ADMP Investment Proposal (First Draft)

TO: Clark Hansen, CEO, AMDP

FROM: Sofia Durán, Research and Development Department

DATE:  March 5, 2024

SUBJECT: Allbirds Inc. Investment Proposal

Essential Basic Concepts

In AMDP we support companies who conduct business in a socially responsible, environmentally
sustainable, and financially viable way. These are 4 essential basic concepts that have to be taken
into account the research:

• Triple Bottom Line: A concept that states companies should commit to measuring not only their financial performance but also their social and environmental impact. The Triple Bottom Line is composed of three P’s: profit, people, and the planet. Profit is the financial return an organization generates for its shareholders. I our capitalist economy, a company’s success heavily depends on it. People highlights an organization’s commitment to positively impact society. Planet is the final component that evaluates the organization’s effect on the environment. These three categories are used by companies to evaluate their environmental and social responsibility, determine positive contributions or negative impacts, without leaving aside the organization’s financial success (Miller, 2020).
• Corporate Social Responsibility: The principle that advocates businesses have a responsibility to the society in which they exist. CSR is broken down into 4 categories: environmental, philanthropic, ethical, and economic responsibility. Companies have an environmental responsibility reducing harmful practices, regulating energy consumption, and offsetting negative environmental impacts. An ethical responsibility ensuring fair and ethical operations to all members. A philanthropic responsibility aiming to actively making the world a better place. Finally, an economic responsibility making financial decisions that do good, not only to maximize profits (Stobierski, 2021)
• Social Enterprise: A business with social objectives as its primary purpose. This business aims to optimize profits and at the same tie maximize benefits to society and the environment. The profits generated by the enterprise are primary to fund social programs (The Investopedia Team, 2022).
• Carbon Footprint: The amount of carbon dioxide (CO₂) emissions attributed to all activities of an individual or entity.  A variety of different tools, like the Greenhouse Gas Protocol and ISO 14064, are utilized to calculate carbon footprints for individuals, businesses, and organizations. Online carbon calculators provided by entities like the U.S. Environmental Protection Agency, the Nature Conservancy, and British Petroleum are also available for. Understanding and reducing carbon footprints are crucial for mitigating climate change and minimize our impact on the environment (Encyclopedia Britannica, n.d.). 

Allbirds Inc. Background

Allbirds journey began when Tim Brown, a native of New Zealand, began asking himself why the remarkable sustainable resource merino wool was virtually absent in the footwear industry. Tim teamed up with Joey Zwillinger, an engineer and renewables expert, to craft a revolutionary wool fabric made specifically for footwear. The outcome was a new category of shoes inspired by natural materials, and an ongoing mantra to create better things in a better way (Allbirds, n.d.).

Allbirds was founded in 2014 and is recognized in the field for its simplicity in design, comfortable construction, and its emphasis in sustainability. The concept of the shoe became “wear-all-day comfort” characterized with a lightweight, bouncy, and effortless feeling.

Financial Track Record

• The full year 2022 net revenue increased by 7% to $297.8 million compared to 2021 and increased 36% compared to 2020. This consistent growth is a positive indicator of the company’s financial health and success.
• The net loss for the full year of 2022 amounted to $101.4 million, marking a significant increase from the net loss of $45,370 recorded in 2021.
• The company's loss from operations increased significantly from $32,876 in 2021 to $100,285 in 2022, indicating a substantial decline in operational performance over the year.
• The company reduced the carbon footprint of top 10 products by 22% in 2022 compared to 2021.

The Company’s Claims

• Materials from The Earth: For the manufacturing of the company’s products, they replace petroleum-based synthetics with natural alternatives like wool, tree fiber, and sugar cane. Therefore, the shoes are soft, breathable, and better for the planet (Allbirds, n.d.). Allbirds creates each pair of laces using one recycled plastic bottle. They use castor bean oil to increase the natural content in their insoles, to make them sleek, efficient, and comfortable. Also, their packaging is made up from 90% recycled cardboard.
• Sustainable Processes: Their production process using wool consumes 60% less energy compared to typical synthetic shoes. They prioritize the well-being of sheep through partnerships with ZQ Merino, ensuring high standards of farming and animal welfare. Additionally, their use of TENCEL Lyocell tree fiber significantly reduces water consumption 95% less water than conventional cotton, and carbon footprint 1/3 lower than virgin nylon. They ensure protection for forests, animals, and people with Forest Stewardship Council certification. The sugarcane, sourced from Brazil, relies on rainwater and is fully renewable. Trino, made from eucalyptus tree fibers and wool, is also has a sustainable production process.
• B Corp: The company became a B Corp company meaning it met rigorous standards of social and environmental performance, accountability, and transparency (Ike, 2023).
• Reducing Carbon Footprint Goals: Allbirds unveiled their Flight Plan in 2021, aiming to cut their carbon footprint in half by 2025 and achieve near-zero emissions by 2030. Two years into the plan, they are already over 60% of the way towards their 2025 goals. This has been a significant achievement in their mission to combat climate change through sustainable business practices (Allbirds, n.d.).