The Smart Money

     I went to a very interesting presentation a couple of weeks ago:  The good folks at the Dow Jones Sustainability Indexes and their partners at SAM, a Zurich-based group focused on sustainability investing, took the time to enlighten several of us ink-stained wretches of the press (if I can still characterize myself as such in the age of word processing) on the virtues of using measures of sustainability to gauge whether or not a company is going to be successful.  According to these folks, companies that focus on the “triple bottom line” – profit, people and planet – are run by managers thinking for the long term.  These are precisely the sort of managers, the investment researchers posit, and the numbers support, who are going to make their companies grow and their investors reap the benefits of that growth.  Here’s an example in which the DJSI folks have charted the performances of their listed companies in several areas versus that of those in the general Dow Jones inventory.  In this case, we’re looking at companies outside the US.  (It turns out that the preponderance of companies that make the grade for listing in the sustainability index are in Europe.)

     Here are two documents that flesh out very nicely what SAM does and how they do it:  “Measuring Intangibles” and “Sustainability: The Value of the SAM Value Chain.”

     One thing these smarter and greener companies do is plan and build so as to avoid disasters.  In an economic downturn, that can make all the difference.

     This comports with the findings of the UN’s “Principles for Responsible Investment” (UNPRI) initiative.  They maintain “… that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios…”  One extraordinary organization, Ceres, has recognized this for a long time and has been actively and very successfully helping to build just this sort of progressive thinking into the day-to-day operations and the long-term planning of major corporations.  The investors who work with Ceres manage many trillions of dollars in their portfolios and continue to find that sustainability equals good business sense.

     SAM partners with KPMG to produce an annual Sustainability Yearbook.  Here’s The Sustainability Yearbook 2012.  Browse it.  It’s got some compelling information to share, including a look at the sustainability leaders in 58 business sectors, from aerospace & defense to water.  (You can also access it here embedded in the post.)