AMDP Draft Memo

TO:                      Clark Hansen, CEO, Anima Mundi Development Partners

FROM:                 Davis Hayter, New Business Development

DATE:                  Friday, March 1^st, 2019

SUBJECT:           Investment Opportunity: 4Ocean Recycled Bracelets

My role within AMDP involves researching emerging companies needing investment in many different industries. Along with being profitable, I seek out companies that prioritize both social and environmental responsibility. I recently discovered 4Ocean, a sustainable jewelry brand that uses their sales revenue to remove plastic waste from the ocean.

After extensive research, I have come to the conclusion that 4Ocean would be a strong candidate for investment from our firm after we attain more financial information. In this memo, you will find the following:

• AMDP’s standards for investment.
• 4Ocean’s origin and concept.
• Traction, opportunities, and finances of 4Ocean.
• My in-depth recommendation.

Investment Standards of AMDP

Triple Bottom Line

Companies are graded on three bottom lines: profit, people, and planet.

• Profit: Company needs to be showing capital gains in order to prove their concept works.
• People: Company holds an exceptional reputation among customers, employees, and communities.
• Planet: Company prioritizes environmental awareness and either works to make a difference or is cautious of the carbon footprint it leaves.

Carbon Footprint

Carbon footprint refers to the collective amount of greenhouse gasses a company emits. These gases include carbon dioxide, methane, nitrous oxide, and fluorinated gases (Ferguson). Greenhouse gasses directly impact global warming, making them an important byproduct companies need to reduce.

Corporate Social Responsibility

Companies that take corporate social responsibility have awareness of the type of impact they have on social, economic, and environmental facets of the environment they inhabit (Investopedia). Not only are they aware, but socially responsible companies also work to improve society in these aspects as well.

Social Enterprise

Social enterprises can be recognized for conducting many different social business models such as providing opportunity employment, creating transformative products or services, and making donations (Social Enterprise Alliance). The most applicable type of social enterprise for this memo is one that has positive environmental impacts through innovative products.

4Ocean

4Ocean was created when two surfers, Alex and Andrew, took a surf trip to Bali, Indonesia. What they found on their trip was massive amounts of plastic along the coastline. At one point, they even witnessed village fishermen pushing their boats through piles of plastic washed up on the shoreline (About, 4Ocean). They saw that nobody was doing anything about this rising issue and wanted to create change. Ultimately, 4Ocean was born.

This company uses recycled material removed from the ocean to create bracelets. They use the revenue from selling these bracelets to fund and grow ocean cleanup operations. They have found that each bracelet purchased equates to one pound of trash removed from the ocean. Since its’ founding in 2017, 4Ocean has managed to eliminate over 4 million pounds of trash from the ocean (About, 4Ocean).

Gaining Traction

In just two years since being established, 4Ocean has gained traction globally as an impactful “for profit” organization on our environment. Tom Huddleson Jr., CNBC reporter, referred to the company as “a big idea for a multimillion-dollar business to help clean the world’s oceans.” With growing media coverage, 4Ocean has vastly grown their brand.

Jeff Kart from Forbes stated, “Not bad for a project launched by two surfers who were inspired to take action by piles of plastic pollution during a surf trip.” This has allowed them to rapidly expand their reach. To date, they have cleaned up coastlines in 27 different countries (Forbes).

Creating an Economy for Plastic Waste

4Ocean has also contributed to the growing economy for recycled plastic (About, 4Ocean). They have done so by selling their collected plastic waste to facilities who repurpose it. In recent years, the demand for recycled plastic has been on the rise globally. It was reported in 2018 by Environmental Leader that “In terms of recycled PET (RPET) used in US and Canadian end market applications, total volumes increased by more than 5% in 2017” (Hermes, Environmental Leader).

With recent technological innovations, companies have increased their range of uses for recycled material. For example, clothing brands have recently created high quality material from recycled plastic. Zoggs, an Australian swimwear brand, created a bathing suit line made with yarn created from regenerated plastic waste (Danigelis, Environmental Leader). 4Ocean has ultimately created another stream of income by becoming an established supplier in this growing economy.

Company Financials

With 4Ocean selling each bracelet for $20 each, the company reported in September of 2017 that it had sold over $30 million in bracelets (Make It, CNBC). There is no information about the true profitability of this company. The only information found is their promise to remove 1 pound of trash with each bracelet purchased. But how much does removing that trash actually cost? It is unclear. However, the company indicated they reinvest 40% of their profits into their cleanup projects and 10% into various partner charities.

4Ocean reported that it currently employs over 150 people worldwide. Although the company has not released how much they pay their employees, they stated workers have wages of a “considerable amount” with full medical benefits (Make It, CNBC). They also market their cleanup times and locations to the public for volunteer opportunities.

At this time, the founders of 4Ocean are satisfied enough with current growth to set their next goal as removing 10 million pounds of garbage from the ocean. This will require a substantial increase in company operating income in order to accomplish this. However, 4Ocean is confident they can do this. Their ultimate goal is to become the largest ocean cleanup organization in the world.

Recommendation

After extensively researching 4Ocean, I believe this company is a promising lead for investment. However, before we commit to funding, we need to know more about their profit margins and capacity for growth. It is important to know for starters what their profit margin is for each bracelet. This would give great insight to their true capacity for expansion.

I believe it would be worth further investigating this company. They have a fantastic culture and concept that has impacted our oceans for the better. Once we have more information on their financials and business plan, our investment decision will be made for us. Say the word and I will set up a meeting.

Works Cited

Chen, James. “Corporate Social Responsibility (CSR).” Investopedia, 2019, p. 1.

Danigelis, Alyssa. “Zoggs Debuts Econyl Swimsuits, Reduces Plastic Waste.” Environmental Leader, 2019, www.environmentalleader.com

Hermes, Jennifer. “US Recycling Rate Rises Just Slightly but End Market Demand Stays Strong.” Environmental Leader, 2018, www.environmentalleader.com

Kart, Jeff. “Bracelets Fund Ocean Cleanup, 1 Million Pounds And Counting.” Forbes, Forbes Magazine, 30 July 2018, www.forbes.com

“Social Enterprise.” Social Enterprise Alliance, socialenterprise.us/about/social-enterprise/.

Thompson, Kelly. “Home.” How to Become a Professional Plumber - Training & Licensing Guide - Ferguson, 2018, www.ferguson.com/content