AMDP Investment Proposal Draft

TO:             Clark Hansen, Chief Executive Officer, Anima Mundi Development Partners
FROM:         Perianne Caron, Research and Development Department
DATE:     June 30, 2021
SUBJECT:     AMDP Investment Opportunity with Tarte Cosmetics [Tarte Inc.]

As requested, I have identified and researched a possible investment opportunity with a cosmetics company that is committed to socially responsible goals and initiatives, environmentally sustainable practices, and financial stability and growth. I highly recommend considering Tarte Cosmetics [Tarte Inc.] as an investment opportunity for AMDP. In this memo, I will outline:

• The AMDP investment criteria

• Background information about Tarte Cosmetics

• A few of the company’s sustainability and cruelty-free claims

• Expert opinions from _______

• My final recommendation

AMDP Investment Standards

At AMDP, there are specific investment criteria that companies must meet for investment consideration.

The Triple Bottom Line

The triple bottom line is a business concept that encourages companies to measure both their social and environmental impact, along with their financial stability, as an alternative to measuring success solely based on profit – the standard ‘bottom line’. The three main facets of the triple bottom line are as follows:

• Profit – In a capitalist economy, financial performance is essential to a company’s success. Companies should measure their ability to maintain financial growth and generate profit for its shareholders.
• People – A company’s societal impact is also highly important to its long-term success. Companies are encouraged to distinguish between shareholders and stakeholders, and develop sustainable business practices that create value for their stakeholders – those impacted by business decisions, including customers, employees, community members.
• Planet – The final facet of the triple bottom line highlights the importance of a company’s impact on the planet. Companies possess the tools and ability to drive positive change. One thing in particular that a company can do to generate a more positive impact on the planet is reduce their carbon footprint.
• A carbon footprint is the total amount of greenhouse gases – including carbon dioxide and methane – that are generated by our actions. Reducing our carbon footprint globally will be crucial to avoiding a 2ºC rise in global temperature that would be incredibly harmful to the planet. Companies can measure their carbon footprints by counting their direct and indirect emissions and converting them into carbon dioxide equivalents.

Tarte Cosmetics Overview

Tarte Cosmetics [Tarte Inc.] – owned by Kosé Corporation – is an American cosmetics company headquartered in New York City. The company was founded in 1999 by Maureen Kelly.

Financial Stability

Tarte Cosmetics has an estimated annual revenue of $100.3M and around 700 employees.

Environmentally and Socially Responsible Ingredients

Maureen Kelly founded the company with the goal to create cosmetics that were both high-performance and natural – the company has since trademarked the term ‘High Performance Naturals’. High Performance Naturals™ is used to describe their line of products formulated with a ‘blend of naturally-derived and other ingredients designed to perform’ – fruit and plant extracts, clinically-proven ingredients, and vegan-friendly options. The company also claims its products to be formulated without harmful ingredients such as parabens, mineral oil phthalates, triclosan, sodium lauryl sulfate, and gluten. Committed to environmentally sustainable practices, the company’s slogan is ‘be green, be smart, be Tarte’.

Environmental Working Group is a 501(c)(3) nonprofit corporation that publishes a Skin Deep® product database. The database rates products using a two-part score, comprised of a hazard score and a data availability score. The ingredient hazard score reflects known and suspected hazards of ingredients. Products are scored on a scale from 1 (low concern) to 10 (high concern). The data availability rating reflects the number of published scientific studies and the scope of ingredient safety data included in the Skin Deep® database. An overwhelming percentage of Tarte Cosmetics’ products have received high scores. The lowest score any product has received is a 6. 

Cruelty-Free Products

Tarte Cosmetics proudly claims all of its products to be cruelty-free. The company has received certification of cruelty-free status from PETA [People for the Ethical Treatment of Animals], a 501(c)(3) nonprofit corporation. PETA’s ‘Global Beauty Without Bunnies’ program reflects urges companies to ban all animal testing. PETA has verified that Tarte Cosmetics and its suppliers do not conduct, commission, pay for, or allow any animal testing on their ingredients, formulations, or final products anywhere in the world.

While the company does not claim all of its products to be vegan – free of animal-derived ingredients – many are vegan friendly in accordance with Certified Vegan standards.  

Environmental and Social Philanthropy

In addition to selling cosmetic products, the company also houses an official 501(c)(3) non-profit organization, Heart to Tarte™, that was founded in 2017. Heart to Tarte™ is dedicated to causes important to both the company and its consumers, such as environmental conservancy, animal rescue, disaster relief, women’s and children’s health initiatives, anti-cyberbullying, and equality.

To demonstrate and practice its commitment to environmental and animal conservancy, the company partners annually with the Sea Turtle Conservancy to “help keep the precious ecosystem as nourished and protected as [their] marine-sourced ingredients keep [their customers’] skin”. Each year, the Sea Turtle Conservancy hosts a ‘Tour de Turtles’ migration marathon to track individual sea turtles as their leave their nesting beaches and head out to sea. This past August, Tarte sponsored one of their turtles.