AMDP Investment Proposal Memo

AMDP Investment Proposal Memo

TO:                  Professor Clark Hansen, CEO, AMDP

FROM:            Elan Fahimian, Research & Development, AMDP

DATE:             March 11, 2022

SUBJECT:      Investment Opportunity: Pangaia

In response to your request for an investment opportunity, I wanted to share with you a company called Pangaia. Pangaia is a materials science company that meets our investment criteria by being socially responsible, environmentally sustainable, and profitable. I highly recommend you take advantage of this opportunity and invest in the company. In this memo, I will:

• Discuss the investment standards at AMDP

• Give a detailed overview of Pangaia

• Review some expert opinions on the company

• Give you my final recommendation

AMDP Investment Standards

Before I started talking about Pangaia, I first wanted to touch on the investment standards we use here at Anima Mundi.

Triple Bottom Line 

The triple bottom line is a concept that states that firms shouldn’t just concentrate on generating profits, rather they should monitor their social and environmental impact while also focusing on their financial performance. This concept is further broken down into the “three Ps”: 

• Profit: A firm should look to maximize revenues while reducing cost and mitigating risk.

• People: A firm should be concerned with the well-being of its employees, customers, and surrounding communities.

• Planet: A firm should be invested in making a positive impact on the environment (Harvard Business School).

Corporate Social Responsibility

Corporate Social Responsibility (CSR) is a business concept in which firms make a conscious effort to operate their business in a manner that benefits society and the environment. By implementing CSR, firms can focus on the effect that their businesses have on people and the planet and do their best to enhance them rather than damage them (Fernando).

Social Enterprise

A social enterprise is a firm that has a particular social aim that fulfills its core purpose. Social enterprises attempt to optimize profits while maximizing benefits to society and the environment, with the profits being used to fund the firm’s social plans (Barone).

Carbon Footprint

Carbon footprint in the context of business is the measure of the total amount of greenhouse gases a firm emits via its business operations and activities. A company’s carbon footprint is calculated by measuring the quantity of greenhouse gases the company emits into the environment during its production cycle. Businesses are responsible for large amounts of greenhouse gases–such as carbon dioxide–being put out into our atmosphere, and these greenhouse gases stay in our atmosphere and trap heat, which contributes to global warming. This is why it is extremely important for businesses to reduce their carbon footprint (Selin).

Overview of Pangaia

Background and Mission

Pangaia is a materials science company founded in 2019 by entrepreneur Miroslava Duma. As a company, they spent 10 years on research and development before they launched their brand (Pangaia). Although Pangaia characterizes itself as a materials science company, many people regard them as a lifestyle clothing brand as they sell hoodies, sweatpants, t-shirts, and many other articles of clothing (Halberg). 

Caring for the environment is a top priority of their company. This is illustrated in the name of their company as it’s derived from the Greek words “pan” meaning “all” and “gaia” meaning “Mother Earth” (Gaffie). They claim their mission is to save the environment by developing environmentally sustainable materials that they use in their clothing. Some of the sustainable materials that they use are organic and recycled cotton, and even seaweed fiber and dried wildflowers (Pangaia). They have grown substantially in the last couple of years as a clothing brand, however, they’ve never lost sight of their mission to operate in an environmentally responsible way.

Pangaia’s Claims

Pangaia has made numerous claims about its business operations being socially responsible and environmentally sustainable. Some of these claims include:

• Achieving carbon negative status in 2021 (Pangaia).

• Planting over 400,000 trees as part of their initiative with SeaTrees (Pangaia). 

• Reaching net-zero emissions in its operations by 2025 (Wightman-Stone).

• Using 100% renewable energy for their operations by 2025 (Wightman-Stone).

These are all very bold statements, and it will be interesting to see if they can meet these claims in the future. Pangaia also uses its environmental claims as a competitive advantage. For example, when you go to purchase an item of clothing on their website, it gives you a detailed breakdown of the amount of CO2 emissions, water, and waste you would save by purchasing their product compared to the average clothing company (Pangaia). 

Pangaia’s Financials

Although Pangaia runs its operations with being environmentally responsible at the forefront, this has not stopped them from creating a profitable business. Since Pangaia is a private company, their financials aren’t really publicized, however, I was able to track down some information on them. In 2020, it was reported that Pangaia had revenues of $75 million. Not only that, but the company was also deemed profitable in that same year (Shopify). And we can predict that they’ve grown a lot since then. This is evident as in the last year, they have seen a 1,200% increase in their staff and have increased their Instagram followers by 14 times to 1.1 million followers (Shopify). The company is showing no signs of slowing down as they’ve been frequently worn by celebrities like Pharell Williams, Bella Hadid, and Justin Bieber (Conlon).

Expert Opinions

As Pangaia is a relatively new brand, it was difficult for me to find critical opinions about the company’s claims about their practices. However, I was able to find some criticism about their merchandise. According to Trustpilot, the quality of Pangaia’s clothing is “genuinely very poor, and the clothing doesn’t retain any softness after a couple of washes and becomes brittle and then rips easily.” There were also complaints about the “environmentally friendly dye” that they use as critics have said that it’s easily worn out (Trustpilot). However, there have been very few complaints regarding their quality. But this is the price that some customers will need to pay if they want environmentally sustainable clothing. Pangaia uses materials like seaweed fiber in their clothes, and grapes to make leather and are working every day to perfect their manufacturing process so that these problems won’t occur (Pangaia).

In terms of Pangaia’s effect on the environment, critics have said nothing but good things. According to Good On You, Pangaia’s environment rating is “great.” Their justification for this claim is that “it uses a high proportion of eco-friendly materials including upcycled materials. It uses low impact non-toxic dyes in all of its products. It uses compostable packaging. Its use of eco-friendly materials limits the amount of water and wastewater used in production” (Good On You).

Recommendation

Based on my thorough research, I highly recommend that you take the opportunity to invest in Pangaia. Although Pangaia has received criticism about the quality of their products, this doesn’t outweigh the benefits that they provide to society and the environment. Not only that, but the company has also proven to be profitable and reached revenues of over $75 million after only one year of operation. Pangaia is still projected to grow as their company is in line with consumer trends, and they’ve been frequently sported by celebrities. For all these reasons, I deeply advise you to invest in Pangaia. 

Works Cited

Barone, Adam. “The Aims of Social Enterprises.” Investopedia. www.investopedia.com (2022, 

February 28).

Conlon, Scarlett. Pangaia, “Young Hollywood's favorite Loungewear label, comes with 

superlative sustainable credentials.” British Vogue. www.vogue.co.uk (2020, April 20). 

Fernando, Jason. “Corporate Social Responsibility (CSR) Definition.” Investopedia. 

www.investopedia.com (2022, February 24).

Gaffie, Anne. “Pangaia is the sustainable fashion brand taking over Instagram.” L'Officiel 

France. www.lofficielsingapore.com (2021, September 12). 

Halberg, Morgan. “Pangaia's First Denim Collection is Made from Himalayan Nettle.” Observer. 

www.observer.com (2021, October 13).   

Liu, Chuanlan. “Clothing Consumption During the COVID-19 Pandemic” Clothing and Textiles 

Research Journal. www.journals.sagepub.com (2021, May 12).

“Materials Science Brand on a Mission to Save our Environment.” Pangaia. www.pangaia.com

“Pangaia Reviews.” Trustpilot. www.trustpilot.com (2022, January 31).

“Pangaia - Shopify Plus Customer.” Shopify. www.shopify.com

“Pangaia - Sustainability Rating.” Good On You. www.directory.goodonyou.eco 

Pantry, Nea. “Pangaia Review - must read this before buying.” Honest Brand Reviews. 

https://www.honestbrandreviews.com/reviews/pangaia-review/ (2021, July 9).

Selin, Noelle. “Carbon Footprint.” Encyclopædia Britannica. www.britannica.com (2020, 

January 6).

“The Triple Bottom Line: What It Is & Why It's Important.” Harvard Business School. 

online.hbs.edu/blog/post (2020, December 8).

Wightman-Stone, Danielle. “Pangaia pledges to reach net-zero operations by 2025.”

FashionUnited. www.fashionunited.com (2022, February 23).