Green Yield

It’s been said that corporations have no soul. Typical corporate behavior proves this point. I may write a bit on the nature of corps later, but for now I’d like to point out that there are some exceptions, starting here with Interface Inc, established in 1973 by Ray Anderson.

Atlanta-based international corporation Interface Carpet is at the top of my list of sustainable companies. Founder Ray Anderson read Paul Hawken’s The Ecology of Commerce [1994] and was inspired to make 100% sustainability as Interfaces’ mission. Since 1995 the entire company has been focused on integrating this policy into every phase of its operations. In 1999 Ray Anderson wrote about his new passion: Mid-Course Correction: Toward a Sustainable Enterprise: The Interface Model (Paperback 1999)

Interface wants to “be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: People, process, product, place and profits by 2020” ... “ Ray believes that if Interface, a petro-intensive company, can get it right, it will never have to take another drop of oil from the earth.” This goal of “ becoming the world's first environmentally restorative company by 2020” is called” Mission Zero.” Details including annual reports can be found at http://interfaceinc.com.

Interface Inc, the stock [IFSIA: NASDAQ] currently sells for around $18 a share, has almost 5000 employees, an annual revenue of over a billion dollars, and a dividend of 0.44%. The share price has increased from $8 in 1990, and has risen steadily from a low of under $3 in 2003. I have owned Interface shares since ‘98, but I will not recommend their purchase, for each of us should make our own investment decisions, based on market timing, our own income, investment goals, common sense, and instincts, so I will NOT endorse ANY investment. But I sure hope to share some great suggestions!

Lets be honest. Its much easier to invest in companies which are NOT very Green or Socially Responsible. Some of our investments may have to be a compromise.

[There will be plenty of discussion along these lines: A corporation is doing something green, but look at what else they are doing ..... Nevertheless, I will emphasize the positive in most future posts.]

If you are close to the news & you have even a little experience with the business world, you know many of the bad guys. Indeed almost everyone in certain industries is bad - like Fast Food. And some industries are all bad - Tobacco, Weapons, & Nuclear Power, for example. [I am hopeful some company will come along & find a beneficial and profitable use for tobacco. Hey, it could happen :-). Nukes: A technology to neutralize radiation: seems impossible ]

Bad Corporations: Since 1988 a man named Russell Mokhiber has taken on the gloomy job of listing the “10 worst corporations of the year.” in his newsletter Multinational Monitor.

For the previous millennium, you can check out his master list of the “Top 100 Corporate Criminals of the Decade - 1990s,” ranked by the amount of their fines. See http://www.corporatepredators.org/top100.html

For 2006, Mokhiber listed in alphabetical order: Abbott Labs, Altria [Philip Morris], BAE Systems [military contractor], Boeing, First Energy Corp [nuclear power], Kroger, Massey Energy [coal], Pfizer, Smithfield Foods, & Wal-Mart.

Here’s the list of the worst offenders: those who have made the annual lists more than a couple of times since the first list in 88:

6 Times: Altria [Philip Morris]
5 Times: Exxon/Mobil
4 Times: DuPont Chemicals, General Electric, General Motors, Pfizer [Warner-Lambert] & Wal-Mart
3 Times: Abbott Labs, Caterpillar Tractors, Coca-Cola, GlaxoSmithKline, Monsanto, & Shell Oil.
2 Times: 24 Companies
1 TIme : 88 Companies

Of course, this is HIS list with HIS criteria. To be fair, it would be nice to feel that a company, like a person, can improve with time. McDonalds & Aetna made the first list in '88' only. Are they better? Did they just avoid getting caught? Did they avoid heavy fines and bad publicity?

McDonalds? Nope. Thanks to negotiations with NRDC (Natural Resources Defense Council), they have made a few minor changes for the better, but over the years they have become more automated and impersonal than ever.

So, I doubt corporations change much. Since these institutions often generate more income than lots of countries, most of them are just plain too large to change much without some kind of public disaster, management takeover, or new philosophy. If you think of an exception, let me know.

Bottom Line: Of course you would not be likely to invest in corporations like these. But what about your pension or mutual fund?

Nucor is UNIQUE. Back in 2000 I discovered a cassette tape about Nucor [as told by past president Ken Iverson] at the local library. Knowing it had long been listed among Socially Responsible companies, I did not hesitate to listen. I was impressed and ready to buy some Nucor stock, but the price had fallen recently so I called the company to find out why. In no time I was connected to the CEO, or CFO - someone in charge. [From what I had learned, this was not unusual] He simply stated that as a whole, the steel industry was depressed, but that Nucor was doing just fine. That was in 2000 and its been a solid investment.

What’s Nucor like? First of all they recycle. “Nucor alone recycles one ton of steel every two seconds, making it the largest recycler of any material in America -- more than the nation's entire aluminum can industry.” And they are committed to a clean environment: “Today, Nucor has ingrained into its culture the understanding that environmental stewardship is equal with all other businesses critical functions, and that environmental protection is the individual obligation of every Nucor employee.” [all quotes are from their website]

Then there is the company structure. They operate in about 35 rural locations across the country, with the greatest concentration in the south. “By selecting non-urban locations, Nucor has been able to establish strong ties to its local communities and its work force.” What seems most progressive about Nucor is its decentralization. Each mini-mill has a great deal of independence. Paperwork is kept to a minimum. There are only 5 levels of upper management. "President & CEO, Executive VP, General Manager, Dept Manager & Supervisory/Professional."

Workers are very happy. They are well paid. They can earn bonuses. They can talk to anyone including the President anytime. “Nucor takes an egalitarian approach in providing benefits to its employees. Senior executives do not enjoy traditional perquisites such as company cars, executive dining rooms, or executive parking places ... All employees have the same holidays, vacation schedules, and insurance programs.” Safety is sacred: “Our attitude toward safety couldn't be clearer: Safety is the TOP priority for every Nucor employee. Period.” “Nucor has not laid off a single worker due to lack of work.” Employees do not belong to a union .... Why would they?

Innovation. Nucor can’t be compared with other steel mills. They are leaner. Their processes are unique - State of the Art. Everyone is encouraged to try new things.

One last observation. I have the 2006 Annual Report here at my desk and the front and back covers contain 8 pages full of the names of all [c.17,000] employees in Nucor.

Very Green.

Pure Play: “A company devoted to one line of business, or a company whose stock price is highly correlated with the fortunes of a specific investing theme or strategy.” (Investopedia)

Finding a good green pure play is not necessarily easy. While a company may produce a wholesome product, it might not pay its employees well, be a safe place to work, or be an asset to its community. Nevertheless, a pure play in a green industry can still be an investment in a better world

There are a few industries which offer pure plays for green Investors to consider: Alternative/Renewable Energy, “Natural” Products, Recycling, Microloans, and Natural Foods, and all of these sectors will be discussed here in the future.

Organic/Natural food/beverage-producing companies used to be a pretty good pure play. I used to own stock in Odwalla and Ben & Jerrys. Nowadays you have to do your homework, because top food conglomerates are buying the original companies out. Here’s my homework - featuring brands I am familiar with:

Heinz owns Hain Celestial which owns Westbrae, Bearito, Health Valley, Arrowhead Mills, Linda McCartney Veggie foods,
Walnut Acres & many more.
Cadbury Schweppes owns Nantucket Nectars & Hanson
Coca-Cola owns Odwalla
Colgate-Palmolive owns Tom’s of Maine
Danone owns Stonyfield Farm
Dean owns Horizon & White Wave (Silk)
General Mills owns Cascadian Farm & Muir Glen
J M Smucker owns Knudsen
Kelloggs owns Kashi & Morningstar Farms
Kraft (Philip Morris/-Altria) owns Boca Foods & Back to Nature
M&M Mars owns Seeds of Change
Nestle owns Poland Spring Water
Pepsico owns Tostidos
Solera Capital owns Annie’s
Unilever owns Ben & Jerry’s
Weetabix owns Barbara’s

Groupe Danone, a French “fresh dairy products, biscuits and beverages” conglomerate, is probably the only one of the above buyers with any claim to being green.

For a dramatic & colorful image of this situation, check out Phil Howard’s Organic Industry Structure (8/06)
http://www.cornucopia.org/images/WhoOwnsOrganicChartAug06.pdf
or surf for some of his other diagrams. About 3/5 of the top 25 food conglomerates own some organic food brand.

Actually I don’t know of any pure plays left in this [former?] pure play sector. It appears they are gone. If you know of any, let us know!