Costco Nets Extra Points for Sustainability

This article is part of our Rising Star Portfolio series.

Environmental group Greenpeace said there was something "fishy" about Costco (Nasdaq: COST  ) . Now, when it comes to seafood sustainability, the warehouse retailer has pledged to clean up its act.

Costco will no longer sell a dozen types of fish deemed unsustainably farmed by the Marine Stewardship Council, according to Fast Company. Since Costco's the largest retail fish purchaser in the U.S., this is a big win for folks worried about the environmental ramifications of commercial fishing. Moves like this from a massive, consumer-facing company like Costco can often result in tsunami-like ripple effects. Consider Wal-Mart's (NYSE: WMT  ) attempts to push for green practices, which have forced its many suppliers to pay attention to their own sustainability initiatives.

Until it made this switch, Costco consistently floated near the bottom of Greenpeace's annual fish sustainability report, "Carting Away the Oceans." After a similarly withering campaign from Greenpeace, Trader Joe's -- dubbed "Traitor Joe's" by the eco-friendly activists -- has since changed its seafood purchasing policies.

Last April, Greenpeace lauded Target (NYSE: TGT  ) for its efforts, and said Whole Foods Market (Nasdaq: WFMI  ) and Safeway (NYSE: SWY  ) had had made significant gains. In September, Whole Foods addressed marine sustainability issues with a color-coded system for stores. However, in April, Greenpeace offered scathing criticism for Costco, along with private grocers H-E-B and Meijer, accusing them of showing "absolutely zero interest" in the issue.

Apparently, Costco took notice. Its steps to fix the problem should generate greater goodwill for the business, and therefore its stock.

I chose Costco as one of my first purchases for my socially responsible Rising Star portfolio because its many wonderful attributes make it both a great business and a net positive for many stakeholders. Although I'm sure some folks would argue that Greenpeace's long-standing criticisms of Costco's fishy seafood selection have tarnished the retailer's socially responsible reputation, I'm simply glad that the retailer's furthering its shift toward environmental responsibility.

This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. See all of our Rising Star analysts (and their portfolios).

Costco and Wal-Mart are Motley Fool Inside Value selections. Costco and Whole Foods are Motley Fool Stock Advisor recommendations. Wal-Mart is a Motley Fool Global Gains pick. Motley Fool Options has recommended a diagonal call position on Wal-Mart. The Fool owns shares of Costco, and Wal-Mart. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax owns shares of Whole Foods Market; for more on this and other topics, check back at Fool.com, or follow her on Twitter: @AlyceLomax. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On August 04, 2011, at 3:04 PM, JBecket1 wrote:

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