Tuesday, May 19, 2015

Getting on the Bandwagon

The Financial Times reported that a study made by Insead concluded that “coaching programs based on introspection and meditation techniques, without any discussion about CSR [corporate social responsibility] topics, exhibit a significant impact on both the probability to act in a socially responsible way and on the factors that influence the probability to behave that way”.

Last week we heard that Verizon has purchased AOL for $4 billion. Considering that AOL is a holding in the Yoga Capital portfolio, it got me to thinking how this reflects on this portfolio’s purpose. It prompted a soul searching of social and environmental investing. If AOL, is indeed a stalwart of socially and environmentally aware companies, then does that mean that Verizon is also such a leader, or does it mean that AOL is not. Does this purchase by Verizon indicate a move by them toward being more sustainable. I’m not going to pretend to know the answer, but I do think the answer should be more obvious.

Again the question is prompted which companies are socially and environmentally responsible because they truly are compassionate and truly care about the community and environment as opposed to being trendy, or wanting investors and clients to see that they are playing their part.

The Insead study indicates what I believe to be the most important indicator of CSR. Companies whose executives or decision makers who have personal contemplative practices, tend to organically be socially and environmentally compassionate. It is these companies that are the most sustainable. It is these companies that represent a new era in capitalism – a new industrial age. To identify and segment these companies is to create an investment class that represents the future of investment. This is still advanced strategy, so to have a rounded portfolio might require broader exposure, but the tide is turning and to have a portion, if not all of ones money in this investment class is essential.

This type of awareness when investing represents our deepest knowledge and beliefs. There is not a sustainably successful investor who does not show attributes of mindfulness and social and environmental awareness.

In order for Yoga Capital to truly represent this strategy, it’s time to take its screening process to the next level. Currently we pick companies that score high on the CSRhub.com rating system, and then we find the companies whose executives have a personal mindfulness practice, and then we take those who have strong financials. But this is not enough. We must now look closer at the companies output and ask the question, “Is this company paving the way to the new era in business, or is it stuck in the old “profit is the goal” way of operation”.

Keurig Green Mountain has also been a holding despite the controversy around the plastic K-cups. My defense has been they have s short-term action plan to overcome barriers to recycling. But I was asking the wrong question. And then I saw someone using a Keurig coffee machine. The K-cup goes in, a pull of the handle and the user hurries off to the chaos of the day. The paradigm of the machine is the problem. I doubt quick coffee will be integral to the new era. Coffee, maybe. And just when Keurig comes into question, it offers up a soda machine.

Deutsche Bank is another one. They made the cut because of a company mindfulness program. A breath of fresh air in a stodgy banking industry. But that’s not enough. Investment banks in their current form have no place in the new era of capitalism. If a bank is going to make the cut, they will have to show extreme proactive signals that profit is not the goal. Goldman Sachs, believe it or not, is on the watch list, but certainly not ready.

Yoga Capital will shortly reallocate, and rebuild with a keener sense of awareness around the real trailblazers. We will find the boardrooms that decide with compassion, that strategize with the future of themselves, and the world around them in mind. As Patagonia does, build companies that will last 100 years. As Google does, do no evil!

Businesses on the mindfulness bandwagon - FT.com


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