Outdoor clothing company Patagonia Inc is restructuring its business to focus on its environmental and social focus, including a new US$20m investment fund to back start-up companies who share its ethical ideals.

Describing the move as "the next logical step," the Ventura, California-based firm has set up a new holding company called Patagonia Works, and an in-house investment fund '$20 Million & Change'.

As well as clothing, the new initiative will invest in new companies in the food, water, energy and waste industries.

"While most holding companies are about diversification, Patagonia Works is dedicated to a single cause: using business to help solve the environmental crisis," founder Yvon Chouinard said in a statement.

Rose Marcario, who has been COO and CFO of Patagonia's apparel company, will now take on a new role as president and CEO of Patagonia Works. Marcario has already been responsible for the launch of Patagonia Provisions "thoughtfully sourced" food.

Casey Sheahan will continue to serve as president and CEO of Patagonia Inc, the clothing company at the heart of Patagonia Works.

"Economic growth for the past two centuries has been tied to an ever-spiralling carbon bonfire," Chouinard added.

"Business - and human - success in the next 100 years will have to come from working with nature rather than using it up. That is a necessity, not a luxury as it's seen now in most business quarters. We invite and encourage all companies to start to work with us in that direction."

Patagonia has long been recognised for its environmental and social values, and every year for the past 30 years has donated 1% of its sales to grassroots environmental organisations.

It also helped initiate the Sustainable Apparel Coalition (SAC), an organisation of companies that produces more than a third of the clothing and footwear on the planet. The SAC has launched an index of social and environmental performance that designers (and eventually consumers) can use to make better decisions when developing products or choosing materials.

And it was one of the first companies to launch a Common Threads clothing recycling scheme to recycle, down-cycle or re-purpose all of its products once consumers have finished with them.