Allbirds, the sneaker brand that listed on Nasdaq last week, dropped its claims to be the first “sustainable” IPO after the Securities and Exchange Commission objected, according to the group’s chief financial officer.
The San Francisco-based company’s plans were an example of a recent trend among companies to emphasise their ethical credentials ahead of listing. But the move by the SEC highlights how regulators are paying increasing attention to how companies report on climate- and sustainability-related issues.
Allbirds announced in August that it would pursue a “sustainable public equity offering” that would guarantee the company met various environmental, sustainability and governance standards. However, it repeatedly weakened the proposals in subsequent updates to its IPO prospectus.
In September it removed references to a sustainable “offering” and said it would instead follow a “sustainability principles and objectives” framework. In October it then removed half the references to the new framework, including suggestions that it could increase the cost of the IPO and that other companies could follow its “sustainable” approach.
Mike Bufano, Allbirds chief financial officer, said the company’s commitment to sustainability remained but said it had been pushed by regulators to change its prospectus. He declined to give details.
“There’s lots of stuff that changes because you get feedback from different stakeholders, in this case the SEC, but . . . we believe [the framework] is still really useful for other companies,” Bufano said.
The SEC declined to comment. The agency has renewed its focus on climate change disclosures and nomenclature this year. In March it requested public comments on disclosure rules “with an eye toward facilitating the disclosure of consistent, comparable, and reliable information on climate change”.
Gary Gensler, SEC chair, last month told a congressional hearing that the agency was also eyeing investment funds’ labels to ensure there is sufficient “rigour” behind sustainability claims.
US companies will also find it harder to obstruct climate change and human rights petitions from annual shareholder votes following reforms announced last Wednesday. Repealing the shareholder measures, which were adopted during the Trump administration, was a win for environmentalists and other socially aware investors who file resolutions to push companies to reform their business practices.
Allbirds’ Bufano said that existing ESG rating systems “are great but are biased to companies with longer track records”.
The company has made eco-friendliness a key part of the branding for its wool- and eucalyptus-based shoes. It says the carbon impact of each pair is 30 per cent less than that of its rivals, though it has faced criticism from some activists over the way it calculates emissions.
The company’s IPO this week was the latest in a string of successful listings by consumer-focused brands. Allbirds sold more shares than planned due to high investor demand, and the stock jumped 93 per cent above its offering price on the first day of trading on Wednesday.
Bufano said investors were encouraged by recent improvements in the lossmaking company’s gross margins, which he said showed the company was “really focused on profitable growth”.
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November 07, 2021 at 06:00PM
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Allbirds dropped ‘sustainable’ claim from IPO after SEC objection - Financial Times
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