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Allbirds is Quietly Revolutionizing Supply Chain Management

If you are currently wearing a pair of Allbirds sneakers, you’re probably in agreement with the company’s slogan: that they’re the world’s most comfortable shoes. 

But the ubiquitous direct-to-consumer sneaker startup did not get to its $1.4 billion-dollar valuation or $80 million in annual sales purely on comfort. Allbirds’ real revolution is something a little less sexy: the life-cycle assessment it uses to manage its supply chains.

By designing its entire process around sustainability, Allbirds has seen benefits to its bottom line as well as the planet. While there is no data available on how many footwear companies regularly assess their products’ life cycles for their environmental impact, Allbirds has been vocal about how its internal life-cycle assessment tool identifies ways for the company to increase its sustainability, innovate on material use, and engage with its customers. 

In April, for example, the company announced a self-imposed carbon tax in response to its most recent life-cycle assessment, which put the carbon footprint for each pair of its shoes at 10kg (22 lbs) of CO2. Globally, the footwear industry emits about 700 million tons of carbon per year, and running shoes in particular average 30 pounds in their production. But instead being content with emissions below industry norms, Allbirds created a Carbon Fund to purchase offsets for each of that 10kg to incentivize innovating down to zero and bolster its eco-friendly credentials.

Of course, as a three-year-old company with 130 employees and just three core products (its original wool sneakers, as well as flip flops and socks), Allbirds can be more nimble than most legacy footwear companies, where a typical sneaker comprises 65 separate parts assembled through 360 processing steps, often via low-cost labor and cheap materials. Supply chain transparency isn’t a benefit when what’s revealed is ugly.

But consumer loyalty is increasingly hinging on that transparency, a trend accelerated by Allbirds and other eco-conscious startups like Everlane and Rothy’s. Brand-new companies with a simply designed core product might have an easier time baking it into their models, but what we know so far about the Allbirds life cycle has takeaways for companies seeking to improve their sustainability.

Pushing for the Eco-Receipts. Allbirds relies on outside certifications to ensure an ethical supply chain. This includes its own B Corp certification as well as WRAP-certified production facilities, ZQ certification for its wool, and Forest Stewardship Council certification for its eucalyptus fiber. Allbirds is sourcing from a rare constellation of ethical options — for starters, only about .02% of the world’s factories meet WRAP certification standards — but consumer demand for transparency means it won’t be that way forever. 

The result of working only with materials and facilities that meet these standards is not only a high-quality product, but continued loyalty from both consumers (who trust Allbirds) and contractors (who are paid fairly and working with renewable materials). 

Getting Circular. Allbirds’ sustainability lens on its life cycle looks specifically at how to reduce waste from its raw materials, something the footwear industry as a whole is adopting. Nike, for instance, announced in 2015 that it had recycled 92% of its waste into new products; Rothy’s, another successful direct-to-consumer footwear company, uses innovative 3D knitting to reduce both time and material waste in its production. Allbirds’ sourcing reduces energy consumption by 60% and water consumption by 95%, metrics that ultimately translate to cost savings on production.

New Uses for Old Materials. A direct result of its waste reduction approach and the pressure to innovate from the Carbon Fund is a rethinking of raw materials. Over the summer, Allbirds rolled out its SweetFoam soles on its new flip-flop product. Made from a sugarcane-based formula developed in partnership with the Brazilian company Brasken, the sourcing process is actually carbon-negative — it removes 2.5 tons of carbon from the atmosphere, as opposed to the 1.8 it used to add. Most recently, Allbirds developed a proprietary eucalyptus-merino wool blend called Trino for its new socks. None of these materials are themselves new; the genius is in rethinking how they can be used. 

The upshot to all of these steps? A great product with loyal customers, a renewable material base, and a more secure future. Allbirds has indicated an openness to sharing its internal life cycle assessment tool with other businesses down the line, but companies can start following their approaches now. 

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