AMDP Investment Proposal Draft - The Ocean Cleanup

TO:                 Professor Clark Hansen, CEO, Anima Mundi Development Partners

FROM:           Clifton Martin, member of the Research and Development Department

DATE:            March 8^th, 2019

SUBJECT:     Investment Recommendation Memo for the Ocean Cleanup

            As an employee of AMDP and a member of the Research and Development department, it’s my job to identify possible companies and opportunities that our firm would potentially like to invest in. Here at our company, we make it a priority to invest in organizations and enterprises that are financially profitable but those that are socially responsible and environmentally sustainable as well. Therefore, I’m certain that the organization I found this week, the Ocean Cleanup, strongly aligns with our values. However, after researching the Ocean Cleanup’s current performance and its criticism, I’m a bit uncertain that it’s a promising investment opportunity.

In this investment memo, you can find:

·       AMDP’s standards for investment

·       An overview of the Ocean Cleanup

·       The Ocean Cleanup’s ethical business practices, critical appraisals of the company, and its current performance

·       My recommendation of the Ocean Cleanup for investment

First, please find below some of AMDP’s standards and values laid out and defined:

Social Enterprise: A commercial organization that has specific social objectives, goals, and a mission that’s meant to serve and achieve a primary purpose that is set out to create a societal and/or environmental impact (Investopedia).

Corporate Social Responsibility: To us at AMDP, corporate social responsibility allows our company to be socially accountable and aware of our impact. At AMDP, there’s a concentration on the well-being of those in society and how our decisions/initiatives will affect others beyond our business. Essentially, corporate social responsibility is being conscious of the impact an organization is making within society whether that be economic, social, or environmental (Investopedia).

Carbon Footprint: A carbon footprint is defined as the total amount of greenhouse gases produced by an individual, organization, or company to support human activities. The carbon footprint is the sum of all emissions of CO2 (carbon dioxide), which are induced by a person’s/company’s activities in a given time frame. At AMDP, our organization is devoted to engaging in business ventures that will keep our carbon footprint number as low as possible, so we don’t negatively impact our precious environment (Time for Change).

Triple Bottom Line: An accounting business model that the AMDP follows that splits into three parts: social, environmental, and financial (Investopedia).

• Social/People – The social part pertains to the fair and beneficial practices toward labor. At AMDP, this means that we value individuals and prioritize the fair treatment of employees and will not exploit or endanger any of our workers. 
• Environmental/Planet – At AMDP, we highly value sustainability and are committed to sponsoring and producing products that will benefit the natural world and not harm or negatively impact the environment.
• Financial/Profit – This is the economic value/profits created by an organization or business. For AMDP, this is important to us but it’s critical that we make a profit and not compromise our ethical or moral values.

Overview of the Ocean Cleanup

Background Information

Currently, there are over five trillion pieces of plastic littered in the ocean. Trash usually accumulates in five ocean garbage patches, the largest being the Great Pacific Garbage Patch, located between Hawaii and California (information provided by the Ocean Cleanup). If this trash is left to move freely, it will leave a lasting negative impact on our ecosystems, economies, and our health. Therefore, Boyan Slat, a Dutch-born inventor and entrepreneur, coined the Ocean Cleanup in 2013 and made it his mission to develop advanced technologies to rid the world's oceans of plastic. According to the Ocean Cleanup, as of right now, the company is “systematically eliminating technical risks through rapid iterations and aims to reach proof-of-technology as fast as possible and scale up to full fleet in the Great Pacific Garbage Patch as of 2020” (per the company’s mission). Essentially, the Ocean Cleanup estimates that the full-scale deployment of their systems is expected to clean up 50 % of the Great Pacific Garbage Patch every 5 years, but fortunately at a fraction of the cost (the Ocean Cleanup).

            With the Ocean Cleanup’s technological prototypes, the team plans to reduce 90% of the floating plastic that’s concentrated in our world’s great bodies of water by 2040 (the Ocean Cleanup). Since its founding in 2013, those at the Ocean Cleanup have constructed floating tubes with 3-meter-long skirts attached beneath it underwater. This system is meant to move around the water in either a C or U-shape and the trash it catches is supposed to accumulate within the center of the device (CNET). The device is also not propelled by anything at all but relies on the metric forces of the ocean and nature (i.e. wind, current, and waves), making it possible for the devices to easily be in the ocean. Finally, once the trash is collected a vessel acting as a garbage truck will remove the plastic every few months (CNET).

Businesses Practices

Planet

Personally, I’m someone that not only loves the environment but I’m also passionate about protecting the very planet that we inhabit. Therefore, I appreciate that the Ocean Cleanup places a heavy emphasis on planet Earth within its business operations and protecting the environment is at the very heart of what this company does. According to the non-profit’s website, safeguarding and taking care of the planet is the “driver behind the Ocean Cleanup’s efforts to remove large concentrations of plastic from the world’s oceans” (the Ocean Cleanup). Thus, in developing the company’s technology, the team has made it a priority to protect marine life as well. To ensure this, the company has designed the system to be safe for sea creatures in three different ways:

1. The systems move throughout the ocean at such low speeds that it’s slow enough for sea animals to swim away.

2. The screen that’s a part of the device’s skirt is not a net, meaning marine life can’t be entangled.

3. The company removes plastic from the water periodically, which means people will always be present to check for sea animals and if there are any existing dangers before any plastic is lifted and removed out of the water.

(information provided by the Ocean Cleanup).

The Ocean Cleanup has also conducted an Environmental Impact Assessment (EIA) to address any potential environmental risks with the deployment of their first ocean cleanup system. Fortunately, this evaluation did not identify any major dangers or hazards.

In conclusion, the Ocean Cleanup heavily aligns with AMDP’s values and standards. Through its commitment to protecting the environment, specifically our oceans, and the company’s awareness of negatively impacting marine life, the Ocean Cleanup has clearly demonstrated that it’s a social enterprise with a great deal of corporate social responsibility.

Profit

Since the Ocean Cleanup is a non-profit, the company is financing the project with the help of philanthropic, commercial, and governmental donations/sponsorships. Since 2013, the Ocean Cleanup has raised over $21.7 million in donations, bringing their total funding to $31.5 million (Routa).

Critical Appraisals

In an article by David Shiffman entitled “I asked 15 ocean plastic pollution experts about the Ocean Cleanup project, and they have concerns” Shiffman’s survey reveals that many scientists do not unreservedly support the Ocean Cleanup. Essentially, many researchers find the project to be overambitious and unrealistic. For example, Eben Schwartz, a  Marine Debris Program Manager from the California Coastal Commission states that, “To make the claim, as the Ocean Cleanup Project is, that they will ‘clean the oceans’ by 2040 or whenever, is disingenuous and misleading, when it will, at best, clean a very small percentage of what’s found on the surface” (Shiffman). Additionally, other scientist believe that the Ocean Cleanup isn’t focusing on the larger problem with ocean plastics: the fact that plastic pieces are smaller than what the non-profit’s devices target. Dr. Jennifer Provencher, a Weston Fellow in Northern Research at Acadia University and Liber Ero Fellow shares her beliefs when she says, “While clean-up efforts are a valuable tool in reducing plastics in our lives and the oceans, efforts such as the Ocean Cleanup are likely to have a minimum effect on reducing the plastics that are affecting seabirds and other marine organisms. Seabirds are particularly vulnerable to small plastic pieces smaller than 1 cm, which are highly abundant in the ocean, and the Ocean Cleanup does not address. Therefore, stopping plastics from entering the oceans are a much larger priority in terms of actions and innovation needed,”(Shiffman). At the end of the day, although the Ocean Cleanup seems promising, many scientists are skeptical about the real, genuine impact it can bring to our oceans.

Current Performance

In September of 2018, the Ocean Cleanup sent out to sea its beta device, System 001, from San Francisco and it reached the Great Pacific Garbage Patch by October. However, by mid-November researchers and the team at the Ocean Cleanup realized that the device wasn’t capturing plastic as planned (Kart). The skirt of the device did indeed catch plastic and other pollutants, but it only was retained for a few days which is not at all enough time to retrieve it with a sea vessel. The company’s COO, Lonneke Holierhoek, believes that the reason for this failure is due to the system’s speed and that it’s not moving quickly enough at every occurring condition (Kart). Therefore, the Ocean Cleanup’s team is experimenting ways to fix this and they’re expecting to increase the span of System 001 by about 25%. This action will hopefully allow the device to more effectively catch wind and waves which will add force and increase the system’s speed (Kart). Since the system is currently at sea, making the improvements will not necessarily be easy and it will take some time.

Recommendation

Although the Ocean Cleanup strongly aligns with AMDP’s standards as it has an ambitious goal to rid our world’s oceans of plastic by 2040 and is currently working to do so, the company is still within its early stages. With this, I believe that the Ocean Cleanup needs a bit more time to develop its systems before AMDP invests any money within the company. However, in rejecting the Ocean Cleanup right now, I do believe that in the future, this non-profit will be a valuable investment opportunity; it just needs to take some more time to work out its kinks.

Works Cited

Barone, Adam. “Learn About Social Enterprise.” Investopedia, Investopedia, 7 Mar. 2019, www.investopedia.com/terms/s/social-enterprise.asp.

Chen, James. “Corporate Social Responsibility (CSR).” Investopedia, Investopedia, 11 Feb. 2019, www.investopedia.com/terms/c/corp-social-responsibility.asp.

Kart, Jeff. “The Ocean Cleanup Isn't Capturing Plastic, But Organizers Are Testing A Solution.” Forbes, Forbes Magazine, 5 Dec. 2018, www.forbes.com/sites/jeffkart/2018/12/05/the-ocean-cleanup-isnt-capturing-plastic-but-organizers-are-testing-a-solution/#5dc2e0e81749.

Kenton, Will. “Triple Bottom Line (TBL).” Investopedia, Investopedia, 8 Feb. 2019, www.investopedia.com/terms/t/triple-bottom-line.asp.

Ocean Cleanup. “The Ocean Cleanup.” The Ocean Cleanup, www.theoceancleanup.com/.

Ocean Cleanup. “The Ocean Cleanup Technology.” The Ocean Cleanup, www.theoceancleanup.com/technology/.

Shiffman, David. “I Asked 15 Ocean Plastic Pollution Experts about the Ocean Cleanup Project, and They Have Concerns.” Southern Fried Science, 14 June 2018, www.southernfriedscience.com/i-asked-15-ocean-plastic-pollution-experts-about-the-ocean-cleanup-project-and-they-have-concerns/.

“The Ocean Cleanup Launches Its Plastic Collecting System - Video.” CNET, CNET, www.cnet.com/videos/the-ocean-cleanup-launches-their-plastic-collecting-system/.

“The Ocean Cleanup Raised $31.5 Million.” Panthalassa, 7 June 2017, www.panthalassa.org/the-ocean-cleanup-raised-31-5-million/.

Time for Change, timeforchange.org/what-is-a-carbon-footprint-definition.