AMDP Investment Proposal Draft
FROM: Lauren Tsuchiyama, Research & Development
TO: Clark Hansen, CEO, Anima Mundi Development Partners
SUBJECT: Investment Proposal for Oatly Group AB
DATE: March 5, 2024
Based on my research and analysis, I recommend that AMDP does not invest in Oatly Group AB. While Oatly claims to reach specific sustainability goals, other sources deny and question their claims. In this memo, I will:
Define AMDP’s standards for investment opportunities and companies
Outline Oatly’s company background, financials, and petitions to sustainability
Highlight two expert opinions on Oatly’s efforts
My recommendation for why we should not invest in Oatly
AMDP’s Standards
AMDP supports businesses that are socially responsible, ethical, and sustainable. Our commitment focuses on three principles:
Corporate Social Responsibility
Corporate social responsibility is a way in which companies can pursue their operational activities while dedicating themselves to making beneficial environmental and social change (Gavin, 2023).
Social Enterprise
A social enterprise is a corporation whose primary focus is to provide social change while maintaining organizational duties.
Carbon Footprint
Carbon footprint is measured as the total greenhouse gas emissions that are produced when an activity or product production takes place. Common greenhouse gasses include carbon dioxide, methane, and nitrous oxide. (Mulvaney, 2022).
Triple Bottom Line
The triple bottom line is an economic framework that involves three different measurements of performance, such as environmental, social, and financial. These three dimensions are explained using three P’s:
People: the organization is committed to positively impact people and society as a whole
Planet: the firm’s dedication to positively impact the environment
Profit: the financial return the business generates for shareholders (Slaper, 2011).
Background of Oatly
Oatly is a Swedish international food and beverage company that produces dairy-free alternatives using oats. The company started in the 1990s backed by researcher and food scientist Rickard Öste from Lund University in Sweden. While researching lactose intolerance and sustainable food production, Öste invented oatmilk. In 1994, Rickard Öste and his brother Björn Öste founded Oatly.
Oatly sells a myriad of oat products, ranging from milk, ice cream, yogurt, cream, and coffee. On their website, they promise consumers to deliver products that have the maximum nutritional value with the least negative environmental impact. They claim that they prioritize the long-term future of the planet before profitability (Oatly).
Oatly’s Financial Data
Oatly’s financials indicate decreasing growth over the past four years:
Revenue growth from 2019 to 2020 was +106.50%, while revenue growth for 2022 to 2023 is at +8.46%.
Current profit margin for 2024 is -53.22%.
Return on equity is -72.02%.
From these financial highlights, Oatly has steady, flatlined growth that indicates long-term profitability. However, shareholder value is not at its maximum capacity. [finish/add]
Oatly’s Claims to Sustainability
To the public and on its website, Oatly presents itself as a green company that produces products in a socially responsible and ethical way. Oatly has made the following sustainability achievements and promises in the following years:
Claim 1: [finish]
Claim 2:
Claim 3:
Expert Options
However, the company has fallen under multiple controversies that dispute its sustainability claims.
Opinion 1
In 2021, short-seller Spruce Point Capital released a report that questioned the validity of Oatly’s sustainability reports. They accused Oatly of [finish] In July 2021, Oatly settled $9.5 million for a lawsuit against Spruce Point Capital.
Opinion 2
[Other opinion on pig farm or Blackstone]
First, in 2018, Oatly Group was criticized for selling oat byproducts from its production line to a pig farm. Since the controversy, Oatly has stopped selling its byproducts to the pig farm. However, many consumers remain skeptical to Oatly’s supposed “greenwashing.”
[maybe include and expand?] In 2020, BlackStone group, who have invested in firms who have caused deforestation, acquired 7% of the company.
In an advertisement, Oatly states that "Oatly generates 73% less CO2e vs. milk, calculated from grower to grocer". But the ASA said the ad was misleading because Oatly based the claim on comparing one of its products, Oatly Barista Edition, with full cream milk. The ASA said consumers would understand the claim to include all of Oatly's products.
My Recommendation
Oatly claims to have achieved strict sustainability goals over the last four years. However, through expert opinions and media coverage, Oatly’s reputation has been tainted from controversies surrounding their lack of transparency and accusations of “greenwashing.” I suggest that AMDP does not invest in Oatly. [finish and add]
Works Cited
https://online.hbs.edu/blog/post/corporate-social-responsibility-examples
https://www.ibrc.indiana.edu/ibr/2011/spring/article2.html
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