Why You Need to Adopt Scientifically Responsible Investing Practices

Investors are putting their money behind socially responsible causes at an increasing rate. Why not invest in a scientifically responsible manner, too?

Jun 19, 2014 at 10:05AM

Images

Scientifically responsible investing practices should be more wide widespread in the 21st century. Source: Fool Editorial/Flickr.

Socially responsible investing has become pretty popular in recent years as a growing population of investors has decided to take a stand against everything from climate change to labor rights to the tobacco industry. While there's often overlap between social responsibility and science, that overlap transforms into a giant crevasse when genetically modified organisms are the topic. The loud minority of consumers that demand GMO-labeling laws from politicians and GMO-free lineups from coffee at Starbucks (NASDAQ:SBUX), groceries from Whole Foods Market (NASDAQ:WFM), laundry detergent infused with renewable algal-oils from Ecover, and burrito wraps from Chipotle Mexican Grill (NYSE:CMG) are doing so at the expense of everyone else.

This isn't just about biotech crops and synthetic biology, however: this about technological innovation. You wouldn't allow a minority of consumers to derail the benefits of additive manufacturing, next-generation battery technologies, or slimmer TV screens because of the risks we'll assume if we commercialize them (3-D printed guns, energy-intensive production processes, and hazardous material usage), because you can see their relevance to your everyday life. Why should we take a different stance on more abstract technologies such as genome editing and organism engineering? We cannot base the majority of our economy, society, and stock market on science and then pick and choose when we want to listen to it.

The problems with GMO-free
A loud minority of consumers often rank organic production methods ahead of biotech production methods in terms of environmental footprint and nutritional and health benefits. These views directly contradict findings from the U.S. Department of Agriculture and Stanford University, respectively. In a survey of the nation's farmers, the USDA found that nearly every major organic crop yield falls "moderately to substantially" below national averages.

Organic crop

% of Overall Average Yield

Corn

71%

Soybeans

66%

Spring Wheat

47%

Grapes

51%

Apples

88%

Oranges

43%

Potatoes

72%

Source: Dr. Steven Savage analysis of USDA data.

To transition all 30 major crops grown in the United States to organic production would require an additional 122 million acres of farmland, or a 39% increase in the nation's total farmland. That's equivalent to the current total farmland of Iowa, Illinois, North Dakota, Florida, Kansas, and Minnesota combined. It's also equivalent to the entire land area of Spain. Consumers demanding GMO-free lineups fail to recognize that increasing organic farmland risks advancing civilization's advance on wild, untouched lands. How responsible is it for Chipotle Mexican Grill and Starbucks to switch their supply chains to GMO-free ingredients? 

That reality, as well as the fact that organic farmland severely lags behind biotech crop farmland, will make it impossible for all of your favorite brands to switch to GMO-free ingredients. There's a reason Starbucks has no plans to transition to organic dairy milk to complement its organic soy milk offerings in Europe and why only one-of-12 Cheerios brands are GMO-free -- and it has nothing to do with corporate control. There simply isn't enough supply, nor is increasing that supply economically or environmentally feasible.

G

This clever advertisement fails to account for the myriad issues facing organic supply chains. Source: GMOinside.

The nutritional and health claims don't hold up, either. Really smart people at Stanford University failed to find evidence suggesting organic foods are more nutritious or healthy than conventional foods. That means Whole Foods Market and Chipotle Mexican Grill are sourcing more expensive ingredients and products that are produced less efficiently than the ingredients and products they're replacing to provide no additional benefit to their customers.

Chipotle Mexican Grill may be able to cash-in on a short-term trend, but it certainly doesn't seem sustainable in the long-term. Would you really shop at Chipotle Mexican Grill over a cheaper quality competitor because it used GMO-free ingredients? Perhaps, but I doubt most consumers would. How can investors largely turn a blind eye to such an outrageous and short-term business strategy?

If organic production is drastically less efficient than modern production systems and doesn't offer any nutritional or health benefits, then why should it be championed as a real solution to the obstacles facing our nation's food supply and demanded by consumers? We live in a country where many people desire the latest gadgets, cars, and fashion trends -- often driven by innovation and science -- yet some demand centuries-old agricultural practices.

Foolish bottom line
There are real benefits to organic food, such as reducing pesticide use and synthetic fertilizer runoff, but it is an inferior production method that falls woefully short in its ability to feed the world. Besides, there are biotech crops that offer those benefits, too, while protecting yields. When scientific reports and recommendations from our nation's leading institutions are ignored, it washes out our nation's global competitive scientific advantage. Many people have adopted socially responsible investing practices or portfolios. Why is it so crazy to suggest we begin investing in a scientifically responsible manner, too?

Does organic food really pay dividends?
Most evidence seems to point to the harsh truth that organic foods don't offer all of the benefits that they claim to yield. But even if a diet high in organic food doesn't pay dividends, your portfolio still can. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolioCAPS pageprevious writing for The Motley Fool, or his work for SynBioBeta to keep up with developments in the synthetic biology industry.

The Motley Fool recommends Chipotle Mexican Grill, Starbucks, and Whole Foods Market. The Motley Fool owns shares of Chipotle Mexican Grill, Starbucks, and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. 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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