Is an Investment in Westport Innovations Socially Responsible?
Ken is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I received my copy of Westport Innovation’s (NASDAQ: WPRT) 2011 Annual Report in the mail the other day. After the letter to shareholders and before the explanation of Westport’s balance sheet are three full pages of disclosures on the social and environmental aspects of Westport’s business. These disclosures are part of Westport’s voluntary participation in the Global Reporting Initiative (GRI). It seems that in addition to Westport’s mission to help establish trucking fleets free from dependence on oil, which Waste Mangement (NYSE: WM) also embraces, the company is devoted to the values of Socially Responsible Investing (SRI).
SOCIALLY RESPONSIBLITY IS SMART BUSINESS
As an investor, I am happy to learn that my businesses are open to welcoming the treasure trove of investable dollars that target companies that care about their employees, shareholders, and the planet. According to US SIF,” an estimated $3.07 trillion out of $25.2 trillion in the U.S. investment marketplace” is dedicated to SRI. The organization further reports that the cash flows into SRI investment funds outpaced the overall growth of the market for the past 15 years. With trillions of dollars waiting to be invested, Westport’s participation in the GRI is a smart business move.
WHAT ABOUT FRACKING?
As a person who cares about social responsibility, I think it is important to dig beneath the surface of Westport’s disclosures. Just like independent minded fools who avoid high-fee mutual funds and want to do their own investing, I want to do my own ethical thinking. For example, after doing a little digging, it was nice to see that Westport’s longtime joint venture partner Cummins (NYSE: CMI) is a SRI champion.
The big question for SRI investors who are interested in Westport should be the issues surrounding the environmental impact of hydraulic fracturing. It is interesting to note that Westport’s GRI report does not mention hyrdofracking in its “Environmental Performance” section. This omission makes perfect sense, because Westport does not itself engage in hyrdofracking. It leaves that honor to companies like Halliburton (NYSE: HAL) and Baker Hughes, Inc. (NYSE: BHI). Even though Westport does not go after natural gas itself, the company’s business plan requires that the price of natural gas remains depressed relative to crude oil. Westport may not frack, but SRI investors should know to read beyond the GRI disclosure and simple SRI screens.
For my investing dollars, I am comfortable with my investment in Westport. I own shares in the company and have rated it a long-term outperform in CAPS. Even if critics are correct that hydrofracking may threaten water supplies (as this series of New York Times articles describe), I believe it is a lesser evil than depending on oil from volatile places in the world. I cannot see United States involvement in a war for natural gas in my lifetime and drilling can be regulated to ameliorate environmental risks if the International Energy Agency's golden rules for natual gas are adopted.
Social responsibility should not be about perfection. Responsibility means we cannot afford to put our head in the sand and need to make choices about the best possible realistic options. Trucks are going to roll down the road one way or another, and I want natural gas in their fuel tank. For my SRI dollars, Westport passes.
Does Westport pass your test for social responsibility and shareholder profitability? I love a good debate, so please comment below!
BoiseKen owns shares of Westport Innovations. The Motley Fool owns shares of Halliburton Company, Waste Management, and Westport Innovations. Motley Fool newsletter services recommend Cummins, Halliburton Company, Waste Management, and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.