What Allbirds got right

Allbirds — the footwear brand known for its dedication to natural materials and its willingness to share low-carbon production methods with competitors — has been sold for $39 million, a fraction of its $4 billion valuation on the day it went public in 2021.  

The asset sale to American Exchange Group, which manages Ed Hardy, Aerosoles and other fashion brands, is subject to approval by Allbirds shareholders. Barring hiccups, the transaction is expected to close in the second quarter.

Fashion industry insiders largely blame Allbirds’ rapid portfolio diversification, consumer concerns about product longevity and expensive retail store expansion for its fall from grace. “Allbirds built its success on simplicity, comfort and sustainability — but drifted by chasing rapid growth, expanding categories and diluting its core identity,” wrote a sales operations manager for rival shoemaker Ecco, in one LinkedIn post.

Others pointed to an over-reliance on the environmental virtues of its products — at the expense of the products themselves. “Quality and durability concerns undermined the company’s brand image,” said Michael Roberto, a management professor at Bryant University. “The shoes didn’t last long enough or became damaged too easily. In the end, people were not willing to sacrifice quality for sustainability.”

Mission driven

To be sure, Joseph Zwillinger and Tim Brown did prioritize environmental considerations when they co-founded Allbirds in 2015, baking them into a mission statement that promised to “reverse climate change through better business by making better things in a better way.” It became a Certified B Corp in 2016. [Disclosure: Allbirds’ original head of sustainability, Hana Kajimura, is CEO of Trellis Group, owner of this website.]

The clearest expression of their commitment came in the company’s choice of materials, which it made with the aim of cutting the average carbon footprint of its footwear to half the industry average by the end of 2025. 

“Allbirds challenged the conventional wisdom regarding the materials that were traditionally used in sneakers,” Roberto said.

Its use of merino wool as sneaker upper material was novel. So, too, was its focus on sourcing from farms dedicated to regenerative agriculture processes.  

Allbirds also co-developed a sugarcane-based material for midsoles, Sweet Foam, with Brazilian supplier Braskem, and sourced bioplastics from startup Mango Materials for components such as eyelets. Its embrace of plant-based leather alternatives included a material made from rice hulls created by Natural Fiber Welding.

Equally important, Allbirds encouraged other athletic shoe makers to use these materials, too, publishing white papers that detailed how to made those choices work. It practically begged others to copy its limited-run Moonshot design to reduce the costs of eco-friendly materials across the industry.

Early on, it found an ally in Adidas, with whom it developed a special-edition Adizero shoe with a carbon footprint of less than 3 kilograms per pair, or about one quarter of the industry average.

“Allbirds recognized that the scale of our shared environmental challenges cannot be addressed by companies acting in isolation — no matter that company’s size,” said Ken Pucker, the former Timberland chief operating officer who is now professor of practice at Tufts’ Fletcher School. “All of the brand’s natural materials innovations were co-developed and openly shared with their competitors.”

Uncertain future

Still, the fate of Allbirds legacy was in question even before its fire sale to American Exchange Group. The company had struggled to grow ever since going public. By 2025, sales had plummeted to barely $150 million, about half of its peak in 2022. 

When the company’s most recent director of sustainability, Aileen Lerch, who created Allbirds rigorous life-cycle assessment methodology, left for Meta in June 2025, a replacement was not publicly named. 

What’s more, Allbirds hasn’t published an ESG progress report since late 2024, and several of its current commitments had a 2025 deadline. Sustainability wasn’t even mentioned in CEO Joe Vernachio’s terse statement about the asset sale.

Nor has American Exchange Group publicly set emissions reduction targets of its own, let alone announced what it plans for Allbirds. That does not bode well.

“If they intend to manage the brand the same way as the rest of their portfolio, they are likely to license the brand name to others to manage different categories and territories without the commitments that Allbirds maintained as a B Corporation,” Pucker said.