Investment Proposal: Draft

 TO: Clark Hansen, CEO, Anima Mundi Development Partners 

FROM: Alyssa Custino 

DATE: March 4, 2024

SUBJECT: Investment Proposal: Tony's Chocolonely

After our last meeting, I have spent time researching companies that are committed to environmentally sustainable, socially responsible, and economically prosperous. The company I am recommending to you is Tony’s Chocolonely, a confectionery company based in the Netherlands that is making strides in the fair trade cocoa market. When looking for a company to pitch, I made sure they aligned with the following standards which I will explain below. 

Triple Bottom Line

Triple Bottom Line is the idea that businesses should be measuring things like their environmental and social impact while also generating profit. It is important that companies operate with the three P framework of the triple bottom line:

• People: minimizing negative social impacts from production and a commitment to customers

• Planet: strategy that insures they have effect environmentally sustainable practices 

• Profit: creating a strategy to effectively create value and gain profit for stakeholders 

Corporate Social Responsibility

Corporate social responsibility which is also known as CSR is the framework that guides companies to making positive environmental, ethical, philanthropic, and economic impacts. When companies engage in CSR it shows that they are willing to prioritize global wellbeing as well as generating profit.  

Social Enterprise 

A social enterprise is the idea that a company operates with a purpose or objective that benefits society, stakeholders, and customers. It is when a company uses corporate structure to run the company while maximizing profit.

Carbon Footprint

 A carbon footprint is the amount of carbon dioxide or other carbon compound a person, people, or group produces. Carbon dioxide is produced by the use of fossil fuels, so a carbon footprint measures the amount of fossil fuels used by an activity. 

Background 

Tony’s Chocolonely was founded in the Netherlands in 2005 by a man named Teun van de Keuken who watched a documentary revealing the horrific child labor practices that are involved in harvesting cocoa in Africa. After eating chocolate he turned himself into the police for purchasing a product that involved such unethical practices and vowed to make a difference in the industry. Since their inception, Tony’s has expanded to the United States and has continued to produce 100% exploitation free confections while also being mindful of their environmental impacts. This concept is groundbreaking, especially for a company as popular as Tony’s and with the profit they have been able to generate. 

Currently in the chocolate industry, the main competitors such as Herseys, Nestle, and Mars are known to use child labor practices within their supply chain. With the global chocolate industry being worth around $117 billion, the amount of illegal child labor and unethical labor practices happening in third world countries is not a small amount. “Côte d'Ivoire and Ghana, together, produce nearly 60% of the world's cocoa each year, but the latest estimates found that 1.56 million children are engaged in child labor on cocoa farms in these two countries” (Bureau of International Labor Affairs). Despite widespread calls for major chocolate manufacturers to end these disgusting labor practices, they continue to put profit before basic human rights. The chocolate is continuing to increase gross profit over the last 3 years, proving that the chocolate industry is continuing to grow. This is where Tony’s Chocolonely fits into the market. 

Ethics & Practices

For people like Tony that were looking to enjoy chocolate without the guilty conscience, their chocolate is fighting to make their chocolate 100% exploitation free. They are very open about their struggles with this task such as having to find exploitation free hazelnut providers and pushing to change child labor legislation. They have also founded a foundation called “Tony’s In Africa” which works to examine the supply chain and identify where it can be improved and how to better fair trade certification. Additionally, Tony’s has launched a carbon neutral truck that sells bars in the Netherlands. “Tony’s principles have had tangible — and dramatic — results. In 2020–2021, the International Cocoa Initiative detected cases of child labor at just 4.4% of Tony’s co-ops’ member farms, compared to instances at 52.8% of member farms in co-ops not partnering with Tony’s, while the average income for farmers that have been in Tony’s co-ops for three years more than doubled” (HBR). 

Profit 

While their environmental and social impacts are outstanding, profit is an important factor of a successful company. “Tony’s profitably sells around $130 million worth of slavery-free chocolate bars in Western Europe and the U.S.”.(Harvard Business Review). While they are able to generate profit for themselves, they are also setting a new standard for the chocolate industry that will make a large impact on the larger players in the market. 

Recommendation

I recommend that AMDP invests in Tony’s Chocolonely due to their outstanding and groundbreaking business practices and clear ability to still deliver profit. They continue to have a deep rooted commitment to their cause, and customers have taken to the genuine responsibility they have taken on as a chocolate producer. We would be helping communities all over the world, and making money at the same time.