AMDP Investment Proposal -- Draft

To:              Clark Hansen, CEO, AMDP

From:         Dan Heinrich, Research and Development, AMDP

Subject:     Homeboy Electronics Recycling: Qualified for AMDP Investment?

Date:          February 26, 2019

As a member of AMDP’s Research and Development team, my job is to identify potential investment opportunities which co-align with AMDP’s investment vision. My research of potential investments at AMDP has been driven primarily by the principles of social responsibility, environmental sustainability, and financial health. My recent research has led me to recommend investing in Homeboy Electronics Recycling. Factors which I have taken into consideration when making this investment recommendation to you include:

·       An alignment with AMDP investment standards

·       Contribution to a local living economy

·       Company history and leadership

·       Financial health and projections

Before analyzing this investment prospect in more detail, I would like to expand on AMDP’s investment standards including the: triple bottom line, corporate social responsibility, social enterprise, and carbon footprint.

AMDP Investment Standards

·       Triple Bottom Line: Put simply: People, Planet, Profits. This phrase stands to represent the financial results of a company’s operations and their external impact on society. “People” refers to the impact a company has on its employees and neighboring communities. “Planet” considers the externalities an organization has on the environment. And “Profit” is recognized as the fair representation of a company’s financial results.

·       Corporate Social Responsibility: Companies exhibiting strong corporate social responsibility demonstrate a commitment to operating in the best interest of society. CSR often takes the form of a business model which promotes transparency and accountability while delivering on the triple bottom line.                                                                                                                                                               

·       Social Enterprise: A social enterprise is founded on a compelling mission statement which drives the group to deliver results benefitting society as well as the organization itself.

·       Carbon Footprint: The carbon footprint is equal to the sum of all CO2 emissions by a corporation given a certain operating period. Carbon Footprints are typically expressed per ton and are used when considering an organization’s greenhouse gas output and contribution to climate change.  

Local Living Economy

Homeboy Electronics Recycling perfectly captures the model of a local living economy. This company’s commitment to employment opportunities, environmentally conscious recycling, and data management processes have distinguished this company as “the only B-Corp certified e-waste company in the United States” (Homeboy Elec.). The three factors of Homeboy Electronics Recycling which contribute to the local living economy are:

·       Environmental impact

·       Community investment

·       Responsible business practices

Environmental Impact

Homeboy Electronics Recycling self-identifies as a “triple bottom line” company. And, “As a "triple bottom line" company, Homeboy Electronics Recycling is committed to the highest possible quality and sustainability standards for the recycling of e waste” (Homeboy Elec.). This company is:                     

·       Operating in compliance with an Environmental, Health and Safety Polity

·       The only R2 certified company in Los Angeles

·       Certified and audited by Orion Registrar, Inc indicating compliance with environmental management standard ISO 14001:2015

Community Investment

Homeboy Electronics Recycling is a section of larger conglomerate Homeboy Industries. This conglomerate employs, “thousands of formerly gang-involved and previously incarcerated men and women with our 18-month program and free services” (Homeboy Annual Report). Homeboy Electronics actively aims to reduce, “barriers to employment faced by those with a criminal record” (Anzilotti). This organization’s operations are focused on servicing the Los Angeles community directly and impacts the economy through:

·       Employment opportunities for former convicts and gang members

·       Crime reduction

·       Professional development, educational, and social opportunities for employees

Responsible Business Practices

By aiming reduce the amount of electronics in Los Angeles landfills, this company has become recognized as a “Los Angeles Green Business”. To truly make an impact, the primary goal of Homeboy Electronics recycling is device refurbishing. The refurbishing process, “also creates more and higher skilled jobs than materials recovery does” (Homeboy Elec.: Our Process). In 2018 this company was audited and certified by Orion Registrar, Inc to ensure compliance with health and safety systems for employees working on device recycling under OHSAS. Its recycling process focuses on maximizing materials salvaging from hardware while also ensuring responsible data destruction.

Company History and Leadership

Homeboy Recycling is a private company established in 2017. Prior to acquisition, this company was named Isidore Electronics. Founded in 2011, Isadore Electronics was acquired in 2017 by Homeboy industries for an undisclosed sale price. While Homeboy Industries reports a non-profit tax status, Homeboy Recycling is a for profit company. Homeboy Recycling is led by CEO Karina Stokes, a graduate of the University of Southern California with a master’s degree in public policy. Kabira has maintained an executive position within the company since she founded Isadore Recycling in 2011.

Financial Position

Homeboy Industries saw income of $16,646,000 for FY 2016. I will do more research into the financial information of this company to provide you with a more complete picture of this company’s financial health. “By leveraging a for-profit to provide jobs and revenue for a nonprofit, Homeboy Recycling is showing how two different business models can work in tandem to support a range of social good” (Fast Co.).In the next year, the goal is to grow sales at the recycling facility by 40%.

Investment Recommendation

As a social purpose company directly benefitting the local Los Angeles economy, Homeboy Recycling provides a relevant investment opportunity. Given factors that I have taken into consideration including social responsibility, environmental sustainability, and financial health, I believe that Homeboy Electronics will continue to provide sustainable growth and profitability into the future. Therefore, I would like to recommend a sizable investment in Homeboy Electronics by AMDP for more equipment purchases to help give more Homeboys and Homegirls, a home.