Allbirds sprints toward sustainability

PwC: What’s at the heart of the Allbirds philosophy about sustainability?

Zwillinger: Environmental sustainability is truly the reason we exist as a brand and why an already crowded industry needs another shoe company. Even if shoes contribute to only 2% of climate change relative to other industries, there’s the fact that consumers make a statement by what they wear. Allbirds is all about style and comfort. But our customers also want to express the fact that they stand for something different. They want to get behind a company that expresses their values.

PwC: How do you work toward achieving these goals?

Zwillinger: We have institutionalized our commitments. We have our flight plan, which aims to reduce carbon by 50% by 2025 and to near zero by 2030 — without any offsets. We have budgeted and planned accordingly, including how we resource materials, design and manufacture shoes and build a larger company. Every product starts with the question: What will the carbon impact be? The product must fit within these goals while aligning with our cost structure, consumer values and stakeholder values.

PwC: As a publicly traded company, how do you manage shareholder values and expectations?

Zwillinger: We’ve always believed that it’s important to tell our shareholders what they’re getting into. We’re a public benefit corporation, which means we have an equal focus on fiduciary responsibility and environmental conservation. It’s no easy feat to balance these things, but we believe it’s achievable through rigorous assessment. We don’t want to be a company that greenwashes. We want to meet or exceed our commitments, and we believe that our shareholders understand this and support it.

PwC: Is it a challenge to balance the mission statement and focus on ESG with practical cost considerations and shareholder value?

Zwillinger: There’s always the question, how much are people willing to pay for sustainability? It’s a valid question. But our objective has always been to maintain sustainable financials as a way to achieve great gross margins and long-term growth. We must maintain stewardship of nonfinancial stakeholders because that’s the real driver for our growth. We have to deliver on the brand promise or we lose everything with consumers. It requires a delicate balance, but we can’t placate some investors for a quarter or two by dropping costs, using synthetics and creating product misalignment.

PwC: What do you require from your leaders to make such a deep commitment to sustainability really happen?

Zwillinger: It’s multifaceted but it starts with the brand promise and putting it at the center of every conversation and event that happens during the day. We’ve also built financial rewards into our metrics. We have a significant portion of executive pay wrapped up in variable compensation. We label every product with its carbon footprint. It’s sort of like calories on a food label. This reinforces our commitment and makes everyone accountable. It also helps educate consumers. It’s a flashlight that shines on what we are actually doing — not only what we are saying.

PwC: How did the pandemic and supply chain challenges of the last couple of years impact sustainability efforts at Allbirds?

Zwillinger: We found that one of the secrets to success is paring back on some initiatives and focusing on what consumers love about our brand. So we doubled down on our environmental mission and worked even harder to become a leader in environmental sustainability. One thing we’ve done is focus on 30 topics that drive the ESG initiative — and determine which of these are the most crucial. We refer to these things internally as our swords. They are the mechanisms that can contribute to reversing climate change. In practical terms, they revolve around three pillars: agriculture, renewable power and material consumption.

PwC: What did you do to mitigate risk but retain sustainability during recent supply chain disruptions?

Zwillinger: First, we have deep partnerships with our supply chain partners and we work very closely with them to produce millions of pairs of shoes every year. When the turbulence began, we focused on becoming quicker and better. We identified the core materials that are key to us — things like merino wool, eucalyptus fibers, sugarcane and plant leather — and narrowed down the key components so that our factories can go deep on these products. That way, whether we get it right or wrong, we can pivot quickly to another product line. It’s all about agility within an overall framework of sustainability.

A secondary reason is that we’ve studied our logistics framework and identified the fact that how we manage transportation has a huge impact on sustainability. The percentage of products we ship by sea is now over 90%. This is important because the ocean is by far and away the best form of transport from an environmental perspective. But this too goes back to our partnerships and our ability to communicate with our partners.

PwC: Are there any lessons learned that you could share with fellow business leaders about how to drive sustainability?

Zwillinger: It all revolves around the task of making sure your management team is focused on the factors that really move the needle for your business. It’s also important to be transparent and communicate with consumers, investors, business partners and others so they truly understand what you’re doing — and they’re willing to stick with you. 

Another key is to become extremely agile. You can’t control all the things happening in the world, but you can control your business and build a framework that’s equipped to deal with events. This is how you can drive long-term value, and results.