Most people buy into the idea that socially responsible companies must necessarily be less successful than companies with an emphasis on the bottom line. The point of "The Blue Way: How to Profit by Investing in a Better World" is to dispel what the authors consider to be a myth and show how socially responsible investors can earn good returns and influence the future by making decisions that encourage a better world.
Daniel de Faro Adamson, an entrepreneur, and Joe Andrew, former national chairman of the Democratic National Committee, bring their political and investing expertise to bear in "The Blue Way," as they describe what the world of investing could be, if more investors realized the power that they have. The main understanding of the book (and one that is reinforced over and over again) is that one should invest in companies whose values and practices align with the values of the Democratic Party (hence "blue" investing).
At first, it seems as though "Blue Way" is going to read as nothing more than a rant against Republicans, and condemnation for the influence unethical companies have over them. A little further in, though, it becomes evident that the authors are suggesting a radical plan for encouraging socially responsible behavior through the investment choices we make.
"The Blue Way" sets out to dispel two myths:
1) That investing is apolitical
2) That social conscious companies are doomed to financial mediocrity (or worse).
The authors provide a historical basis for the currently unparalleled influence of such companies of ExxonMobile (XOM) (94% of the company's political contributions go to Republicans) on government policy, as well as numerous examples of how corporate America disproportionately favors Republicans. In compelling, yet simple language, the authors explain how investment choices may actually end up supporting policies that ultimately hurt environmental and social causes:
But because of the myth that investment is politically neutral, not even progressive mutual funds ask whether their "responsible" companies contribute money to an irresponsible political party or government….
The bottom line? Progressives may feel good about their decisions to invest in socially responsible funds, but they have unwittingly become owners of the very companies that send millions of dollars to Republican candidates.
Rather than fixating on the problem, however, "The Blue Way" moves into how to participate in a solution. The book highlights blue way characteristics that can lead to progressive investing opportunities. And the book offers handy lists of companies with poor socially responsible track records, as well as lists of some of the best blue way companies. When we see that Starbucks (SBUX), Apple (AAPL) and others are following the blue way, we suddenly feel as though we really could make money with socially responsible companies.
Examples of the steps taken by companies to act in socially responsible ways (Costco's (COST) decision that its top executive only makes 12 times what the lowest paid employee makes, as opposed to companies whose executives make 100, 200 or 300 times other employees' pay, Starbucks' move to offer health insurance to part time employees, etc.) provide solid and interesting case studies of the ways in which ethical business practices can actually help the bottom line. My favorite example is Nike (NKE). When the company discovered that its Nike Air shoes could be causing a large greenhouse effect due to the SF6 in the heels, they began research on using nitrogen:
[I]t would take almost fourteen years, millions of research dollars, and a total reengineering of the sole before the company found a way to make nitrogen cushion a runner's foot as effectively as SF6 did. The research had a major, unforeseen bonus, however: the shoe's new structure allowed Nike to fill the entire sole with air, not just the heel. The resulting Air Max shoe has been a huge commercial hit, richly rewarding Nike for phasing out SF6 in all its products.
"The Blue Way" continues on to what we can do as investors to ensure that we are investing in the blue way as well. It offers solid tips and plain-language descriptions of the power that shareholders can wield, as well as pointing out that shareholders really do have a stake in blue way investing. And the book looks to a future in which American progressive values are reclaimed by the majority, while insisting that blue way investing also leads to greater prosperity.
In the end, "The Blue Way" is about hope. It's about opening eyes and describing problems, and then offering realistic solutions to make the world a better place. A passage in the closing paragraph says it all:
The Blue Way is, literally, about investing in a better world. The alliance among progressive investors, citizens, companies, and political organizations in America will not only benefit those of us who participate in it directly; it will also make our nation more prosperous and just.
Disclosure: I am interested in, and participate in, socially conscious investing.
Title: The Blue Way: How to Profit by Investing in a Better World
Authors: Daniel de Faro Adamson and Joe Andrew
Publisher: Simon & Schuster
Price: $26.00, hardcover