Making "Mission Impossible" Possible - Interface Rocks!
Roger is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
It's not quite the magic carpet, but the company making this rug is soaring to new heights and weaving the triple threads of sustainability - profit, planet and people - into the present, one purpose-driven throw at a time.
For investors looking to profit (grow Economic Capital), that's good news. It has been for me! Having bought low in March 2009, a return of 318% isn't bad. But to win with a company also paying a care dividend to the planet (growing Natural Capital) and to people (growing Social Capital) makes this a carpet I, along with more and more consumers and investors, most definitely want to ride. Destination? A sustainable future for all...and along the way a win for the investor; a win for the planet; a win for people.
How refreshing is that?
No wonder Interface (NASDAQ: TILE) scores a One-World-Rating of OW-332(8), its business practices earning it a 3 out of 3 for caring for the planet, a 3 for caring for people, and a 2 for profitability. Its resulting single digit sustainability rating of (8) out of a possible (9) - the sum of the ratings of the three pillars of sustainability, 3+3+2 - makes it a company worthy of tracking by any investor with aspirations of flying in the same direction.
But it hasn't always been this way, and therein lies the wonder and the hope! There was a time Interface's One-World-Rating would have been the equivalent of a red-flagged fossil oil company, something like OW-003(3) - highly profitable with an Economic Capital rating of "3," but "0" for Natural Capital and Social Capital, leaving it with a weak sustainability rating of (3).
For Interface that's all changed. Now quickly becoming an ex-oil company - its factories transformed barrels and barrels of toxic oil into nylon carpet which then filled landfills after their uselfulness - it is purpose-driven (using good science, excellent engineering and a commitment from the very top) in its quest to systematically change direction from being a "plunderer of the earth" towards becoming a restorative company focused on sustainability. Today it is on track to use little, if any, fossil oil by 2020. Interface's story is leading the way in changing industrialism's dirty narrative to one that is clean and earth-friendly. The impossible has become possible. By purchasing Interface's carpet one literally walks on the future in support of change.
So, just how does this model company earn its One-World-Rating of OW-332(8) - a 3 out of 3 for caring for planet (comitment to grow Natural Capital), a 3 for caring for people (commitment to growing Social Capital), and a 2 for being profitable (growing Economic Capital)?
Calculating this is not difficult. And it shouldn't be if the new OW-Rating system is to empower the average investor and consumer wanting to join Interface in this Mission Possible - investing and spending the earth back into a vibrant health by supporting the truly innovative companies who profitably care for planet and people.
It entails three simple steps. First, guage a company's commitment to sustainability by reading its own public narrative. Second, use the four system principles of a sustainable world, as articulated by The Natural Step, to assess the scientific and administrative rigor of the company's plans to transition towards sustainability. Three, use the very useful and easily accessible Motley Fool CAPS-Rating to help assess the company's profit potential.
1. Interface's Public Narrative. Real commitment to sustainability begins with a company's own clarity of understanding and purpose. If that's present it should be loudly flaunted on a company's website, in its press releases and annual reports, as the marketing advantage this affords. Interface models this, saying in every press releases, "The Company is committed to the goal of sustainability and doing business in ways that minimize the impact on the environment while enhancing shareholder value."
Read Interface's website and the message is unequivocal: "In 1994, Interface® Founder Ray Anderson challenged us to pursue a bold new vision, "Be the first company that, by its deeds, shows the entire world what sustainability is in all its dimensions: people, process, product, place and profits - and in doing so, become restorative through the power of influence" The Interface journey toward sustainability has been a momentous shift in the way we operate our business and see the world. Move through these pages for a closer look at our progress, and find out how to get involved in our Mission Zero® journey." [Explore the website here].
Even a brief reading of Interface's public literature makes it pass the sniff test. It would appear that this is a company with a commitment to sustainability that is right up there with a commitment to making a profit - not minimal, not average, but definitely stellar. An OW-Rating of "3" out of 3 for both Natural Capital and Social Capital therefore suggests itself.
2. The Natural Step: Scientific Rigor. But talk can be cheap. So how can one quickly determine if a company is meaningfully transitioning towards real sustainability? The Natural Step (TNS) can help. It is "a non-profit environmental education organization working to build an ecologically and economically sustainable society" that has worked with major corporations like Nike (NYSE: NKE), Starbucks (NASDAQ: SBUX), CH2M HILL, IKEA, Scandic Hotels, Collins Pine Company and Interface, offering a useful framework for a transition towards sustainability. Nike is using its framework to help ensure that "Just do it" includes "Do the right thing". Howard Schultz of Starbucks, in his book "Pour Your Heart Into It," talks of building a company "in a different way" that "provides long-term value for shareholders without sacrificing its core belief in treating its employees with respect and dignity." The Natural Step framework assists with this.
So how does Interface's PR about sustainability measure up? The Natural Steps' four principles of sustainability give us the questions to ask.
The Natural Step Four Principles of Sustainability
| To become a sustainable society we must... |
| 1. eliminate our contribution to the progressive buildup of substances extracted from the Earth's crust (for example, heavy metals and fossil fuels) |
| 2. eliminate our contribution to the progressive buildup of chemicals and compounds produced by society (for example, dioxins, PCBs, and DDT ) |
| 3. eliminate our contribution to the progressive physical degradation and destruction of nature and natural processes (for example, over harvesting forests and paving over critical wildlife habitat); and |
| 4. eliminate our contribution to conditions that undermine people’s capacity to meet their basic human needs (for example, unsafe working conditions and not enough pay to live on). |
Source: The Natural Step (TNS) website
With these principles guiding our examination of Interface, the company's website reveals the depth to which its commitment goes. For Natural Capital the company has developed EcoMetrics™, a way to quantify its progress towards meaningfully closing the loop so that as a company it generates no waste to pollute creation. For Social Capital likewise, SocioMetrics™ is a way the company measures its investment in people, "including training and education, volunteering and philanthropy." (read more here).
Interface, we can conclude, really is a company with a comprehensive plan in place to meet each of the four sustainability principles as set forth by TNS. A rating of 3 for growing Natural Capital, and 3 for growing Social Capital, therefore, is in order, giving us the beginning of a One-World-Rating (OW-Rating) of OW-33x(x).
Which leaves profit.
3. Motley Fool CAPS-Rating. Open Interface's Motley Fool's CAPS page and with the help of the innovative CAPS community we can begin to responsibly rate the company for its profit potential. A three star CAPS-Rating for Interface converts into a One-World-Rating of "2" for its' potential to grow profit (Economic Capital). [1 or 2 stars CAPS-Rating = an OW-Rating of "1" for Economic Capital; a 3 star CAPS-Rating = an OW-Rating of "2" for Economic Capital; a 4 or 5 star CAPS-Rating = an OW-Rating of "3" for Economic Capital)].
Examine Interfaces' Motley Fools CAPS page further and we find that of 45 All Star Players 42 feel it will outperform and only 3 underperform. In addition we see that of 6 Wall Street players, all 6 feel it will outperform.
Interface's CAPS page also offers links to recent articles on Interface, like the one by Travis Hoium on "Why Interface's Shares Jumped" 14% today (25 April 2012). Travis does not feel any compelling reason to buy at the moment and I would tend to agree, prefering to wait on a fall in price.
Further reading indicates that Interface declared the payment of a regular quarterly dividend of $0.02c per share, payable May 25, 2012.
Conclusion. For Interface, the matter is clear. No debate. No beating around the bush. No greenwashing. For this company the one-world we have matters! And it intends to take care of business - make a profit while caring for planet and people. For them it's beyond time for action. The future is now. And in its steady progress towards win-win-winning, this visionary company is multiplying cents by common sense and paying a comprehensive dividend centered on LIFE.
Interface is a company therefore rated a high, green, OW-332(8) - a company leading the way, truly making "Mission Impossible" possible by profitably caring for planet and people.
That's a carpet worth fastening my seatbelt to, a rug worth walking over in my own journey to the future, a company worth investing in. OW-Rated companies like it give us options in our caring for the one-world we have, one purchase, and one investment at a time.
Corporations (and "frackers") will follow...and then lead.
TripleEFocus1 owns shares in IFSIA, SBUX, and NKE. The Motley Fool owns shares of Interface and Starbucks. Motley Fool newsletter services recommend Nike and Starbucks. 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.
