October 18, 2021

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Social Responsibility Is a Key Mission Objective Among New IPOs

This article was originally published on ETFTrends.com.

Companies launching their initial public offerings are branding themselves for their do-good objectives that reflect their greater social responsibility.

Startups such as Rent the Runway Inc., Chobani LLC, Warby Parker Inc., and Allbirds Inc. will go public this fall. Among their key messaging, the companies say it isn’t just about the money but also about the mission, the Wall Street Journal reports.

“It’s the wave of the future,” Ken Wallach, co-head of the global capital markets practice at Simpson Thacher & Bartlett LLP, told the WSJ. “It’s everything from raising capital from like-minded investors to competition for millennial talent.”

According to regulatory filings, companies refer to themselves as “mission-driven,” making the environment a stakeholder and highlighting their commitments to charity and sustainable methods.

“While many businesses see tension between profit and purpose, we see opportunity,” Allbirds said in its IPO paperwork. “The more sustainable we are, the better we believe our products and business will be.”

Food maker Chobani is committed to “transforming our food system for the betterment of our planet, our people, and our communities,” from “cow comfort” on dairy farms to “responsible manufacturing practices.”

Eyeglass maker Warby Parker highlighted its “Buy a Pair, Give a Pair” program that distributes glasses to people in need.

Swiss running-shoe maker On Holding AG is “committed to positive impact,” outlining plans to use 100% recycled polyester and 100% organic natural materials by 2024.

“Thirty years ago, the goal of a company was to serve shareholders. That’s evolved,” John Chirico, co-head of North American banking, capital markets, and advisory at Citigroup Inc, told the WSJ. “Everyone is trying to be mission-driven these days. Some companies are founded on that mission. Others have come around to it, and others are not as authentic.”

More cynical observers, though, argued that money is still a big part of their mission as companies are virtue signaling in a bid to chase after consumers with a newfound focus on environmental, social, and governance objectives.

The IPO market is also on fire this year as U.S. equity markets push toward record highs, and money raised by newly public companies in 2021, which includes special-purpose acquisition companies, is at its highest on record for any full year according to Dealogic data. IPOs already raised $105 billion through Monday, or just short of its full-year record total set during the dot-com tech boom.

For more news, information, and strategy, visit the ESG Channel.

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