How Will Patagonia’s $10M Trump Tax Cut Donation Influence Other Brands? Experts Weigh in

Patagonia CEO Rose Marcario said the $10 million the company saved from President Donald Trump’s corporate tax cut is going to eco-friendly groups. And industry experts expect other firms to follow.

“I don’t know that they’ll be as overt as Patagonia, but I think we’ll see the industry step up and take stronger positions on sustainability and other social issues,” The NPD Group Inc.’s senior sports industry advisor Matt Powell said. “I urge all companies to take a visible stand on social issues, specifically around sustainability. Patagonia continues to show leadership and I would expect we’ll see other outdoor brands respond in kind.”

And FDRA CEO Matt Priest agrees.

“You see in other spaces where a Nike or an Adidas puts forward an initiative that drives change, it brings along the rest of the industry,” Priest said. “It always helps when you have someone take the lead. Whether or not other companies are progressive enough to follow suit remains to be seen.”

Starting this year, the corporate income tax rate dropped from 35 percent to 21 percent, a move Marcario referred to in a LinkedIn post yesterday as “irresponsible.” Despite her feelings about the reduction, the executive said Patagonia saved $10 million.

But that money, Marcario stated, won’t be reinvested into the brand.

“We have always funded grassroots activism, and this $10 million will be on top of our ongoing 1 percent for the planet giving,” Marcario wrote on LinkedIn. “It will go a long way toward funding grassroots groups; including those dedicated to regenerative organic agriculture, which may be our greatest hope for reversing the damage done to our overheated planet.”

Despite the effect Patagonia’s move could have on the actions of others in the industry, the experts disagree on the impact it could have on its sales.

The brand has continuously fought for environmental causes, and since Trump took office, has been a vocal opponent to his actions that the company believes will hurt the outdoors. Most notably is Patagonia’s ad blasting his national monument reductions, which featured the phrase “The President Stole Your Land.”

Powell believes Patagonia’s continued fight will prove positive at the cash register.

“Everything I’ve seen says [Patagonia’s efforts have] been positive so far. It’s not overtly a marketing move, and yet it has positive marketing impact,” Powell said. “I think they will continue to reap the benefits of taking strong positions.”

According to The NPD Group Inc.’s retail tracking service, Patagonia apparel sales within the specialty channels are on the rise. In the 12 months ending September 2018, they increased by 14 percent, outpacing the total market, which grew 1 percent.

However, Priest isn’t sure if people will come out of pocket to support companies that have a strong public pro-environment stance.

“Sustainability and environmental protection is definitely something that consumers value, and when you ask somebody, ‘Would you rather buy a product that’s sustainability sourced or from a company that prioritizes environmental protection?’ most people would say, ‘Yeah, absolutely,'” Priest said. “But when it’s time to make that decision, when you’re looking at the wall of shoes, you base it on silhouette, colorway, price, functionality. All other things drop below that.”

He continued, “For brand awareness it’s awesome, but what will it do for sales, that remains to be seen.”

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