Investment Memo: Imperfect Foods draft

To: Clark Hansen From: Erica Lu Date: October 15, 2024 Subject: Investment Opportunity: Imperfect Foods

A potential company to invest in is Imperfect Foods, a company committed to reducing food waste by selling “imperfect” and surplus groceries that do not fit the traditional aesthetic standards. Based on our ADMP standards: Social responsibility, Environmental Sustainability, and Profitability – I recommend that we consider investing in Imperfect Foods. Below is my evaluation, including:

• AMDP Standards

• Overview of Imperfect Foods

• Outside Evaluation

• Recommendations

Triple Bottom Line

The triple bottom line is a business concept that firms, rather than solely focusing on generating profit, but also on their impact on people and the planet. It can be broken down into “three P’s”: 

• Profit: Strategic planning initiatives to maximize profitability for shareholders

• People: Commitment to positively impact all stakeholders and society (Harvard).

• Planet: Commitment to being environmentally responsible

Corporate Social Responsibility

Corporate Social Responsibility (CSR) is a way for companies to measure and control their impact on society. This is a business model that helps a company be socially responsible to itself, its stakeholders, and the public (Investopedia). CSR helps build a positive brand reputation whilst fostering trust among stakeholders.

Social Enterprise

A social enterprise is a business that aims to address social or environmental issues as its primary purpose (Investopedia). Social enterprises still strive to maximize profits while also maximizing positive social and environmental impacts.

Carbon Footprint

Carbon footprint is the measure of greenhouse gases that the organization emits into the atmosphere. It is measured and calculated by adding up all the emissions from every stage of a product or service’s life, this includes production, manufacturing, use, and disposal (Michigan). The greenhouse gases contribute to climate change, and the acceleration of climate change comes with disastrous effects on the planet. Reducing carbon footprint is crucial in combating climate change and promoting long-term sustainability.

Overview of  Imperfect Foods

Background

Founded in 2015, Imperfect Foods is a grocery delivery company with a mission to tackle food waste and create a more sustainable food system. Their mission is to eliminate food waste and b build a better food system for everyone (Imperfect Foods). The California-based company rescues and sells surplus and cosmetically "imperfect" groceries at a discounted price, which would otherwise go to waste. Imperfect Foods identifies “imperfect” as: Leftover ends & pieces, Discoloration, Excess inventory, Packaging issues, Near “best-by” date, and Irregular in size. It operates on a subscription-based model, delivering imperfect groceries directly to consumers.

Ethics & Practices

Imperfect Foods claims a strong commitment to reducing food waste, minimizing environmental impact, and offering affordable groceries to customers.

Financials & Growth

Imperfect Foods has grown substantially since its inception in the food waste industry. In 2019, the company’s profit of $122 million, and in 2023, it was $705 million. In January 2021, the company raised $110 million in a Series D funding round, boosting its valuation to $700 million and allowing it to expand across the United States (Privco).

Future Goals

• Become net-zero by 2030

• Increase food access 

• Sourcing renewable energy across all refrigerate warehouses

Outside Evaluations

Opinion 1: For-Profit Organization vs. Anti-waste Goals

“Despite its laudable anti-waste goals, Imperfect Foods has received significant pushback from the sustainability community. Critics are concerned that the for-profit organization is diluting its goal of reducing food waste by incentivizing overproduction” (Hoffman). 

Opinion 2: Certified B Corporation

In November 2021, Imperfect Foods was named a Certified B Corporation. B Corp Certification is a designation that a business is meeting high standards for social and environmental performance, transparency, and accountability (B Lab). This certification ensures that Imperfect Foods is accountable and holds true to its claims of sustainability.

Recommendations

I recommend that AMDP consider investing in Imperfect Foods. Imperfect Foods addresses one of the most pressing environmental challenges – food waste – while providing a profitable business model with strong growth potential. However, we should encourage Imperfect Foods to address certain diluting of sustainability goals to ensure alignment with AMDO’s values. 

Work Cited