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Titans of (Sustainable) Capitalism

By Taylor Gray, Ph.D. on September, 6 2021

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Taylor Gray, Ph.D.

The world is a better place when companies are good corporate citizens. I remain focused on developing meaningful and actionable insights from empirical data in pursuit of a better world.

It’s certainly no mystery that we think good corporate citizenship can change the world and that consumer demand is the most important force in driving companies to be better. As more and more of us align our spending with our values, we are not only sending a signal to the markets but we are actually moving markets. 

When we expect companies to behave sustainably and ethically, we are effectively shifting the incentives that guide company operations. Through our spending patterns, we are moving sustainability from being nothing more than a marketing gimmick to actually being a strategic competitive advantage.

I was reminded about how powerful intentional shopping truly is again this week when I was reading about the planned Allbirds initial public offering. Allbirds started in 2015 as a manufacturer of sustainable sneakers and now offers a broader selection of active-wear clothing as well. Now, in 2021, the company is planning an IPO (to be listed on the NASDAQ exchange) to raise capital for further growth and development.

If it wasn’t clear before, it should be now: Sustainability is profitable. The ‘titans of capitalism’, the self-styled experts in profit, have now recognized this.

 

Born in Sustainability

The company was founded with sustainability front and center. From its first ever sneakers on to its most recent clothing options, Allbirds has designed and manufactured products with recycled, natural, and/or sustainable materials, predominantly ethically-sourced merino wool. With carbon offers, the use of renewable energy, and the documentation of full life-cycle carbon footprints of its products, Allbirds has taken big strides in demonstrating responsibility for its impacts on people and the planet--and every year the company shows even more progress along this trajectory.

Just the fact that Allbirds exists and is a widely recognized brand gives me hope for intentional shopping. Enough people want to be intentional in the impacts of their shopping that a (relatively) recent start-up can produce a sustainable alternative that rivals its entrenched competitors such as Nike and Adidas. Every sale that Allbirds makes not only continues to support its operations but also serves to put pressure on these much larger rivals to be more responsible--to be better.

 

A New Chapter

But what excites me even more is the actual Allbirds IPO, and who is underwriting this IPO in particular. Investment banks underwrite IPOs to help the company ensure that all regulatory compliance measures are in place and further guarantee that a specific number of initial shares will be sold at a specific price (and buy any surplus if not). An IPO underwriter is effectively a seal of confidence for markets.

What amazed me is that Morgan Stanley, JP Morgan, and Bank of America are leading the underwriting for the Allbirds IPO. These are not green finance or sustainable investment names from niche markets. Rather, these are among the ‘titans of capitalism’--those investment banks derided in popular press as being out to make a buck no matter the cost. Yet here they are, underwriting one of the most popular sustainability-oriented IPOs ever.

These banks aren’t doing this as a favor or as a feel-good project. They are involved because they see a chance to make money. Allbirds is a company built on sustainability and this is a core proposition of its IPO filing. Morgan Stanley, JP Morgan, and Bank of America are underwriting this offering because they see a chance to make money--and they will be making money through sustainability.

I don't begrudge them this. In fact, I celebrate it. That these financial power brokers are finally seeing what many of us have known for years is actually empowering.

 

A Clear Message

If it wasn’t clear before, it should be now: Sustainability is profitable. The ‘titans of capitalism’, the self-styled experts in profit, have now recognized this. Sustainability is not a marketing gimmick, it is a strategic competitive advantage. And we have decades of international shoppers to thank  for making this happen.

 


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