Is Patagonia the end game for profits in a world of climate change? – CNBC

by | Nov 20, 2022 | Climate Change

A Patagonia store signage is seen on Greene Street on September 14, 2022 in New York City.Michael M. Santiago | Getty Images News | Getty ImagesMany brands are aligning profits with purpose, but Patagonia’s decision in September to convert its for-profit business to one under which all the profits flow through to fighting climate change is the most complex move yet by a U.S.-based company in the realm of sustainable capitalism. Is it a model for other companies to pursue in the future?For the family founded firm, it’s in some ways a natural evolution. Patagonia has long been on the vanguard of responsible business practices. As far back as 1985, Patagonia deployed portions of its profits to the environment, via an “Earth tax.”It’s far from the only well-known U.S. brand to be structured in a way that allows profits to be donated to charitable causes. Newman’s Own, the food brand founded by Hollywood icon Paul Newman, is perhaps the most familiar. Since 1982, Newman’s Own has given 100% of profits to charity, now totaling half a billion dollars in contributions. But that business, with a pure non-profit structure, was more of a “first generation” model for sustainable business, says Tensie Whelan, founding director of the NYU Stern Center for Sustainable Business. “The Patagonia model is a little more sophisticated.” A business model already in EuropeYet while Patagonia made headlines in the U.S. for being a novel marriage of capitalism and charity, similar corporate structures are already in use with several large family-controlled European companies, from Carlsberg to Ikea and Novo Nordisk. “Nothing new in this model,” said Morten Bennedsen, professor of family enterprise at INSEAD and the academic director of the Wendel International Centre …

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