Investment Proposal Final

TO: Clark Hansen, CEO of Anima Mundi Investment Partners 

FROM: Sofia Kristiansen 

DATE: February 26, 2023 

SUBJECT: Bombas Socks Investment Proposal 

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As a Research & Development Analyst at Anima Mundi Investment Partners, it is my job to present unique and promising investment opportunities. After diligent research, I have come across a company called Bombas that I think would make a great addition to our investment portfolio. Bombas donates a pair of socks for every pair purchased. Their company values align with our own and have had a very healthy financial growth pattern over the last few years. 

I will first explain the standards AMPD complies with followed by a presentation of how Bombas supports and promotes these same values. Then, I will include some of the financial successes Bomas has achieved, followed by background information on their commitment to sustainability. Next, I will dive into a weak point in Bombas' supply chain and why this might be a concern of ours as investors. Finally, I will conclude with an overview of the benefits of having Bombas as an addition to our portfolio while staying mindful of a couple of issues that I see in the company's infrastructure. I will provide recommendations at the end that we might consider if going forward with a Bombas investment.  

AMDP Investment Standards

AMDP is committed to investing in companies that are socially responsible, environmentally sustainable, and profitable. The following standards help us to identify whether a company satisfies these requirements or not: 

Triple Bottom Line 

The Triple Bottom Line is a theory that expands conventional business success metrics to include an organization's contributions to social well-being, environmental health, and a just economy. These bottom-line categories are often referred to as the three “P's”: people, planet, and prosperity. (Elkington)

People - considers all stakeholders including employees, communities within which an organization operates, individuals throughout the supply chain, future generations, and customers (Elkington) 

Planet - consequences business activity can have on the environment, community, and economy (Elkington) 

Prosperity - aims to provide decent work (safe working conditions, living wages, compassionate leadership) and economic growth for those in specific communities (Elkington) 

Corporate Social Responsibility 

Corporate Social Responsibility is the self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. (Fernando) 

Social Enterprise 

A social enterprise or social business is defined as a business with specific social objectives that serve its primary purpose. Social enterprises seek to maximize profits while maximizing benefits to society and the environment, and the profits are principally used to fund social programs. (Barone) 

Carbon Footprint

A carbon footprint is the amount of carbon dioxide (CO2) emissions associated with all the activities of a person or other entity (e.g., building, corporation, country, etc.). It includes direct emissions, such as those that result from fossil-fuel combustion in manufacturing, heating, and transportation, as well as emissions required to produce the electricity associated with goods and services consumed. In addition, the carbon footprint concept also often includes the emissions of other greenhouse gases, such as methane, nitrous oxide, or chlorofluorocarbons (CFCs). (Selin) 

Overview of Bombas Socks 

While scrolling through Facebook in 2013, David Heath, the founder of Bombas, read that socks were the most requested item in homeless shelters. He then made it his mission to try to solve this problem. Since then, Bombas has also expanded to include other apparel like t-shirts, underwear, and slippers. Heath had always dreamed of owning a clothing brand and felt a strong desire to help others in the process. This is the story of how Bombas was born. The name Bombas is derived from the Latin word for bumblebee. This name is symbolic of the company’s goal to work together as a hive to make our world a better place. (Picket) I will provide a brief overview of the company’s financial success and then cover two aspects of its commitment to sustainability: social impact and environmental impact.  

Financial Success

Coming up on Bombas’ ten-year anniversary, they have celebrated $250 million total in annual revenue and 50 million pairs of socks donated. Bombas' peak revenue occurred in 2021 and totaled $8.3 million indicating that this company is in a growth stage and continues to make a significant profit. Bombas has been profitable year after year and has a very low employee turnover rate with just seven people having quit over six and a half years. (Caprino) 

Commitment to Sustainability 

Social Impact

One of Bombas' core values is social responsibility. They have donated over 75 million items and every purchase made helps contribute to supporting one of the many partners Bombas are involved with. Some of these partners include overnight shelters, rehabilitation centers, street outreach teams, and Title 1 schools. 74% of their partners say that Bombas has helped free up their budget for other needed items and initiatives. 61% of partners say that working with Bombas has increased community engagement. These statistics are testimonies of the positive impact Bombas has had across the United States. (Bombas) 

Environmental Reputation and Reliability 

While Bombas is a great example of a socially responsible company, I do have some reservations about its environmental impact. Their website indicates that Bomas “earned B Corp status for [its] commitment to helping those in need with our One Purchased = One Donated business model.” (Bombas) The site goes on to talk about how, “The certification matters because it signals our serious commitment to community, makes public our intentions as a company, and validates our practices through rigorous outside review” (Bombas) with no mention of their environmental efforts as a company. 

There is little to no information on the internet as to where Bombas apparel is manufactured. We know from their website that they have suppliers in Peru, Taiwan, China, and the United States but information about the conditions of these warehouses is almost obsolete. A small portion of Bombas socks has the “Made in the USA” tag which leads me to believe that many of the socks and other garments are produced mainly in Taiwan, China, and Peru, places that have historically had poor working conditions. Bombas claims that they have received certification from MadeInAFreeWorld, which is a company that investigates businesses for human trafficking and slavery. I am trusting that the rigorous review necessary for earning B-Corp certification as well as MadeInAFreeWorld certification is enough to prove the environmental and social integrity of Bombas as a company. However, the lacking information about its environmental impact and supply chain is something we will have to explore in more depth before choosing to invest. 

Expert Opinions

Harvard Business School

Harvard Business conducted a case study on Bombas in January 2022. They addressed issues like “What pace of growth would best allow Bombas to reach new customers while maintaining focus on its social mission?” and “with a sprawling network of 3,500 Giving Partners of varying sizes around the U.S., was it time for Bombas to simplify its giving program?” highlighting the positive social impacts of the company but failing to explore its environmental footprint. 

In the case study, researchers mention that Bombas is, “America’s most visible buy-one-give-one company, with over $250 million in annual revenue and 50 million pairs of socks donated” (Keenan) which supports the claims made on the Bombas’ website as well as other outside sources mentioned above. 

U.S. Chamber of Commerce 

The U.S. Chamber of Commerce announced that Bombas “experienced 40% year-over-year growth between 2019 and 2020 as it added T-shirts and, most recently this January, underwear.” As Bombas continues to expand its product line, statistics show that the company’s profit will increase as well which is a positive sign for investors. 

Bombas was also able to adapt to the changing environment around them. “Technology solutions also offered Bombas an opportunity to streamline the product development and procurement side of the business” which made it easier for the company to capitalize on the supply and demand shifts during the pandemic. 

Final Recommendations 

On the surface, Bombas incorporates all of the standards that we value at AMDP. The company’s mission is in line with the triple-bottom-line concept. Bombas has partnered with many other companies that promote the same social, environmental, and profitable goals of AMDP showing their devotion to their mission. There is no doubt that they uphold the highest social standards, but my concern lies in their devotion to environmental sustainability. With very limited public documentation of their manufacturing process, it is hard for me to determine whether or not Bombas apparel is produced in a sustainable way. I cannot speak on the carbon footprint left behind by Bombas manufacturing plants. The lacking information leads me to believe that their products may not be produced in an eco-friendly or ethical way. However, Bombas has earned B-Corp certification as well as MadeInAFreeWorld certification, so my concern may be invalid. In my expert opinion, until it is certain that Bombas products are a result of clean and clear manufacturing practices, my recommendation would be to not invest. 

Thank you,

Sofia Kristiansen, AMDP R&D Analyst

Works Cited

Barone, Adam. “The Aims of Social Enterprises.” Investopedia, Investopedia, 8 July 2022, https://www.investopedia.com/terms/s/social-enterprise.asp.

Caprino, Kathy. “Bombas: How This Mission-Driven Organization Remains Profitable and Impactful, Even in Crisis Times.” Forbes, Forbes Magazine, 30 Mar. 2020, https://www.forbes.com/sites/kathycaprino/2020/03/30/bombas-how-this-mission-driven-organization-remains-profitable-and-impactful-even-in-crisis-times/?sh=782ab1b9b5a6.

Dishman, Lydia. “How Bombas Grew Its Business through Software and Shopper Insights.” Https://Www.uschamber.com/Co, 6 Apr. 2021, https://www.uschamber.com/co/good-company/launch-pad/bombas-startup-growth.

Elkington, John. “A Simple Explanation of the Triple Bottom Line: University of Wisconsin.” University of Wisconsin Sustainable Management Degree, 31 Jan. 2023, https://sustain.wisconsin.edu/sustainability/triple-bottom-line/.

Fernando, Jason. “Corporate Social Responsibility (CSR) Explained with Examples.” Investopedia, Investopedia, 19 Dec. 2022, https://www.investopedia.com/terms/c/corp-social-responsibility.asp.

Keenan, Elizabeth. “Bee-Ing Better at Bombas.” Bee-Ing Better at Bombas - Case - Faculty & Research - Harvard Business School, https://www.hbs.edu/faculty/Pages/item.aspx?num=61877. 

“Made in a Free World.” Made in a Free World, https://madeinafreeworld.org/. 

Picket, Levetta. “Bee Better: How Bombas Is Helping the Homeless.” AIM2Flourish, https://aim2flourish.com/innovations/innovation.

Selin, Noelle. “Carbon Footprint.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., https://www.britannica.com/science/carbon-footprint.