AMDP PROPOSAL DRAFT

TO: Professor Clark Hansen, CEO, AMDP
FROM: Hou Stephen, Financial Analyst Intern, Research and Development
DATE: July 7, 2017
Subject: The Honest Company Recommendation

In my research work, I came across a viable enterprise, the Honest Company. A critical review of this establishment led me to recommend that Anima Mundi should consider allocating funds to the organization because it seems to align with most of the requirements for funding. The organization is economically sustainable, empowers the consumers socially, and seeks to uphold environmental sustainability. The following memo gives several definitions relevant to the business terms and also provides an overview of the Honest Company business practices.

DEFINITIONS:
·         Triple Bottom Line (TBL):  TBL is an accounting framework used to measures sustainability of most organizations in the world. It goes beyond the obvious measure of a firm’s success through profits, and return on investment (Slaper and Hall). Moreover, it includes social and environmental features to interrelate with profits, people, and the planet.

·         Corporate Social Responsibility (CSR): It is voluntary activities adopted by an organization to perform in a socially, environmentally, and economically responsible manner (Global Affairs Canada). Through CSR, establishments seek to empower the community and mitigate possible environmental risks within the scope of their business.

·         Social Enterprise: It is a business model that prioritizes the interest of the people and the world before embarking on the shareholder’s benefit. Like any private or government business, social enterprises aim to make business profit (Social Enterprise Scotland). However, the company reinvests 100% of the profit made for environmental and social purposes.

·         Carbon Footprint: It is the total amount of the greenhouse produced by an organization as a result of burning fossil fuels. It is thus a metric used to measures the emission of carbon in a defined period (Lee and Clark). The metric measures both the direct and indirect emissions and it is useful to determine the environmental impact of an organization in an environment. The chart below shows these metric measures in percentages.

Description of the Honest Company
Jessica Alba founded the Honest Company in the year 2012 as an organization dealing with consumer products with the aim of satisfying the growing market for organic products. It sells more than 100 products, and in the year 2016, it hit a total of $300 million sales. Particularly, the firm zeros on natural cosmetics products for babies and adults. It performs sales online with its goods being readily available in popular stores such as Target and Nordstrom. With regard to the triple bottom line, the organization provides employment opportunities to empower people economically. Moreover, it also deals with natural products, and therefore, keeps the environment free from harm.
Economic Impact-Employer
The Honest Company has a profound economic impact on the society. It has created jobs for the youth, men, and women in various fields. Most people in the company work in finance, accounting, human resource, product development, and operations. The Honest Company offers internship programs for students currently learning in colleges and university. Other than selling safe products for babies, led by Alba, who is a mother of two, gives advice and offers training to young mothers on how to use the best and improve their homes to create an enhanced environment for proper child growth and development.

Social Impact-Reaching out to the Needy
The Honest company values goodness that helps it drive its urge for a positive social impact. As a result, it encourages its employees to donate products and volunteer in social organization to extend such goodness to the community level. For instance, in the month of December 2008, the Honest employees gave a gift of 500 toys to needy families to cheer their holidays. Moreover, in 2014, the organization’s founders volunteered to clean a room at Mount Sinai Hospital in New York City. The action was aimed to reduce the impact of harmful chemicals on the environment and children’s health.
Environmental Impact-protection
The Honest Company seeks to make the best products without harming people or the planet. It bears the responsibility of keeping the environment safe by inspiring revolutionary solutions, reduce the collective impacts, and make non-toxic and healthy products.

Critical Evaluation of Business Practices
Evaluation of the business activities was executed with proper consideration of financial health, accountability, and transparency factors.

Financial Health
The Honest Company has grown from the financial worth of $10 million revenue received in the year 2012 to more than $250 in the year 2016. The eco-friendly baby products organization expected to have an annual income of over $150 in the year 2016. Lorenzetti states that about 80% of its revenue is drawn from subscriptions of monthly delivery services, which facilitates the sending of products to moms.

Accountability and Transparency
The Honest Company complies with the California Transparency in Supply Chains Act of 2010. The statute requires every retailer and manufacturers to give information to the consumers concerning the stakeholders’ efforts to eradicate slavery and human trafficking in its supply chain. It, therefore, strives to promote justice and human rights. In addition, it is easy to find satisfying information of the company’s finances from online websites

Investment Recommendation
Based on the review conducted, the Honest Company showcase its effort to excel and enhance economic, social, and environmental growth. Anima Mundi should, therefore, consider investing in the organization to steer its continued economic growth in line with environmental sustainability.

Works Cited

Global Affairs Canada. “Corporate Social Responsibility.” International.GC.CA, 3 March 2017. <http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-rse.aspx?lang=eng>.
Lee, Mike Berners and Duncan Clark. "What is a Carbon FootPrint." The Guardian. 4 June 2010. The Guardian. <https://www.theguardian.com/environment/blog/2010/jun/04/carbon-footprint-definition>.
Lorenzetti, Laura. "Jessica Alba startup The Honest Co. raises $70 Million as it Heads Toward IPO." Fortune, 26 August 2014. <http://fortune.com/2014/08/26/jessica-alba-honest-co-ipo/>.
Slaper, Timothy F, and Tanya J Hall. "The Triple Bottom Line: What is it and How Does it Work?" Indiana Business Review (2011).
Social Enterprise Scotland. “What is Social Enterprise.” Social Enterprise Scotland, 2017. <http://www.socialenterprisescotland.org.uk/our-story/what-is-social-enterprise/>.



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