Effective immediately, the Chouinard family has transferred all ownership to two new entities: Patagonia Purpose Trust and the Holdfast Collective. Most significantly, every dollar that is not reinvested back into Patagonia will be distributed as dividends to protect the planet. The company projects that it will pay out an annual dividend of roughly $100 million (£87m), depending on the health of the business.

The Patagonia Purpose Trust now owns all the voting stock of the company (two percent of the total stock) and exists to create a more permanent legal structure to enshrine Patagonia’s purpose and values. It will help ensure that there is never deviation from the intent of the founder and to facilitate what the company continues to do best: demonstrate as a for-profit business that capitalism can work for the planet.

The Holdfast Collective owns all the nonvoting stock (98 percent of the total stock), and it will use every dollar received from Patagonia to protect nature and biodiversity, support thriving communities and fight the environmental crisis. Each year, profits that are not reinvested back into the business will be distributed by Patagonia as a dividend to the Holdfast Collective to help fight the climate crisis.

Mr Chouinard, Patagonia founder, former owner, and current board member, said: “It’s been a half-century since we began our experiment in responsible business. If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have.

“As the business leader I never wanted to be, I am doing my part. Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source. We’re making Earth our only shareholder. I am dead serious about saving this planet.”

Patagonia will remain a B Corp and continue to give one percent of sales each year to grassroots activists. The leadership of the company does not change. Ryan Gellert will continue to serve as CEO and the Chouinard family will continue to sit on Patagonia’s board, along with Kris Tompkins, Dan Emmett, Dr. Ayana Elizabeth Johnson, Charles Conn (chair of the board), and Ryan Gellert.

The Chouinard family will also guide the company’s controlling shareholder, the Patagonia Purpose Trust, electing and overseeing Patagonia’s board of directors. They will also guide the philanthropic work performed by the Holdfast Collective. Acting together, Patagonia’s board and the Patagonia Purpose Trust will work for the company’s continued success over the long term while ensuring it stays true to its purpose and values.

Mr Gellert, board member and CEO of Patagonia, said: “Two years ago, the Chouinard family challenged a few of us to develop a new structure with two central goals. They wanted us to both protect the purpose of the business and immediately and perpetually release more funding to fight the environmental crisis.

“We believe this new structure delivers on both and we hope it will inspire a new way of doing business that puts people and planet first.”

The website Patagonia.com was updated to state “Earth is now our only shareholder” and to include a letter from the founder.