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Like most investors, you probably aim for the best possible return when picking potential investments. But as consumers increasingly clamor for companies to embrace social responsibility, good corporate citizenship is fast becoming a vital part of any business or stock's success.
Corporate Responsibility magazine recently released its "100 Best Corporate Citizens" list, in which it rated members of the Russell 1000 large-cap index on more than 300 different elements related to responsible behavior. In the coming weeks, I'll delve into each of the seven categories that contribute to a company's overall score.
Today, we'll look at climate change, which gets a 16.5% weighting. Here are the top-rated companies in this category:
- IBM (NYSE: IBM )
- Johnson Controls (NYSE: JCI )
- Campbell Soup (NYSE: CPB )
- Exelon (NYSE: EXC )
- Johnson & Johnson (NYSE: JNJ )
- Eaton (NYSE: ETN )
- Dell (Nasdaq: DELL )
To earn their high scores, the companies above engaged in a variety of good deeds, including disclosing their total use of carbon offsets and their various emissions, addressing greenhouse gases in their climate change policies, and making their board of directors responsible for the company's climate-change policies.
IBM notes on its website how in the past 20 years, it has "saved 5.1 billion kWh of electricity consumption, avoided nearly 3.4 million metric tons of CO2 emissions (equal to 50% of the company's 1990 global CO2 emissions), and saved over $370 million through its annual energy conservation actions." Remember, these moves don't just conserve natural resources -- they also help companies save lots of money.
Witness Johnson Controls, which has turned energy management into a lucrative business. It currently manages $1 billion in annual energy spending, monitoring 5,000 buildings around the world for companies such as Lockheed Martin. Johnson estimates that its initiatives have saved $1 billion and millions of metric tons of greenhouse gas emissions.
Campbell Soup lists various climate-change related statistics on its website. In 2009, the company saw water use drop about 10% from the previous year, and reported slightly lower greenhouse gas emissions, despite using slightly more energy in its production processes.
Exelon is reducing its emissions by retiring some fossil-fuel plants and expanding its zero-emission nuclear plants. It also plans to use its urban solar installation, the nation's largest, to cut more than 30 million pounds of greenhouse gas emissions per year.
Via the Business Roundtable's Climate RESOLVE program, Eaton has pledged to reduce greenhouse gas emissions from major manufacturing facilities by a sales-adjusted 18% in the next year. Through the Department of Energy's Save Energy Now LEADER program, it has pledged to reduce its energy use by 25% by 2016.
Companies that take benevolent actions cannot only lift your spirits, but also boost your portfolio. In its first nine years, companies on the "100 Best Corporate Citizens" list outperformed the Russell 1000 over the ensuing three-year period by more than 25%. That's a great motivation for even the most coolly rational investors to take social responsibility to heart.
Add Johnson Controls, IBM, Campbell Soup, Exelon, Dell, Eaton, and Johnson & Johnson to your watchlist. You'll get valuable updates, as well as immediate access to a new special report, "6 Stocks to Watch From David and Tom Gardner." Click here to get started.