Buffett-owned Brooks Running commits to net zero carbon emissions by 2040, CEO says

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Brooks Running Company, owned by Warren Buffett‘s Berkshire Hathaway, announced Tuesday a pledge to achieve net zero carbon emissions by 2040 and its first carbon neutral shoe.

Jim Weber, CEO of Brooks, told CNBC the new iteration of the company's best-selling shoe, The Ghost, will help the environment, in part, by using recycled materials.

“This is the first high volume, carbon neutral running shoe in the marketplace, so we're pretty excited about that,” Weber said on “Squawk Box.” “It's gonna be interesting to see how customers respond because The Ghost is up 77% already, year to date.” He added, “It's selling stronger than our overall business top line, but with this attribute of carbon neutral, I think it's going to engender trust from a lot of runners that maybe haven't looked at us before.” 

Many sports brands have announced similar goals in recent years. Nike is aiming to power its facilities with 100% renewable energy by 2025 and operate with net-zero carbon emissions. Dick's Sporting Goods has been reducing its environmental footprint with a recycling rate of 70% for its retail stores and operations.

Brooks' sales rose 27% last year, Weber said, as more people took to running during the Covid pandemic. “Demand is very strong, and it's not just, I think, the cresting of the catch up and people having money and back out spending. That's clearly happening. Retail is strong,” he noted, saying Brooks is benefiting from a “secular running growth spurt.”

Weber said Brooks turned its supply chain on earlier than most companies, as pandemic-fueled supply chain disruptions and labor shortages began impacting production. Since May 2020, the company has been adding capacity and expects to do so in the coming year. In 2019, Brooks shifted the majority of its operations from China to Vietnam to avoid tariffs consequential of former President Donald Trump‘s trade war.

“We're about 80 days for shipping and it used to take us closer to 40,” Weber said. “So there's no question that supply chain is strung out. But I think in our industry, we feel like we're managing as well as anybody and you can see that from our year-to-date growth. We're mostly keeping up with our demand right now.”

Brooks expects the interest in running to stick after the pandemic. Weber hopes to see activity double in popularity throughout the next decade. “We think there are about 150 million people that run for fitness and competition, a variety of reasons around the world. We think that could double to 300 million and it's just a part of a healthy, well lifestyle, which as we've found in this pandemic is actually really important,” he concluded.

Programming note: Warren Buffett and Charlie Munger talk with CNBC's Becky Quick about their friendship, the business deals they've done over the years together, and what makes Berkshire Hathaway so special. Watch CNBC's “Buffett and Munger: A Wealth of Wisdom” special Tuesday night at 8 p.m. ET.

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