Author Archives: Connor Leonard

Billionaire is ‘Going Purpose’ by Donating $3 Billion Company to the Earth

5 years after claiming that ‘We’re in business to save our home planet’, Patagonia founder Yvon Chouinard has followed through on his promise by donating his company to the earth. Chouinard founded Patagonia in 1973, and his values have always been central to the company. The company also donates 1% of its profits to charity each year and promotes an environmentally friendly business model, even going so far as to encourage customers not to buy Patagonia clothing new and instead reuse old ones.

In his open letter to stakeholders, it was clear that in selling the company Chouinard wanted to ensure both the financial success of the company and the charitable success of his donations. According to Chouinard, ‘there were no great options available to us, so we created our own.’

Chouinard decided to sell his businesses to two different entities. The first entity, the Patagonia Purpose Trust, received all off the voting stock which is equivalent to 2% of the company. The Chouinard family received nothing from this sale and paid $17.5 million in taxes.

However, by doing this Chouinard believes he and his family can ‘maintain our values’. The Patagonia Purpose Trust’s board will include the Chouinard family as well as directors equally committed to the success of the company and the planet.

As well as this, 100% of the non-voting shares will go to the Hold Fast Collective. These shares are equivalent to 98% of the company and will receive 100% of the profit. The Hold Fast Collective is a non-profit organization that advocates for clause and political candidates that fight for the environment. Patagonia expects to generate $100 million in profit to help the Hold Fast Collective.

Chouinard closed his statement with a message of hope: ‘Despite its immensity, Earths resources are not infinite, and it is clear we’ve exceeded its limits. But it’s also resilient. We can save our planet if we commit to it.’ Chouinard has set an example for all companies and governments, and one can only hope that his example is followed in time.

Truss’s first act as UK Prime Minister promises to save the public, but she threatens the value of the pound

Lizz Truss enters no. 10 Downing Street during high-stakes wars; both within her party, and on the Eastern borders of Europe. However, her first battle as prime minister will be tackling the energy bill crisis. This daunting task is made ever more difficult by Truss’s commitment to a low tax economy.

The cost of a cap on energy bills depends largely on its form. A targeted plan to help the most vulnerable households, such as £650 for those on means-tested benefits, would be cheaper. However, it would be difficult to implement quickly and effectively and it would leave families just above the threshold in a precarious position. A blanket tax break would benefit richer households with disposable income, and would cost substantially more.

Furthermore, the cost of the energy cap will likely be increased by factors outside of Truss’s control. Putin has taken a stance against western sanctions by extending the closure of Nord Stream 1. This will increase the price of gas as well as the cost of Truss’s relief plan. As well as this, a relief package of this scale will increase public spending in a demand charged inflation spike, spurring a further rise in interest rates.

With a public debt to GDP ratio of 96%, investor confidence in the UK is low. Couple this with extensive high-interest rate borrowing, Truss will need to provide extensive assurances on payment plans in order to attract foreign investment. However, as of yet all she has done is ensure that taxes will be slashed.

If Truss decides to increase taxes, either approach will be politically difficult. A general tax would be a rejection of her low-tax promise, which could be seen as a return to the laissez-faire approach to policy integrity endured during the Johnson administration. However, a long-term repayment of tax breaks could cut vulnerable households adrift, which would be detrimental to the economy.

With a worryingly high cap on costs, and no real plan to raise funds for repayments, investor confidence is at a worryingly low level. On Monday, Shreyas Gopal of Deutsche Bank claimed the UK could be on a “balance of payments crisis”. Although unlikely in a G7 economy, the risk of a balance of payments crisis is no longer negligible. Therefore, in order to attract foreign investment and fund her relief package, Truss will have to depreciate the value of Sterling substantially, with Deutsche Bank claiming that a devaluation of 30% may be required to attract foreign investment into Britain.