This advice sounds simple: buy the shares of companies whose managements are socially responsible, shareholder-friendly, and/or who strive to look out for the needs of their employees; then watch the profits roll in. The trouble is there are no easy formulae for that kind of responsible leadership. And one person's socially responsible company may not be another's.
Tobacco companies have paid billions of dollars a year in taxes for many decades, which seems pretty responsible, and, by and large, have also been good for their shareholders and not bad places to work. Yet in today's culture, few would argue that they have been managed with the best interests of society in mind.
Berkshire Hathaway has certainly been good to its shareholders. The intrinsic value of a share of the company has grown by leaps and bounds, overall considerably better than 20% a year, compounded. Usually the share price has followed that value skyward. Top management takes a pittance in wages (around $100,000 a year) compared with the extravagant CEO salaries of many other companies. And its head honcho, Warren Buffett, has often personified good ethics in business. Yet, currently a division of the company, General Re, is under investigation by NY's Attorney General, Eliot Spitzer, for possible misconduct in a specialized type of transaction, previously fairly common practice, that called into question the validity of AIG's earnings statements and risk acceptance.
Starbucks has a lot going for it, but the long-term health of its caffeine and/or chocolate addicted consumers may not be one of them. If we chastise big tobacco for smoker-related illnesses and junk food companies for making us fat, can coffee companies be far behind, in a widening circle of criticism and litigation?
Whole Foods has been a terrific growth company and has found favor with an increasingly wholesome eating public. They are now even starting a program to assure their meat comes from farms, ranches, or other suppliers that are friendly to animals (right up until they are butchered for our dinners), but vegetarians may not find this kind of sensitivity persuasive. Also, there have been hints of a bit of controversy in how the company treats some of its employees.