For the past quarter century, Silicon Valley has generated untold innovation and value from new business models that have transformed our world. For many of the original generation of disruptors, a formal look at environmental, social, and governance (ESG) questions would only come later, after they achieved the size and scale to merit scrutiny and, in some cases, after they made misjudgments of their impacts in the world.
This is why last week’s initial public offering (IPO) from Allbirds, an apparel and footwear company that has made sustainability an explicit part of its brand and value proposition, is so interesting. Indeed, Allbirds premised its entry to the public capital markets on an explicit set of 19 ESG criteria developed through partnership with an advisory council comprised of a mix of nonprofit and philanthropic organizations, investors, and corporate governance experts. (Full disclosure: I chaired the advisory council and therefore participated in the development of the criteria, which are currently hosted by BSR at https://spo.bsr.org/ and where the full list of advisory council members can be found).
The Sustainability Principles and Objectives Framework (SPO Framework) includes topics ranging from climate change to value chains, human rights, labor practices, and governance.
In preparing to go public, Allbirds, which had already achieved B Corp status, found that there was no existing framework specifically designed for a company at its stage of development. This led to the creation of the SPO Framework, which is intended for late-stage private companies, companies preparing to go public, and early-stage public companies.
In the development of the Framework, several key principles were applied:
- The framework needed to be appropriately comprehensive for companies that, in many cases, do not—yet—have the institutional structures to develop, implement, and verify policies and practices.
- It also aimed to be sufficiently ambitious to be meaningful, while not being limited to a tiny handful of companies.
- The Advisory Council also had a clear commitment to ensuring that the Framework was not seen as adding to the already quite crowded world of performance standards and reporting and disclosure frameworks. This is why the focus on companies at a specific stage of their development is so important.
- Finally, there is an intention on the part of all of us who developed the Framework to see the Framework grow and evolve, with plans for ongoing development yet to come.
This IPO may be the first of its kind, but it most certainly will not be the last. Since the SPO Framework was first released in August, we have seen considerable interest from investors, other companies at a similar stage of development, journalists, and the sustainability community more broadly. It seems highly likely that there will be more companies using this model to raise the level of their ESG commitments and to demonstrate to investors and stakeholders that they intend to make sustainability commitments right from the start.
And for Allbirds, a company whose initial product is athleisure shoes, it makes sense that they hope many companies will follow in their footsteps.