Unlike Chouinard’s decision to allocate 100% of Patagonia’s profits to environmental causes, the Business Roundtable’s 2019 statement is nonbinding and doesn’t compel companies to do anything differently.

Research published in 2020 seems to confirm that the roundtable’s new statement of purpose was mostly performative. Since its release, close to 100 of the companies that belong to the group have updated their governance guidelines, but very few had "made any changes to their statement of corporate purpose.”

In addition, the researchers examined 26 proposals that shareholders had introduced with the goal of implementing the roundtable’s statement. “Each company invariably opposed these proposals,” the study observed.

Chouinard’s remake of Patagonia’s governance acknowledges an important reality.

When presented with a situation in which social welfare and private profits align, companies will act sustainably. However, when circumstances pit public welfare against a company’s bottom line, executives typically side with their shareholders.

This does not make most executives evil; it makes them rational. They are responding to capitalism’s current system rules and incentives.

That’s why I find Chouinard’s imaginative act of moral courage uplifting.

At the same time, I believe that it would be naive and even harmful to expect many others to follow his example by voluntarily choosing a purpose other than the pursuit of profits.

Expecting businesses to do so would relieve government of its responsibility to set different rules to protect the environment and address climate change. I also agree with David Gelles, the New York Times reporter who broke the story about Patagonia’s new governance structure. As Gelles noted in a Vox interview, Chouinard’s family is “one of one.”

This article is republished from The Conversation, an independent nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Ken Pucker, Tufts University. The Conversation has a variety of fascinating free newsletters.

Read more:
Patagonia’s founder has given his company away to fight climate change and advance conservation: 5 questions answered

How the climate crisis is transforming the meaning of ‘sustainability’ in business

Ken Pucker does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.