Sustainable Column | An unfinished model? Exploring Anta's "Zero Carbon Store"

"The risk of opening such a store is quite high." Facing the media, ANTA brand CEO Xu Yang's statement exudes a strong Shanghai style: pragmatic, frank, and striving for perfection.

Choosing to open the first "Zero Carbon Store" in the green season of Wutong Xin Ya, the artistic and aesthetic Wu Kang Road in Shanghai, and decorating all exterior walls with factory defective fabrics seems to be in line with this extreme perfection.

However, after stripping away the concept, is "Zero Carbon" just a greenwashing gimmick, or a truly reliable sustainable model? Why did ANTA, which has released ESG reports for 9 consecutive years, choose to portray its business ideals through such a physical store? Will the second "Zero Carbon Store" appear?

"Not Doing Charity"

According to public information, ANTAZERO aims to create an innovative retail format that comprehensively achieves carbon reduction goals from product manufacturing to end-to-end operations. From concept initiation, store decoration, to display and sales, carbon emissions are gradually reduced. During the construction process, by retaining original walls and floors, using old clothes and patchwork fabrics for enclosures, purchasing second-hand equipment, and reusing air conditioning and lighting fixtures, over 30% emission reduction has been achieved.

Through overall data analysis, it is found that building materials and props materials are the two largest emission points, with further room for emission reduction. Assuming 100% of building materials and props are made from recycled and regenerated materials, and 100% of equipment is purchased second-hand, along with other carbon reduction measures, it is possible to achieve an additional nearly 60% reduction on top of the first Zero Carbon Mission Store.

"ANTA is not doing charity, but conducting a sustainable model experiment. We are exploring green benefits, a complete green business model. You can see this store as a 'laboratory'," Xu Yang told Wall Street News. He mentioned that after inspecting many shops last year, many commercial real estate properties are interested in the ESG concept, but there are too many constraints when locating in shopping malls.

Wall Street News learned that the Wu Kang Road store is owned by a private owner. The choice of location here may be based on business considerations on how to align with ANTA's audience. As it is a "fallen leaves landscape road" (meaning intentionally not sweeping the fallen leaves of French plane trees on the roadside), Wu Kang Road has become a popular spot for City Walk in Shanghai.

In Xu Yang's view, only after the "experiment" is successful will they consider opening a second or third store, and they look forward to industry followers. "No one will buy an electric car just because of the ESG concept. Only when companies can make the cost of electric cars lower than traditional cars will it motivate consumers to purchase," he told Wall Street News. He mentioned that the current "ESG selection" in the store is still relatively thin and requires continuous adjustments, with expectations to reach the ideal state by the end of the year Wall Street News noted that the concept products displayed in stores now are actually Anta's core products, rather than specifically "special supply" for "Zero Carbon Stores." Taking the "Air Armor" professional running jacket currently on sale as an example, this lightweight running jacket is made of renewable nylon materials and increases the use of green electricity in the production process, reducing carbon emissions by 0.74-1.37kg compared to traditional products.

Another carbon-neutral certified product, the Mach 4 running shoes, uses 5 types of raw materials made from recycled polyester yarn, with recycling rates ranging from 30% to 100%. Compared to using virgin materials, this practice can reduce emissions by 5.15%, applying environmentally friendly materials to reduce carbon emissions by around 0.5kg per pair of Mach 4 running shoes.

"Last year, 20% of our product line met ESG standards. When developing products, we already started considering carbon. We don't treat ESG as a commodity concept, but from the perspective of these standards, we try our best to improve the functional and beneficial points of the products. Only in this way can we replicate it." Xu Yang explained.

"Give Chinese Brands Time"

In fact, ten years ago, when Anta was planning products internally, the concept of meeting the spirit of ESG was already proposed, but due to the lack of successful precedents in the industry, progress was not smooth.

Xu Yang frankly told Wall Street News that compared to overseas competitors who have been running in the ESG track for 20 years, Anta's "Zero Carbon Store" still has a lot of room for growth, "hoping to give Chinese brands more time."

However, Anta's progress in the ESG dimension is evident. The ESG report released in April revealed that by 2023, Anta Group's greenhouse gas total emission intensity decreased by 3.6%, and total water consumption intensity decreased by 9.0%. In the latest MSCI ESG rating, the group has risen two levels to "BBB" grade, the highest scoring Chinese sports goods company. In addition, in the 2023 annual Climate Change Performance Rating by the Global Environmental Information Research Center (CDP), the group received a "B" rating, higher than the global and Asian average "C" rating, and the non-essential consumer retail industry's "B-" rating.

In addition to carbon neutrality in the production process of the products themselves, sustainable packaging is also a way for Anta to practice ESG. The report shows that sustainable packaging accounted for nearly 20% in 2023. Currently, the amount of sustainable packaging for footwear products is 9157 tons, with 570,000 shoe boxes recycled and reused, 18 million shoe head or packaging papers, and 99.9% of footwear products not using plastic bags.

Furthermore, Anta has joined organizations such as the Leather Working Group (LWG) and the Sustainable Apparel Coalition (Cascale), requiring that leather materials used in Anta and FILA brand footwear products are 100% LWG Gold certified, with over 90% of leather materials traceable to their origin "'Zero Carbon Stores' has actually become a part of the corporate culture, with case studies shared daily among the decision-makers, influencing internal business decisions," said Li Ling, Vice President of Anta, to Wall Street News.