Patagonia ignites the debate between ‘woke’ capitalism and responsibility

Capitalism wants to be responsible or, at least, appear so. Sustainability pioneering fashion company Patagonia scored a point for the so-called responsible capitalism last week by announcing that it will be controlled exclusively by two non-profit organizations, Patagonia Purpose Trust and Holdfast Collective. A radical action so that the purpose of the company is not lost and that will allow it to save taxes, but an exception in a market that is still trying to integrate sustainability into its business model.

“In Patagonia they are pioneers in sustainability from the beginning, it is in the core of its business, but it is difficult to think that a conventional company can take this step”, says Bethlem Boronat, an expert in Corporate Social Responsibility (CSR) at EAE Business School. “I don’t even think that sustainability is due to a CSR strategybut it is part of the company’s mission”, says Boronat, although he points out that there is some debate about it.

Patagonia’s founder, Yvon Chouinard, can hang himself the pioneer medal, but there are other companies that have walked that path before. “We are seeing it in smaller companies that are born as a movement, many of them in the food sector,” says Boronat.

One of these business experiments is the company Who’s the boss? that allows consumer associations to create products. Patagonia’s decision has also caused an impact among the giants of the sector. Only two days after the announcement of the fashion company outdoor, the founder of the Canadian Lululemon announced that he would donate 76 million dollars to protect the forests of British Columbia.

Although such an extreme action has only one great parallel in the United States: Republican billionaire Barre Seid, who donated $1.6 billion from the sale of his company to a conservative political action group. In both cases, the donors avoided a large amount of federal taxes by choosing to incorporate as a 501(c)(4) organizationa tax-exempt nonprofit entity that can make unlimited political contributions.

Specifically, Chouinard will save the payment of about a billion dollars by not leaving the company to his heirs. Thus, the multimillionaire will avoid paying taxes while he maintains control of the company. “The company has a long history of paying taxes and supporting the rise of those who can benefit the planet,” Patagonia spokeswoman Corley Kenna defended.

Faced with criticism of hypocrisy, council member Charles Conn also defended in an opinion column that “this is not capitalism woke up”, but it is about “the future of business”. The term woke up, in Spanish, awake, began to be used in the United States in the 2010s to refer to those who were against racism, but it soon expanded to other groups. Currently, the term is often used pejoratively for those insincere movements, with more image than background.

Patagonia has become the umpteenth company that has been thrown in the face of the term coined by the columnist of the New York Times Ross Douthat. The term was defined by sociologists Akane Kanai and Rosalind Gill as a growing trend in which companies incorporate “positive empowerment messages” for traditionally marginalized groups, which, according to its authors, depoliticizes social problems and reduces them to a matter of self-esteem. In this sense, the giant Unilever received the same criticism after assuring that the purpose of Hellmann’s mayonnaise was “to promote healthy eating.”

Despite the bold statement, the strategy is in line with advice from the McKinsey Institute, which argued that “business leaders must accept the seeming contradiction – of low trust and high expectations – and make the decision to demonstrate who consider that their mission is at the service not only of the shareholders, but also of the clients, the suppliers, the workers and the communities”. The most common term for it is capitalism of stakeholders and we believe that its time has come”, sentenced the consultant.

Although for now, the Patagonia model seems more like an exception than a symptom of change. “There are very few companies that are consistent with their purposes”, maintains Boronat. “For this, it would be necessary for a change in economic culture and business philosophy to take place, for profits to be understood as a means and not as an end,” argues the teacher. “It’s not about carrying out sustainable actions, but that this is in the DNA of your business, it is one of the objectives,” she adds.

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