Brambles Ltd Investment Proposal
TO: Clark Hansen, CEO, Anima Mundi Development Partners
FROM: Tara Shinde, Research & Development
DATE: Wed Oct 16, 2024
SUBJECT: Investment Opportunity: Brambles Ltd
As part of AMDP's Research and Development team, my job is to seek investments that balance profitability with social and environmental responsibility. I strongly recommend Brambles Ltd, a supply-chain logistics company whose sustainable, circular business model of reusable pallets and containers aligns with our investment criteria.
AMDP Standards
Before I discuss Brambles Ltd, I want to reiterate the standards of AMDP when considering possible investments.
Triple Bottom Line: AMDP evaluates a company using the TBL sustainability framework to measure a company's social, environmental, and financial impact. It focuses on three key areas:
“Profit” is the traditional measure comparing revenues and costs.
“People” takes into account the social responsibilities of the company – how it treats its employees, customers, and community.
“Planet” measures the company’s environmental awareness and what it does to protect the planet.
Corporate Social Responsibility (CSR): The CSR model is used to determine what initiatives businesses are taking to consider the environmental and social impacts of their decisions in order to reduce harm where possible, beyond just maximizing profit (HBR).
Social Enterprise: A social enterprise is a business primarily aimed at addressing social issues. These enterprises prioritize social goals alongside profit, using their earnings to maximize improvements in societal and environmental well-being (Investopedia).
Carbon Footprint:
Carbon Footprint: A measure of total carbon dioxide (CO2) emissions from an entity's activities (Britannica). Companies track emissions across product lifecycles and operations (ClimateTrade). Reducing carbon footprints mitigates climate change while driving health benefits, energy security, and economic innovation through improved efficiency (ClimateTrade).
Brambles: Company Overview
Established in 1875, Brambles Ltd is an Australian supply-chain logistics company that operates the world's largest pool of reusable pallets and containers. Originally a butchery business, it evolved into a global logistics leader serving diverse sectors including consumer goods, food and beverage, automotive, and pharmaceuticals (Brambles).
The company employs over 12,000 people and manages approximately 360 million pallets, crates, and containers through 750+ service centers across 60 countries, with primary operations in North America and Western Europe (CHEP).
Pioneer of the Sharing Economy:
As pioneers of the sharing economy, Brambles' circular business model enables the share and reuse of pallets, crates, and containers across global supply chains (Brambles). This approach delivers operational and financial efficiencies while minimizing environmental impact, offering advantages that single-use alternatives cannot match. The company helps customers reduce waste and improve supply chain safety through its end-to-end logistics solutions.
Sustainability Strategy:
Brambles generates value through a ‘share and reuse’ model that leverages its scale, density and expertise to achieve superior operational efficiencies (Brambles). These efficiencies in turn generate cash flow that can either be returned to shareholders or reinvested in the business to fund growth, innovation, the development of its people and build a more resilient business.
Brambles sustainability strategy organises the company’s sustainability activities and goals under three broad programs: Better Business; Better Planet; and Better Communities.
Better Business:
Customers: Brambles enables enhanced customer experiences and innovative supply chain solutions through digital transformation and collaborative partnerships (Brambles)
Shareholders: Brambles generates strong cash flow through operational efficiency, delivering dividends and strategic reinvestment in growth. Additionally, it has a strong FY23 revenue of $6.35B USD with 19% profit growth (Brambles).
Employees: Brambles maintains Global Top Employer status by focusing on employee development, workplace safety, and diversity, with a target of 40% women in its workforce (Brambles).
Better Planet:
Brambles takes nature-positive action through its circular business model, targeting net-zero carbon emissions by 2040. The company promotes forest regeneration through sustainable wood sourcing and advances zero waste initiatives through product repurposing and water stewardship (Brambles).
Better Communities:
Brambles makes strives in creating value for their communities by collaborating with food banks, advocating for the education of 1 million people in circular economy, and commitments to developing natural and social capital accounting approaches.
Industry Opinions on Brambles Ltd's Sustainability Practices:
Brambles has consistently received recognition for its sustainability efforts:
Retained the top spot in the Dow Jones Sustainability Index (DJSI) for the Commercial Services & Supplies category in 2023, marking its tenth consecutive year as a DJSI World constituent (Dow Jones Sustainability World Index).
Ranked third most sustainable company globally in Corporate Knights' Global 100 index for 2023 (Yahoo Finance).
However, industry experts have noted challenges:
Balancing rising operational costs with sustainable practices (GlobalData).
Maintaining profitability amid fluctuating demand and global supply chain disruptions (GlobalData).
These perspectives highlight both Brambles' leadership in sustainability and the ongoing challenges of scaling sustainable practices within a resource-intensive industry.
Recommendation:
Following your directive to identify a potential investment that aligns with Anima Mundi Development Partners' commitment to social responsibility, environmental sustainability, and profitability, I am pleased to recommend Brambles Ltd. As a global leader in supply chain logistics solutions, Brambles exemplifies our investment criteria through its innovative and sustainable business practices.
References:
About. (2024). Brambles Corporate Site. Retrieved October 22, 2024, from https://www.brambles.com/about
Brambles announces changes to CHEP Americas leadership. (2024). CHEP USA. Retrieved October 22, 2024, from https://www.chep.com/us/en/brambles-announces-changes-chep-americas-leadership
Brambles Limited (BXB.AX) Environment, Social and Governance (ESG) Ratings. (2024). Yahoo Finance. Retrieved October 22, 2024, from https://au.finance.yahoo.com/quote/BXB.AX/sustainability/
Brambles Limited (BXB). (2018). GlobalData plc. ProQuest. https://libproxy.usc.edu/login?url=https://www.proquest.com/reports/brambles-limited-bxb/docview/2214941646/se-2
Conservation International. (n.d.). What is a carbon footprint? Retrieved October 22, 2024, from https://www.conservation.org/stories/what-is-a-carbon-footprint
Dow Jones Sustainability World Index. (2024). S&P Dow Jones Indices. Retrieved October 22, 2024, from https://www.spglobal.com/spdji/en/indices/sustainability/dow-jones-sustainability-world-index/#overview
Key Financials. (2024). Brambles Corporate Site. Retrieved October 22, 2024, from https://www.brambles.com/key-financials
Plasencia, J. (2022, August 18). The evolution of carbon footprint measurement. ClimateTrade. https://climatetrade.com/the-evolution-of-carbon-footprint-measurement/
Reducing emissions to lessen climate change would yield dramatic health benefits by 2030. (2021, November 30). Climate Change: Vital Signs of the Planet. https://climate.nasa.gov/news/3134/reducing-emissions-to-lessen-climate-change-would-yield-dramatic-health-benefits-by-2030/
Research, Z. E. (2024, August 28). What makes Brambles (BXBLY) a new strong buy stock. Yahoo. https://au.finance.yahoo.com/news/makes-brambles-bxbly-strong-buy-160010387.html
Scott, M. (2023, January 18). The 100 most sustainable companies of 2023. Corporate Knights. https://www.corporateknights.com/rankings/global-100-rankings/2023-global-100-rankings/2023-global-100-most-sustainable-companies/
Selin, N. E. (2010, May 25). Carbon footprint. Encyclopedia Britannica. https://www.britannica.com/science/carbon-footprint
The Investopedia Team. (2014, September 25). Social enterprise: What it is, how it works, and examples. Investopedia. https://www.investopedia.com/terms/s/social-enterprise.asp
What is corporate social responsibility? 4 types. (2021, April 8). Business Insights Blog. https://online.hbs.edu/blog/post/types-of-corporate-social-responsibility
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