Socially responsible investors, “shareholder advocates,” want their investment money to effect change in living conditions and human development without their proactive investment strategies sacrificing returns on investment.
Here are three strategies and investment recommendations: Impact Investing (II), Corporate Social Responsibility (CSR), and Sustainable Investing (SI).
Impact Investing targets specific issues: democracy and religious freedom, environmental safety, community development, animal welfare, universal health care, women’s rights and economic development, literacy, income redistribution, eliminating smoking, gun control and human trafficking.
Campbell Soup (NYSE: CPB), for example, partners “with the American Heart Association to address consumer health concerns, and address issues relating to both childhood obesity and hunger.” The architect of this strategy, former CEO of Campbell Soup, exclaims, “The more we leveraged our business resources to deliver social value… the better we performed in the marketplace.” Campbell’s trades near its 52-week high of $48.08. This is a basic food group stock paying 2.69% yield. Analysts waiver between hold and moderate sell, because in a mature company like Campbell’s, annual sales growth (4.5%) is steady but not awesome.
Teva Pharmaceuticals Industries Ltd. (NYSE: TEVA) is an Israeli-based company that donated nearly $3 million last year for medical education in Pennsylvania, according to Sherwin Pomerantz, president of Atid EDI Ltd. Starbucks (NYSE: SBUX) announced it is going to cover much of college education tuitions for 135,000 baristas. Details are emerging.
Secretary of Education Arnold Duncan welcomed Starbucks’s announcement saying, “Think of the example you can set for the rest of the nation. If you guys can do this well… you’re going to change the trajectory of the entire country.” Starbucks might also have hit on a way for quick-service restaurants to retain smarter, low wageworkers in their jobs longer (not to sound jaded).
Corporate Social Responsibility (CSR) strategy is for shareholder advocates wanting “big-picture” investing. IBM (NYSE: IBM), like Campbell’s, credits its corporate giving with increasing employee engagement in community affairs, reducing employee turnover and skill development, strengthening customer relationships and opening new markets. Its giving is good for others, good for itself, and IBM is good at it.
Some companies give generously in absolute dollars, and others as a percentage of pre-tax profits (ptp). Leading the pack and worth investing in are:
• Wells Fargo & Co. (NYSE: WFC) donated $315,845,766; 1.3% ptp
• Walmart Stores (NYSE: WMT) donated $311,607,280 cash and more than $755m. in products; 4.5% ptp
The Chronicle of Philanthropy in an earlier review identified companies donating the largest percentages from ptp. If they can operate on this standard, others can too.
• Kroger Co. (NYSE: KR) gave $64,000,000; 10.9% ptp
• Macy’s (NYSE: M) donated $41,266,887; 8.1% ptp Sustainable Investing as a third strategy offers returns on investments as healthy as other kinds over the long term.
The Domini 400 Social Index boasts that carefully selected stocks with social and environmental standards lead to potentially higher returns. The Domini Social Equity Fund (DSEFX) beat the S&P 500 rising 32.85% in 2013. Its current return almost exclusively from stock investments is a respectable 8.6%, at a price of $46.98. DSEFX has a Morningstar rating above average of 3 stars.
Elon Musk, CEO of Tesla Motors (NASDAQ: TSLA), is releasing electric car patents to companies that want to produce electric cars. Musk is fulfilling the company mission of sustainability. The stock is speculative and volatile. This might also result in lowering Tesla’s costs with other electric carmakers sharing costs for building universal electric battery recharging stations.
Chipotle Mexican Grill, Inc. (NYSE: CMG) is an example of SI in the food business. It has more than 800 restaurants serving food from organic farms, and free-range poultry and beef. Sales top $3.3b, and grew 17.7% in the past 12 months.
The stock is high priced, but the company has growth potential appealing to quick service and healthy eating consumer preferences.
My article in the Gale Business Insights Handbook of Investment Research, 2013, titled “Sustainable and Socially Responsible Investing,” offers Seeking Alpha readers more information.
Suffice to say in this limited space, “Saving the planet and improving the human condition requires special commitment and acumen.”
Finally, sustainable investing is the incarnation of Ralph Waldo Emerson’s line; “It is one of the most beautiful compensations of life that no person can sincerely try to help another without helping themselves.”
Dr. Harold Goldmeier is the managing partner of Goldmeier Investments LLC and an instructor of business and social policy at the American Jewish University, Aardvark Israel Gap Year Program, Tel Aviv.