (23:25):
It's been a real pleasure. Thank you for being on.
Just as a last question, can you tell me something
maybe our listeners don't know about you.
Speaker 2 (23:35):
Boy something listen you know maybe I guess we haven't
talked about the fact that I came to Patagony and
it came to this industry through climbing and through snowboarding
and through a little bit of surfing and mountain biking,
and so yeah, this time I've been you know, in
this industry and including with Patagonia for almost eleven years.
(23:55):
I've been able to spend a lot of time in
really incredible places in nature, most recently about a month
ago up in the Western Arctic in Alaska with my
son on a river trip, so camping and rafting a
river up in the Western Arctic. But you know, over
the course of my career, I've climbed all over Asia
and Europe and a bit in South Africa and elsewhere,
(24:17):
and snowboarded and the Arctic Circle in Norway. And I
guess the reason I say those things is, you know,
protecting those areas is not an abstract theory. For me
being up in the Western Arctic a month ago and
knowing the pressure that that area is under, both from
climate change and also extractive industry, you know this is
anything but an academic interest.
Speaker 1 (24:39):
That's amazing. Maybe one thing our listener is don't know
about me. I aim to climb the mountains of the woods.
I like that.
Speaker 2 (24:45):
I'll see you out there.
Speaker 1 (24:46):
Oh yeah, thank you so much for joining us. It's
been a real pleasure.
Speaker 2 (24:50):
Pleasure is all mine. Thank you and.
Speaker 1 (24:52):
For our listeners. You can find more information on sustainability
issues on bispace ESG on the Bloomberg Terminal. If you
have an ESG quandary you'd like to ask BIS expert
analysts or learn more about our research, send us an
email at ESG Currents at bloomberg dot net. And if
you like this episode, please subscribe on Apples, Spotify, or
(25:13):
your favorite podcast platform. Thank you, everybody,
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social megats Bounting regulatory attention and pressure from other stakeholders,
The rapidly involving landscape has become inundated with acronyms, buzzwords
and lingo, and we aim to break this down with
(00:30):
industry experts. Welcome to ESG Currents, your guide to navigating
the evolving ESG space, one topic at a time, Brought
to you by Bloomberg Intelligence, part of Bloomberg's research department,
with five hundred analysts and strategists working across all major
world markets. Our coverage includes over two thousand equities and credits,
(00:51):
as well as outlooks on more than ninety industries and
one hundred indices, currencies and commodities. I'm Shahin Contractor, senior
year as she analysts for Bloomberg Intelligence, your host for
today's episode, and today we're recording from the Bloomberg Green
Conference in Seattle, which aims to unite leaders for climate
action and a recalibration towards net zero. We're joined today
(01:15):
by Ryan Geller, the CEO of Patagonia, a company famously
known for putting the planet before profit. Now. Ryan stepped
into this position in September of twenty twenty, and I'm
particularly excited to get his perspectives as the leader of
a mission driven in company. Ryan, thank you so much
for joining us. It's really an honor.
Speaker 2 (01:36):
It's wonderful to be here with you. Shahin, so thank you,
of course, thank.
Speaker 1 (01:39):
You, Sarhan. I was reading a little bit into Patagonia's
history and its mission. I think the one statement that
stood out to me is that the Earth is your
only shareholder. That's very interesting, I believe, and correct me
if I'm wrong. There's an ownership structure that helps facilitate that.
If so, can you tell us a little more about
(02:00):
the structure and how it influences your day to day.
Speaker 2 (02:03):
Yeah, let me, if you don't mind, I'll be a
little long winded here for a second and just sort
of roll back and give contexts. The company was started
by Yvonne Schnard in nineteen seventy three, so we're fifty
two years old now, and you know, yvon got his
start in business by hand forging pitons. He was a climber,
(02:24):
He had a lot of friends who were climbers, and
he felt like the quality of pitons, which are in
essence the nails that people that climbers used to kind
of at the time to ascend large rock walls, were
not of the quality that they could be. So he
taught himself to forge and that was the beginning of
Snardicuet Equipment, which was a hard goods company. Fast forward
(02:46):
to nineteen seventy three he added apparel that was the
birth of Patagonia. Through the fifty two year history of Patagonia,
Yvonne has become increasingly clear eyed on the degrading health
of the planet and the role that businesses can play
in getting, you know, and just finding solutions to the
(03:06):
climate and ecological crisis, doing their part to scale those solutions.
So that's a bit of the backdrop and a little
bit of the sort of philosophy of our founder. One
of the things that Yvonne wrestled with for decades was
he never wanted to be a businessman. That's just not
wasn't a motivation of his. He does not somebody that
really values money the same way many people do. And
(03:28):
so one of the things he wrestled with was how
can I have the biggest impact using Patagonia. And you know,
he had a mentor, Doug Tompkins, who made money in business,
also in apparel, and sold that business and then moved
down to Chile and Argentina and started creating national parks
which he would then he would buy land and degraded land,
(03:50):
often from sheep farming, and then he would combine them
into large tracks, build some light infrastructure for national parks,
donate them to the governments of Chile and Argentina. So
that was the idea that Yvonne thought, Okay, maybe that's
what I'll do. What he came to understand though, was
that by running a company Patagonia that had a unique
(04:10):
way of making decisions, keeping, you know, thinking about more
than just how much money can we make, he felt
like that can have maybe an outsized impact above and
beyond the money. So that brings us to twenty twenty.
And in twenty twenty, Yvonne decided it was finally time
to figure out the future ownership of Patagonia, and so
(04:31):
after about a year of conversations with the family, what
became clear where there were two things that the family
felt very strongly about number one, they wanted Patagonia to
continue to exist run according to the values they'd imbued
it with. And number two, they wanted to give more
money away to fighting the climate ecological crisis right now.
And so to your question now about the structure, what
(04:54):
we put in place was a structure that has two pieces. First,
a perpetual purpose which sits above the board of directors
in essence make sure that leadership and the board of
directors don't drift from the values that they've created. In theory,
that should be a very inactive part of the structure
unless we're getting it wrong. The second part is a
(05:16):
series of five oh one c fours that we call
the hold Fast Collective, And at the end of each
year for the last three years and going forward, we
look at how much money we make running the business,
how much of that money we need to either reinvest
in the business or just hold back to ensure our
ongoing independence. And then the rest of it we grant
(05:37):
over to the hold Fast Collective and they put that
money to work in a variety of different ways.
Speaker 1 (05:43):
That's a very unique structure, I think, given that your
shareholders are the planet, and given this structure, have there
ever been any tradeoffs so between profit and the planet,
any additional costs over the years.
Speaker 2 (05:59):
You know, I would say, I'm gonna draw a line
of demarcation between the structure and just trying to balance
running a more responsible business. I would say the structure
hasn't imposed any new restrictions or trade offs on us.
I think one of the challenges, you know, every year
is figuring out where we need to reinvest in the
business first and foremost. That's a perpetual issue. I think
(06:20):
when you're giving money away, it creates this sort of
visual around Okay, are you investing everything that the business needs?
And I can tell you after three years agoing through this,
absolutely we're very committed to Patagonia continuing to exists for
one hundred years, building the best product via performance, lowest footprint,
all the rest of it. I think some of the
(06:41):
trade offs that we have historically made and continue to
make are things like you know, we we don't advertise
with meta platform. We have felt like we're just our
values and theirs and what that platform represents it's just inconsistent,
so we've opted out of that. I would say that
we probably do a lot less marketing than any of
our competitors as an example. But yet we do a
(07:03):
lot more investing in making our product as responsibly as
we can, decarbonizing our supply chain, creating models where other
companies can do the same, paying fair trade premiums, using
responsible largely recycled organic materials, scaling our resale and repair businesses,
on and on and on. So those are some of
(07:23):
the costs that we incur impose upon ourselves. And I
think you know it's we know that all those things
pay back, but we never know exactly when and where.
Speaker 1 (07:34):
I guess a simple way to put it is, do
any of these costs have a lead to a premium
quote on good being charged for your products?
Speaker 2 (07:42):
I would say that the quality that we engineer into
our product and the services that we provide in partnering
with our customers to help them keep their product in
use as long as possible. I don't feel like customers
are paying a premium for our product at all. We rarely,
if ever are setting the price ceiling in our industry,
(08:05):
first of all, and second, I'll stand behind everything I
just said that makes sense.
Speaker 1 (08:09):
So I think that's a classic quote unquote business case
for sustainability, right.
Speaker 2 (08:14):
I think ultimately we have got to create models. So
I would tell you that initially when we put new
programs in place, there are at times significant costs until
we can find ways to scale them. And so that
is that's generally how we work through.
Speaker 1 (08:31):
That's just economies of skill and going down the learning curve. Okay,
that makes sense. And you mentioned all these investments, the
supply chain investments, the sustainability investments. What has had the
biggest bang for your book? I'm just curious if there's
any one particular initiative that you can say, oh, this
(08:53):
actually made the impact.
Speaker 2 (08:55):
I would probably pick two, despite your ten. That one
is my information. The first is our commitment starting in
nineteen eighty five two and this came from Yvonne. He
had an insight that no matter what decisions we made
in minimizing our footprint as a business, running Patagonia still
(09:18):
had a negative impact on the planet, and so initially
in the mid eighties he required that the company pay
an Earth tax. It was either one percent of revenue
or ten percent of profits, whichever was greater. In two
thousand and two he co founded the independent organization one
Percent for the Planet, and since that time we have paid.
We have contributed one percent of our revenue, regardless of
(09:40):
how profitable we are or are not, in any given year,
to small grassroots organizations working to fight the climate ecological
crisis around the world. I think the other that I
would point to is the transition from conventionally grown cotton
to organic cotton in starting in the mid nineties, we've
not used anything but organic cotton or cotton in conversion
(10:02):
since that time.
Speaker 1 (10:03):
That's super interesting. Any key innovations on the cards that
maybe has a similar bank fail buck, Yeah.
Speaker 2 (10:11):
I mean, I think when I think about innovation, I
think about how we serve our customers. I think about
it in product. I also think about it within footprint,
which which we're talking about. So I'll start with footprint.
I think a couple of the areas that I'm really
excited about are scaling, resale. You know, our product is
built to last a very long time, and it's increasingly
designed for repair ability, and so sometimes the product lasts
(10:32):
a lot longer than somebody's interest in using the same
piece and they want to upgrade, change colors, whatever it is.
It's a shame to think that that product either would
sit idly in somebody's closet or end up in an
even worse situation. And so we have not just pioneered
kind of buying back product and selling secondhand. We've really
put it right in the center of the business. And
so we made a lot of technical advances and you basically,
(10:55):
you come to Patagonia today, you're looking for a black
medium nanopuff jacket, will show it to you and new,
and we'll show it to you used. And if you're
paying whatever you're paying for that product new, you will
know that there's a market for that product. On the
back end, we'll buy it back from you. So I
think that's one of the more interesting ways that we're
engaging with our customers. As far as performance, innovation and product,
(11:18):
we got a lot of things going on right now
that I'm really excited about. Active insulation, really lightweight insulation products.
Nanoware Ultra Light's one of my favorites. And then we've
got new Capeline Sun sun Protection UPF protection product coming
out in spring of next year, which I'm really excited about.
We've got a great fabric package that is really cool
(11:38):
against the skin and it doesn't wash out like a
lot of the competitor's product. So yeah, we got a
lot of things going on in that space.
Speaker 1 (11:44):
Any unique challenges or rewards when it comes to leading
a mission driven company.
Speaker 2 (11:53):
I think as far as rewards got, the list is long.
I mean, I'd start with the fact that I get
to work every day with the best people in the industry,
best people probably in any industry. I think people that
are great at their job, passionate about driving solutions, and
you know, whether there are people that come to the
company through sport and wanting to make the best ice
climbing jackets or pants for people that come through the values. Ideally,
(12:14):
it's a it's a cross between the two. I think
we've just got amazing human beings. I think that you know,
feeling like you're perhaps making a little detent in the
universe in doing the work that we do, particularly at
a time like or now where I think it's never
been more needed, and I candidly see a lot of
companies moving in the other direction. I think is really rewarding.
(12:35):
I think on challenge is probably the single biggest is
we've got a really finely tuned bullshit detector. We know
what's real and what's not, and we're our own toughest critics,
and we've got a really high standard that we hold
for ourselves. And you know that I think every day
is sort of okay, here's something we accomplish. What's the
next challenges? Keep moving and that you know, it takes
a certain disposition and resilience to kind of navigate through that.
Speaker 1 (12:58):
That makes sense. And you know, over the past few years,
we've had a number of challenges, one being the energy crisis,
the second being tariffs. I'm just curious if any of
that is exasperated in your business model and how you
deal with it.
Speaker 2 (13:13):
Yeah, I mean, I would say that we are so
we're unapologetically a for profit business and so and we're
in the apparel business, and our sales are global, as
is our sourcing, and so you know this tariff landscape,
I mean, have been pretty consistent since April of this
year internally and talking about this, which is despite the
cost of these terraffs, which to be clear, are really
(13:36):
significant for our business, the biggest issue is uncertainty. You know,
this administration can define the teriff rates, they can't claw
back the uncertainty that they are allowing to ripple through
the global economy, So that's that's a huge concern. As
I said here today, we're recording in mid July, i'd
make exactly the same statement as of right now. I
think we've got more certainty about the impacts of tariffs
(13:58):
on our business, and we calculate through the balance of
our fiscal year it's about eighteen percent new costs in tariffs,
but on a full twelve month basis, it's probably closer
to twenty two percent. So that normally would be a
really significant challenge, and it is. But I think the
uncertainty piece is really the big story.
Speaker 1 (14:19):
Eighteen percent is quite significant. It's huge. Maybe going back
to happier topics, the rewards, as you mentioned, the ability
to work with such passionate people, how do you instill
this culture throughout your organization of you know, being passionate
about sustainability about the planet, especially as you grew. You
(14:39):
mentioned that in a Paragonia you aim to keep it
alive for hundreds of years, So how do you instill that?
Speaker 2 (14:44):
Yeah, Well, I think the long term thinking that Yvonne
has instilled in the business, and he's been incredibly consistent
about this on a couple of things. Number one, He's
always said, you know, I never wanted to be a
business person, but if I'm going to own a business,
I want to own one I respect. I want it
to be an exp speer in doing business differently, and
I want it to exist for one hundred years or more,
because that's that's the challenge, that's the experiment. And so
(15:07):
he's always had this long term vision of what he
wanted to create. And so I think, to answer your question,
it starts with nesting the decisions that we make within that.
And I think that means making decisions that serve us best,
not just for today or tomorrow, but for the long term.
That means making tough decisions, when making tough decisions is
required and not just taken sort of the easy and
(15:30):
current path. I think that, you know, I think keeping
people inspired. Candidly, it's been a little bit more challenging
in the last couple of years as a couple of
things have been sort of cycling through culture. One is
just this post COVID environment I think has been really
destabilizing for people. And number two, I think just the
level of economic uncertainty that people are feeling I think
(15:52):
has been equally so I think people, and you know,
this describes the vast majority of our employees who really
are concerned about the fragile state of our planet and
see what's happening from this administration. I think are also
feeling kind of beat up and discouraged and trying to
figure out where the hope is. And you know, to
(16:14):
quote Yvonne again, you know, the cure for depression is action.
And I think that that's also something that we fall
back on at Patagonia, which is, Okay, what are the
things we can do, what are the things we can control,
and that includes the service that we provide to our customers,
the quality of the product that we make, and what
we do with our business, both what we represent and
(16:35):
stand for, and also how we use the resources that
the business as.
Speaker 1 (16:40):
This makes a lot of sense and it's quite motivating.
I mean, given the environment, as you mentioned, Ran, I'd
love to shift to your journey, your goals as a leader.
I'm curious as to what inspired you to take this
career path and are there any particular leadership principles that
(17:01):
stand out that you've learned along the way.
Speaker 2 (17:04):
I think that as first taking this role on, it
certainly not something I ever planned for. It was not
something I ever sort of worked towards. I was really
happily looking after the business in Europe and enjoyed it immensely.
It was a great opportunity, you know, taking all the
best parts of Patagonia in an environment like that, in
a landscape like that where I think there was a
(17:25):
lot of receptivity, and my family and I loved living
over there as well. So taking this job, it's definitely
it's been a big lifestyle change, not just living in California,
but also you know, the stress and the twenty four
to seven nature of it's been vastly different. You know.
I believe then and i'd like to believe now that
I could make a difference and have an impact on
(17:45):
this business and help to continue to move forward Yvonne's
vision of what a company, in this case Patagonia can
really represent. I don't think I fully appreciated the times
we're living in and how challenging some aspects of that
would be. So, you know, a lot of lessons learned,
but we continue to move forward. I think as far
as leadership principles, it's just staying in constant motion and
(18:07):
being as transparent, approachable as possible. So I think, if
in doubt, tell the truth and stay really humble, and
stay really hungry, and I think those are things that
I try to fall back on.
Speaker 1 (18:19):
I like to stay hungry, but always be curious is
something that I'm.
Speaker 2 (18:24):
Also Yeah, yeah, I think you know it's funny. I
know we're here talking at this Bloomberg Green event here
in Seattle, and Jane Fondes spoke last night, and she
reminds me, I think, eighty seven years old. If I'm
not mistaken a lot, she reminds me quite a bit
of a number of people I know, Yvonne, our founder,
being one of them, who are in their eighties and
(18:44):
are seemingly as curious and therefore energetic and passionate as
they probably were ten, twenty, thirty, forty fifty years ago.
And I think that appears to me to be a
life well lived very much.
Speaker 1 (18:56):
So I think I've always said that it's never too
late to learn something, right. Yeah, well, Son, you stand
by that. I guess you say, any one piece of
advice you would give to maybe a founder looking to
start a sustainability business or young professionals in the space, I.
Speaker 2 (19:13):
Think, as simple as it sounds the first thing I'd say,
and again, depending on which of those it is, it
might it might ring true differently. But just do something.
Just get started. I think sometimes people can kind of
just get stuck, sort of all right, where do I begin?
And I think the answer is begin somewhere, and you know,
you probably have a list of six different things, if
not sixty, So get started is part of that. I
(19:33):
think if it's the business context that you asked, probably
the best piece of advice I can give is consider
becoming a B corp and the be Corp movement. In
that process, A certification is quite rigorous. It's also quite
broad and exhaustive in the things, the questions that it
asks and the requirements it imposes for you to understand
your business and build your business in a way that
(19:56):
I think has got you know, some great learnings from
a cross industry. Will also use this as an opportunity
to just mention Andrew Kassoy, who was one of the
three founders of b Lab and therefore the BE court movement,
who just passed away just less than a month ago,
way too early. And Andrew, along with his other two
(20:19):
co founders, Jay and Bart, really believed that what was
problematic about capitalism as we know it today was just
the lack of care and concern for people in planet.
And I think he you know, he gave a huge
portion of his life to creating a different outcome and
I's want to acknowledge that as well.
Speaker 1 (20:38):
Thank you, and what aspirations do you have for Patagonia's
future and also just you as a leader.
Speaker 2 (20:48):
I think for Patagonia in the time that I have remaining,
however long that is, I think it's distilling things down
to the basics, and it's building the best product, and
that's performance, innovation and performance. So product it's best in
class for what it's intended to do, regardless of what
product that is the same in footprint, make that product
with is soft to touch on the planet and our
(21:11):
resources as possible, take every learning that we have and
scale those solutions across the industry, and then use everything
we've got our people, our community, our money, our voice
to advocate for you know, for protecting our home planet.
And I think that's what makes Patagonia Patagonia, and I
think those things have never been more needed than they
(21:33):
are right now. And you know, to get a little
more granular and what that can look like. I think
it is as I talked about before, you know, encouraging
people not to buy product that they don't need. When
you buy product by quality, and when you buy quality,
see yourself as an owner, not a consumer. And I
think I can, you know, sort of make those comments.
But what's most important is when we both design the
(21:55):
product with that in mind and then design the systems
that support that where it may it easy or at
least reasonable for people to participate in that. And that's
why product repair is so important to us, and that's
why resale is so important to us, and why we've
invested so much money in time ahead of the curve
in enabling those services.
Speaker 1 (22:16):
And it's really interesting that you say, you know, you
don't encourage people to buy more product. How do you
balance that with being a for profit business, one that
is dependent on consumerism. I know you mentioned your bed
and you know ensuring that these products live along life,
but just balancing.
Speaker 2 (22:35):
The two well, I would say it's a tricky balance
at times, but I don't think the two things are
totally in conflict. And so mistake food maybe as a
slightly more benign example. People need to eat often three
times a day. They don't need to eat excessively. They
should eat quality food that's good for them. And so
I sort of think about apparel and equipment the same way.
(22:57):
You know, people need raincoats, and so when you need
a coat by the most responsibly made by the best performing,
by quality, and then take care of that product, keep
it in use as long as possible. If you've got
a raincoat, you may not need three more just because
you saw a new color that you like. And so
I think that that's kind of the sort of razor's edge.
I suppose that we rude.
Speaker 1 (23:18):
I like that, buy what you need. I'm very guilty
of the latter what you mentioned.
Speaker 2 (23:25):
Ran.
Speaker 1 (23:25):
It's been a real pleasure. Thank you for being on.
Just as a last question, can you tell me something
maybe our listeners don't know about you.
Speaker 2 (23:35):
Boy something listen you know maybe I guess we haven't
talked about the fact that I came to Patagony and
it came to this industry through climbing and through snowboarding
and through a little bit of surfing and mountain biking,
and so yeah, this time I've been you know, in
this industry and including with Patagonia for almost eleven years.
(23:55):
I've been able to spend a lot of time in
really incredible places in nature, most recently about a month
ago up in the Western Arctic in Alaska with my
son on a river trip, so camping and rafting a
river up in the Western Arctic. But you know, over
the course of my career, I've climbed all over Asia
and Europe and a bit in South Africa and elsewhere,
(24:17):
and snowboarded and the Arctic Circle in Norway. And I
guess the reason I say those things is, you know,
protecting those areas is not an abstract theory. For me
being up in the Western Arctic a month ago and
knowing the pressure that that area is under, both from
climate change and also extractive industry, you know this is
anything but an academic interest.
Speaker 1 (24:39):
That's amazing. Maybe one thing our listener is don't know
about me. I aim to climb the mountains of the woods.
I like that.
Speaker 2 (24:45):
I'll see you out there.
Speaker 1 (24:46):
Oh yeah, thank you so much for joining us. It's
been a real pleasure.
Speaker 2 (24:50):
Pleasure is all mine. Thank you and.
Speaker 1 (24:52):
For our listeners. You can find more information on sustainability
issues on bispace ESG on the Bloomberg Terminal. If you
have an ESG quandary you'd like to ask BIS expert
analysts or learn more about our research, send us an
email at ESG Currents at bloomberg dot net. And if
you like this episode, please subscribe on Apples, Spotify, or
(25:13):
your favorite podcast platform. Thank you, everybody,
Host
Eric Kane
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