What's in Your Wallet?

By Roger Hudson - April 16, 2012 | Tickers: TILE, SZYM, SBUX, WFM | 0 Comments

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Rating porfolios, not only companies, for their commitment to sustainability, would help investors determine whether their wealth is either helping, or not helping, to care for planet and people. That's a metric that could revolutionize the role business plays in society. And it matters!

The trend is becoming self evident. Companies committed to caring for the one world we have are those that people increasingly want to share their money with. In an age of “experience marketing,” theirs are stories more and more folk, wanting to do the right thing, are keen to participate in.

For one thing, it makes that cup of coffee at Starbucks (NASDAQ: SBUX) taste sweeter because the farmer growing the beans and protecting the one world we have is paid more. It makes that carpet laid recently in the den feel softer because Interface (NASDAQ: TILE), its manufacturer, is committed to doing business lightly in our one world by generating zero waste and using no more carbon-producing fossil oil by 2020. Also, it helps me smile rather than hold my nose when burning that diesel in my VW Jetta because, as biodiesel produced by Solazyme (NASDAQ: SZYM), its carbon neutrality cares for the climate of this same one world, and that’s good. It makes that meal from Whole Foods Market (NASDAQ: WFM) the very taste of goodness – tasting both healthy food and a healthy food production system caring for, yes, you guessed it, the one (and only) world we’ve got. Experiencing a world changing can be heady stuff.

The business take on all this is that consumers committed to caring for this one world are increasingly rewarding companies that do the same. And these companies, like Whole Foods Market, are bringing a new rigor and set of values to doing business that is shifting perceptions of what constitutes a good or bad company. “Good” companies are committed to winning – making a profit. But they choose not to do so at the expense of the planet and people, a practise of "conscious capitalism." In this sense it’s no longer business as usual. By investing in natural (planet), social (people) and economic (profit) capital simultaneously, they pay attention to the triple bottom line to ensure each wins - planet, people and profit. These are the companies, committed to sustainability, whose stories people want to embrace. Their storylines are what more and more investors want to buy into and profit from by developing a portfolio of good companies offering an opportunity for clean living at its best. 

So, what’s in your wallet? And just how clean is it?

To make clean living easier by identifying “good” companies committed to sustainability, the newly introduced One-World-Rating system (OW-rating) helps rate a company by its commitment, or lack of commitment, to sustainability. Speaking hypothetically to illustrate the point, a Starbucks One-World-Rating of OW-223(7) - a 2 out of a possible 3 for caring for Natural Capital (planet), a 2 for doing the same for Social Capital (people), and a 3 for building Economic Capital (profits) -  gives a single digit sustainability rating of the sum of its parts, a (7). Whole Foods Market’s hypothetical One-World-Rating of OW-323(8) - a 3 out of 3 for Natural Capital (planet), a 2 for Social Capital (people), and a 3 for Economic Capital (profit) – would give it a single digit sustainability rating of (8). Rated a high (7) and (8) of a possible (9), would put both these companies solidly in the camp of those which have moved beyond yesterdays preoccupation with profit, or economic capital, alone. And together, in the example, they would be the start of a portfolio of companies that are not just sustainable, but profitably so.

Imagine both Starbucks and Whole Foods Market as just two companies in a portfolio of companies with OW-Ratings of (7), (8) or (9). Consider the chart below:-

                  * All OW-Ratings at this point are for illustrative purposes only

Three of the companies have a sustainability rating of a high (7) and one has (8), assigning the portfolio an equally high sustainability rating of OWP(7.25). In a world emphasising a Goldman Sachs-type vampire capitalism where value is signalled by the dollar sign and number of digits following it, we need an alternative sign with greater depth that is similarly visual and informative. Hopefully the One-World-Portfolio-Rating system can offer this – a calibration of true value because it measures, alongside profit, a portfolio's commitment to clean water, pure air, fertile soils and people.

OW-Ratings can therefore point investors to companies already screened for their commitment to sustainability. And this can help make a world of difference to just how “good” our portfolios can be. OW-Rated, Motley Fool’s Rising Star Alyce Lomax’s SRI portfolio promises to extend its comprehensive lead beyond dollars and cents – most profitable - to most “good” as well.

 So, what do you have in your wallet? The cold green of a vampire capitalism “earned” by preying on planet and people (which means ultimately your life is subsidized by the public purse and the earth)? Or is the green in your wallet wholesome, clean and good (and unsubsidized), carrying with it visions of a new day – of business valuing the one-world we have by making a profit while caring for planet and people?

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