No Ordinary IPO: The First-Ever Sustainable Public Equity Offering?​

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By Adelina Budulan​


The Story

Allbirds, “credited as having literally created the category of woven footwear”, has filed for an initial public offering (IPO) – with a twist (Forbes).

According to the filing, the shoemaker aims to pursue the first-ever sustainable public equity offering (SPO) through an easily replicable framework (US Securities and Exchange Commission). The framework requires an independent third-party to assess whether Allbirds meets a host of environmental, social, and governance (ESG) criteria (Forbes). These include maintaining “a minimum ESG rating”, following “best practices on climate responses, value chain, people management, and corporate governance”, and making “commitments to make meaningful progress on important ESG matters” (BSR).

Founded in 2015, Allbirds is registered as a public benefit corporation under Delaware law, which means that it is required to balance the interests of shareholders with those of stakeholders, and to pursue environmental conservation (Reuters). To this end, the shoemaker uses naturally derived materials, and reduces its carbon footprint through various practices. Despite steady growth in revenue, Allbirds has stated that it expects to remain unprofitable for the foreseeable future (Financial Times).

What It Means For Businesses And Law Firms

Sustainability is becoming increasingly important to millennials and Generation Z consumers, which is represented in their shopping habits, as well as their investment choices. In aiming for the first-ever SPO, Allbirds seeks to capitalise on the opportunity presented by the rapidly growing “demand for fashion brands with environmental credentials” - especially among its two target demographics (Financial Times). The shoemaker also hopes to pioneer SPOs within the fashion industry and beyond (US SEC). It remains to be seen, however, whether fellow environmentally and socially conscious companies will adopt Allbirds’ SPO framework in the foreseeable future.

Whether or not Allbirds’ SPO framework becomes widely adopted, ESG concerns will likely continue to be important to regulators and investors alike. As such, law firms will likely continue to be called upon by companies, banks, and funds for advice on ESG matters. They will likely help such clients navigate the nascent regulatory landscape, avoid greenwashing, or even pioneer novel initiatives.Law firms that boast particularly highly-ranked ESG practices on a global scale include Linklaters, Herbert Smith Freehills, and Allen & Overy (Chambers and Partners).

Law Firms Involved: Cooley is advising Allbirds on its listing, while Latham & Watkins is advising the underwriters, including Morgan Stanley, JP Morgan, and Bank of America Securities (Law360).