AMDP Memo

 AMDP Investment Memo: Pela

 

 

TO:                 Clark Hansen, CEO, AMDP

FROM:          Lucia Shao, R&D, AMDP

DATE:            October 21, 2022

SUBJECT:     Investment Consideration – Pela

 

As a member of the Research and Development Department, I have spent time analyzing the company, Pela, to see if it aligns with our values of conducting business in a socially responsible, environmentally sustainable, and profitable manner. With these factors in mind, I recommend investing in Pela. Pela is an everyday product brand specializing in 100% compostable cases and tech accessories. Using sustainable sourcing and new technologies, Pela is committed to creating a waste free future.

 

AMDP Investment Standards 

Outlined below are our company standards to help evaluate the company in consideration:

 

Triple Bottom Line: A business concept for firms to take into consideration their social and environmental impacts alongside their financial position. This consists of measuring the “three Ps”: profit, people, and planet. Firms can benefit from committing to sustainable business practices (Miller). 

 

Corporate Social Responsibility (CSR): Businesses have a responsibility of their impact to society. It is broken down into four categories: environmental, philanthropic, ethical, and economic responsibility. Together, a firm can work towards creating social change by using less energy, reducing waste, and more. A socially responsible firm can further reap profits and additional benefits due to their initiatives (Stobierski). 

 

Social Enterprise: A business with social objectives as one of their goals to make an impact in society. These enterprises focus on generating profit as well as meeting its social goals. This includes trading enterprises, financial institutions, community organizations, non-governmental organizations, and charities (“Social Enterprise.”).

 

Carbon Footprint: Represents the amount of greenhouse gas created from everyday activities. These gas emissions produced by human activities accumulate in the atmosphere and contribute to global warming. This is an important metric for businesses to track as business activities like manufacturing, transporting, and energy consumption, add to these emissions. Companies can work towards reducing their footprints by improving energy efficiency to be more socially responsible (Iberdrola). 

 

The World’s First Compostable Phone Case

Founded in 2010, Pela was created by materials scientist Jeremy Lang. After digging up plastic on the beach of Hawaii, Lang set out to do something about it. After inventing a material from flax straw known as Flaxstic, he created an entirely biodegradable phone case, kickstarting the business with entrepreneur, Matthew Bertulli. Now, twenty-one years later, the British Columbia-based company has removed 760,000 pounds of waste by selling their phone cases (“Our Story and Mission.”). Expanding from phone cases, Pela now re-invents everyday products, from sunglasses to deodorant. Today, Pela does mid-8 figures in annual revenue and received a $100m valuation in its latest funding round.

 

Pela is a company that is committed to reducing and preventing global waste, to create a waste-free future. Their four main values are the four Cs – Community, Creativity, Consciousness, and Courage. Pela is committed to building a vibrant culture and community while fostering creativity, living with awareness of their impact and consciousness of their choices. As a Certified B Corporation, Pela is on a mission to eliminate 1 billion pounds of waste from the global waste stream and continues to research and develop the most innovative products to achieve this goal (“Our Story and Mission.”).

 

A Circular Economy

A circular economy is designed to be regenerative and free of waste. The value of the raw material throughout its lifecycle remains constant, avoiding landfill. Greenbiz labels Pela as part of the technical cycle, where “technical waste becomes either something new again or part of something new” (Harbaugh). 

Pela redefines plastic by using a new material, Flaxstic, a combination of recycled materials, flax straw ‘waste’, and plant-based biopolymers. The resulting phone cases and other products are biodegradable and compostable. The manufacturing process of Flaxstic reinforces Pela’s goal to reduce their footprint. The process requires up to 50% less non-renewable energy and produces up to 60% fewer greenhouse gases than traditional plastic polymers (“What Is Flaxstic?”).

 

By focusing on using renewable energy and resources instead of burning through limited raw materials, Pela acts as an example of practicing a sustainable circular economy while simultaneously reducing their carbon footprint through their processes.

 

Transparency

Pela acknowledges their internal functions and has a team to work on reducing their footprint.  To do so, they have continuously created plans to meet their goals. One of their completed reduction efforts includes reducing emissions associated with shipping. Pela streamlined transportation routes and sourced distribution centers in closer proximity to do so. One of their in-progress reduction efforts is reducing emissions from third party manufacturers. This process involves engaging with the Chinese manufacturing facility to promote operational efficiency (“Pela: A Climate Neutral Certified Brand.”).

 

Their current year reduction actions include sourcing more efficient heating components, making their new product, Lomi, 10% more energy efficient by the end of the year, and more. By creating and sharing these goals, Pela proves to be a socially responsible company by continuously working on their reduction efforts.

 

 

Investor Backing Supports Growth

In 2019, Pela closed a $5M round of funding led by Marcy Venture Partners and Kensington Capital. Larry Marcus, Co-Founder and Managing Director of MVP, believes in Pela’s profitability and mission, stating that Pela is “tapped into the tuned-in, conscious and discerning consumer that cares about what they buy. Their products offer a powerful combination of utility, design, and sustainability.” (Phan).

 

MVP has a strong history of amplifying cultural trends, and the funding has further expanded Pela’s product line and exploration of other brands. With funding support, Pela launched several brands under their umbrella, including Habitat, a plastics-free deodorant, and Barxby, an environmentally friendly dog shampoo.

 

 

Final Recommendation

Pela’s goal is to create Everyday Products Without Everyday Waste. Their business embodies the standards we value here at AMDP. Pela is conscious of their impact on society and is consistent with their message and their actions. Pela already has the right products and the right message. Now, Pela needs our help now with marketing efforts to increase their outreach, especially in the United States. After careful consideration, I strongly recommend investing in Pela to continue expanding their environmentally conscious everyday products.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Works Cited

Harbaugh, Veena. “What Goes around Comes around: Shipping in the Circular Economy.” Greenbiz, Sendle, 11 Mar. 2022, https://www.greenbiz.com/article/what-goes-around-comes-around-shipping-circular-economy.

Iberdrola. “What Is the Carbon Footprint and Why Will Reducing It Help to Combat Climate Change?” Iberdrola, Iberdrola, 22 Apr. 2021, https://www.iberdrola.com/sustainability/carbon-footprint. 

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

“Our Story and Mission.” Pela Case, Pela, 2022, https://pelacase.com/pages/our-story. 

“Pela: A Climate Neutral Certified Brand.” Climate Neutral, 2022, https://www.climateneutral.org/brand/pela. 

Phan, Trung T. “Pela Case, the $100m Sustainable Phone Case Startup That Created a Category.” The Hustle, 19 Jan. 2021, https://thehustle.co/01192021-pela-case/. 

“Social Enterprise.” Corporate Finance Institute, CFI, 13 Oct. 2022, https://corporatefinanceinstitute.com/resources/esg/social-enterprise/. 

Stobierski, Tim. “Types of Corporate Social Responsibility to Be Aware Of.” Business Insights Blog, Harvard Business School, 8 Apr. 2021, https://online.hbs.edu/blog/post/types-of-corporate-social-responsibility. 

“What Is Flaxstic?” Pela Case, https://pelacase.com/pages/what-is-flaxstic.