Here at the Fool, we tend to judge companies on their merits as potential investments -- their margins, their moat, that kind of stuff.
But there's another way to sift the good companies from the bad: We can ask whether they're good corporate citizens.
Let's face it -- companies are in business to make money. There are many different ways to grow that bottom line, but some companies can do so and still leave the world a better place. Many of those companies appear on indexes devoted to that ideal, such as the Domini 400 Social Index maintained by KLD Research & Analytics.
A short while back, The Motley Fool's editorial team got together to determine which companies best follow that path. We came up with the following list, and we need your help to determine which will wear the honorary jester cap for being most socially responsible.
Chipotle Mexican Grill
Whole Foods Market
Healthy fast food
Chipotle makes the list for a couple of reasons. First, its "Food With Integrity" program keeps the company focused on serving "natural" food, including animals raised on smaller, non-factory, free-range farms. The sour cream, for instance, comes from cows that have never received recombinant bovine growth hormone. Does the food taste better? CEO Steve Ells believes so, and he's working to increase the amount of food his company purchases from such sources. Second, the company provides health benefits, a 401(k) plan, and paid vacation for all of its employees -- even the hourly ones who put together your meal. Not your typical fast-food joint.
Retail? Employee relations? No contradiction.
Costco appears on our list because of its excellent employee relations, especially when it comes to pay and benefits. For retailers, Costco pays a better-than-normal wage and offers extensive benefits, including health, dental, vision, and prescription coverage, a 401(k) plan, life and long-term-disability insurance, and an employee stock-purchase plan. The company also believes in employee development and encourages cross-training and promotion from within. Treating employees well has led to superior results, too. Over the past 10 years, Costco stock has climbed 222%, compared with 146% for Wal-Mart
The power of caffeine
Starbucks is well known for good employee relations. In addition, it just emerged as one of 195 companies to score 100% on the Human Rights Campaign's Corporate Equality Index. It's also been on Business Ethics magazine's annual 100 Best Corporate Citizens list for all eight years the roster has been compiled, and it's 10th among companies purchasing green power -- that is, power from renewable sources such as wind and solar -- according to the Environmental Protection Agency. Besides all of that, Starbucks helps its coffee farmers do well by paying them above-average prices for their beans and helping them develop environmentally sound practices.
We pay you to volunteer
Timberland is probably not as well-known as the other names on our list, but this boot and shoe maker has also appeared on the 100 Best Corporate citizens list for all eight years, too. It also has a great employee-benefits package, including tuition assistance. We especially like the company's goal of minimizing its environmental impact, and we tip our hat to its long-established "Path of Service" program, which encourages employees to spend company-paid time giving back to the community through volunteer service.
Care from the top
Whole Foods is another company known for treating its employees well. (Hmm, I see a pattern here.) For instance, the authors of Firms of Endearment noted that when a Wisconsin group of Whole Foods employees voted to unionize, rather than send in an anti-union swat team, CEO John Mackey personally looked into the matter, found where management had failed the employees, and corrected matters, with the result that the employee group voted not to unionize after all. Consider, too, that Whole Foods is third among purchasers of green power, according to the EPA. And, of course, the company's entire stock in trade is organically produced products -- hence, its inclusion on our list.
That's a brief introduction to why we think these companies are tops when it comes to social responsibility. Be sure to vote for the one that you think deserves top honors, and be sure to check out the other nine Fool Award categories while you're at it.
Chipotle is a Rule Breakers pick, and it's "B" shares are a Motley Fool Hidden Gems selection. Wal-Mart is a recommendation of Inside Value. Costco, Starbucks, and Whole Foods are all Stock Advisor picks.
Jim Mueller gets his coffee from Hawaii and volunteers at the Fool's "Writer's Block Removal by Surgery" charity organization. He owns shares of Starbucks but of no other company mentioned. The Fool's disclosure policy is very responsible when it comes to saying what's what.