AMDP

To: Clark Hansen, CEO, AMDP

From: Taylor Thomas, Research and Development Analyst 

Date: March 10, 2023

RE: Investment Proposal: VEJA

Several weeks ago, you asked me to find a socially responsible business for Anima Mundi Development Partners to invest in. After many hours of research and careful analysis, I am eager to present to you, the first ethical sneaker company in the world, VEJA. Since the beginning, VEJA has remained true to its mission: fusing sustainability with style. Not only does this company use eco-friendly inputs and fair-trade cotton to produce its shoes, but also has a deep care and respect for the dignity of its workers. Because of this, I am confident that VEJA’s values align with our own and is a company worthy of our investment.

AMDP Investment Standards

Here at AMDP, we pride ourselves in investing in companies that adhere to doing business in ways that are socially responsible, environmentally sustainable, and profitable. In the next section, I will discuss the standards we use to assess potential investment opportunities.

Triple Bottom Line

“The triple bottom line is a business concept that posits firms should commit to measuring their social and environmental impact--in addition to their financial performance--rather than solely focusing on generating profit, or the standard "bottom line" (Miller)." This framework evaluates businesses based on their performance in three different dimensions: profit, planet, people, and planet. 

• Profit: a measure of an organization’s financial success (Kenton).

• People: a measure of how socially responsible an organization has been over time

  (Kenton).

• Planet: a measure of how environmentally conscious an organization has been throughout time  (Kenton).

Corporate Social Responsibility

Corporate social responsibility is a business approach that companies often take to create positive outcomes for society and the environment (Kasturi). A socially responsible company will put in daily effort to reduce its carbon footprint, improve working conditions for employees, care for the well-being of its staff, and use ethical sourcing of materials and labor.

Social Enterprise

A social enterprise is an approach that businesses use to address social or environmental problems while also attempting to maximize profits (“Social Enterprise”). Even though the main goal for social enterprises is to create and promote trends that positively impact our world, businesses must take their profits into account, so they can continue serving the greater good.

Carbon Footprint

A carbon footprint measures the total amount of greenhouse gas emissions, such as carbon dioxide and methane, associated with the activities of a person or entity (Power). People can measure this by calculating how many tons of greenhouse gases they produce each year through transportation, energy use, and production of goods and services. Reducing carbon emissions is important because of its ability to drift into the atmosphere, trap heat, and contribute to global warming. Individuals and businesses must reduce their carbon footprint to halt climate change, improve air quality, and most importantly, preserve a sustainable future.

About VEJA

In 2004, two shoe lovers, Sébastien Kopp and François-Ghislain Morillion, decided it was time to create a company that actually acted on the social and environmental issues our world has been facing for decades. So, in 2005, after one year of working closely with producers and farmers from all over the world, they successfully launched their first batch of sustainable sneakers. VEJA uses sustainable materials to produce its shoes and partners with trade cooperatives in Brazil and Peru to ensure safe working environments and fair-trade practices. In addition to this, VEJA shows its care and consideration for people and the planet by investing in sustainable agriculture, education, and reforestation. The company’s deep commitment to sustainability, social responsibility, and fair labor practices has helped it gain customer loyalty and maintain healthy profit margins.

Planet

VEJA’s commitment to sustainability goes far beyond just creating eco-friendly, everyday sneakers for consumers to purchase. This company truly cares about the planet and relentlessly searches every day for new ways to reduce its environmental impact. Over the years, VEJA has made conscious decisions to address these environmental issues.

Some things VEJA has done to reduce deforestation, promote biodiversity, and limit carbon emissions include:

• Using Amazonian rubber that emits roughly 73% fewer greenhouse gases than conventional rubber (“The Blindness”).

• Using organic cotton that helps with carbon absorption, soil fertilization, and optimizes the water cycle without using any chemicals or pesticides (“The Blindness”).

• Upcycling plastic bottles and polyester to use for sneaker material.

• Using a tanning process that uses less energy and reduces water use by 40% and salt by

  80% (“The Blindness”).

• Using leathers that do not contain hazardous or prohibited chemicals (“The Blindness”).

• Transporting materials by boat instead of by plane to reduce their carbon emissions by

  92% (“The Blindness”).

• Using 99.2% of clean energy from renewable resources (“The Blindness”).

People

Going hand in hand with their commitment to sustainability, VEJA has a deep respect for social responsibility as well. After visiting several manufacturers and seeing firsthand how many factory employees work in squalor conditions for nearly no wages at all, VEJA decided to make a change. VEJA produces and manufactures its shoes in parts of Brazil and Peru. Here, workers are well-compensated and given normal living conditions.

To show their care and consideration for people, VEJA has done several things which include:

• VEJA produces products under safe and fair labor practices.

• paying 50% of the cotton harvest to support the communities in advance and paying

  50% more than the market price for it (“Cotton”).

• Paying 5 times the market price for Amazonian rubber to enhance economic value of the

  forest and the families that protect it, and to improve living conditions for all (“Rubber”).

• Hire people who are less fortunate and have disabilities.

• Paying company workers, a higher salary than the country’s living wage (“Production”).

• Not spending any money on marketing or advertising, so that the company is able to

  spend more money on sustainable materials and an eco-friendly production.

Profit

VEJA is a very profitable company. Its sustainable practices and ethical fashion have attracted loyal customers that are willing to pay the premium for a pair of these sneakers. By maintaining a lean organizational structure and outsourcing some of its products, VEJA has been able to keep its overhead costs low. 

Over the years, VEJA’s financials have reflected its success in the following ways:

• From 2010 to 2020, VEJA’s operating revenue increased from $6,385,857 to $119,786,814 and is still increasing today (Orbis).
• From 2010 to 2020, VEJA’s profit margin increased from -3.42% to 25.35% (Orbis).

Expert opinions

"We were particularly impressed by the fully integrated approach to supply chain and sustainability. It is unique to the fashion industry. They are genuinely pushing the boundaries in their sector and demonstrate the potential to lead." -- The Guardian

"In short, while you're paying a premium price for quality materials, that will last you for years to come, you're also supporting a business that has a broader social mission for positive change." -- Cosmopolitan 

Final Recommendation

My recommendation is that we invest in VEJA as soon as possible. Not only does this company embody everything we value here at AMDP but is also a profitable company with a very loyal customer base. VEJA is not just another successful sneaker brand but is also a company that commits itself to creating change and improving the quality of life for people all around the world. Their dedication to their workers, sustainability, ethical practices, environmentalism, transparency, and financial success, leads me to strongly believe that AMDP should invest in VEJA.

Works Cited:

“Cotton.” VEJA, https://project.veja-store.com/en/single/coton.

Harding, Natasha. “Are Veja Trainers Worth the Money? Our Fashion Editor Weighs In.” Cosmopolitan, 23 Mar. 2022, https://www.cosmopolitan.com/uk/fashion/style/a35707366/veja-trainers/.

Kasturi, Rangan v. “The Truth about CSR.” Harvard Business Review, 15 Dec. 2022, https://hbr.org/2015/01/the-truth-about-csr.

Kenton, Will. “Triple Bottom Line.” Investopedia, Investopedia, 13 Jan. 2023, https://www.investopedia.com/terms/t/triple-bottom-line.asp.

Miller, Kelsey. “The Triple Bottom Line: What It Is & Why It's Important.” Business Insights Blog, 8 Dec. 2020, https://online.hbs.edu/blog/post/what-is-the-triple-bottom-line.

Power, Gabriel. “What Is a Carbon Footprint?” The Week UK, The Week, 30 Sept. 2019, https://www.theweek.co.uk/103478/what-is-a-carbon-footprint.

“Production.” VEJA, https://project.veja-store.com/en/single/production.

Reed, Betsy. “Veja: An Ethical Passion for Fashion.” The Guardian, Guardian News and Media, 30 May 2012, https://www.theguardian.com/sustainable-business/best-practice- exchange/veja-ethical-passion-fashion.

“Rubber.” VEJA, https://project.veja-store.com/en/single/rubber.
Shibboleth Authentication Request, https://orbis-r1-bvdinfo-com.libproxy1.usc.edu/version-

20230116-3407-6/Orbis/1/Companies/Report.

“Social Enterprise.” Corporate Finance Institute, 15 Dec. 2022, https://corporatefinanceinstitute.com/resources/knowledge/other/social-enterprise/.

“The Blindness around CO2 Emissions.” VEJA, https://project.veja- store.com/en/single/emissions.