Patagonia's profit giveaway aimed to challenge the capitalist norms, but it has not been without its challenges.

• The employees of Patagonia were not surprised by the company's decision to allocate its profits towards combating the climate crisis, but the process has not been without stress.
• Two years ago, Yvon Chouinard and his family announced that they were donating their ownership of the outdoor clothing brand to climate-focused organizations that would use the profits to protect nature and biodiversity.
• Despite the challenges, the outdoor apparel brand's restructuring was a pivotal moment in its history.

Patagonia's decision to allocate its profits towards combating the climate crisis was anticipated by its employees, but the process has not been without its challenges.

Two years ago, Yvon Chouinard and his family announced that they were giving away their ownership of the company to climate-focused groups that would use the profits to protect nature and biodiversity.

The controversial move that combined capitalism and charity sparked debate about whether it would inspire others to imitate it.

Nina Hajikhanian, general manager for Patagonia EMEA, stated via video call to CNBC that no one was surprised internally about the inspiring and uplifting moment when it became clear that the company's values would be forever enshrined in the way they do business.

Hajikhanian stated that they did not want to sell the company because, although they could withdraw profits, it would be a one-time occurrence.

She stated that the main objective was to revolutionize capitalism by turning it on its head and encouraging other businesses to adopt different methods, which felt like a natural progression.

"Although it might have been a significant event, to us, it was just routine."

Since announcing its shift in September 2022, Patagonia has dedicated over $71 million to environmental causes, which is in addition to the grants and in-kind donations made through its "1% for the Planet" program.

The Holdfast Collective, a U.S.-based charity, owns 98% of Patagonia's nonvoting stock and made contributions to over 70 groups during its first year, including a $5.2 million grant to The Nature Conservancy in Alabama in February.

'Tension points'

Despite the difficulties, Patagonia's restructuring has been a significant turning point in its history.

Hajikhanian stated, "On the one hand, it is inspiring for our employees and gives them a sense of being in the right place. We consistently follow through on our actions and our words."

While investing in important work to ensure progress, tension points may arise during periods of weak business performance, causing tension in conversations.

"What happens to the funds? Do you reinvest in our business or channel those investments through the Holdfast Collective to support environmental solutions?"

According to Hajikhanian, if a business is not financially independent, it cannot serve as a role model for other businesses.

In late September, Ryan Gellert, the CEO of the company, announced that due to economic challenges and internal changes, 41 layoffs would be necessary, which is about 1% of the company's global workforce.

Gellert stated in a LinkedIn post that since the Chouinards transferred their stock to the Patagonia Purpose Trust and the Holdfast Collective two years ago, there have been minimal changes in Patagonia.

The CEO of Patagonia stated that the changes implemented were crucial for the company's long-term success, emphasizing their significance for the next 50 years.

'A serious decision'

Hajikhanian stated that inspiring others was a key reason behind Patagonia's structural shift in addressing the climate crisis.

Although she acknowledged that the process was far from easy, some companies have already reached out to discuss how such a move might work for them.

She emphasized that it was a crucial choice that required careful consideration.

"While I would suggest considering the process, I also believe there are other ways to contribute to the fight against the climate crisis if the founder is not ready to take that step."