Green Companies' Stocks Outperform Non-Green Competitors

Green Companies' Stocks Outperform Non-Green Competitors

A company that makes decking lumber from reclaimed plastic and wood, a coffee-bean roaster, and a maker of outdoor footwear and apparel have been named the first recipients of the Green2 Awards by green-investment firm Winslow Management Company. The annual awards recognize companies that make positive contributions both to the environment and to their shareholders by outperforming their non-green competitors.

Green2 Award winners Green Mountain Coffee Roasters of Waterbury, Vt.; The Timberland Company of Stratham, N.H., and Trex Company, Inc. of Winchester, Va. are all listed on the Winslow Green Index (WGI), an equally weighted index of 100 "green-screened" companies. Since it was created five years ago, the WGI has had a cumulative increase in value of +96.99%. In comparison, the S&P 500 has had a cumulative decrease in value of -16.89%, while the Russell 2000 had a cumulative return of +23.19%. Returns are for the period from July 1999 through March 2005. Past performance is no guarantee of future returns.

As of Sept. 30, 2003, the WGI is adjusted quarterly and companies are removed if their performance is no longer green, if their stock is no longer publicly traded or if their market capitalization falls below $50 million.

"These companies exemplify the Winslow philosophy that, 'What's good for the environment is also good for shareholders,' " according to president Jackson W. Robinson. "They offer proof that capitalism and environmentalism can not only coexist, but can reinforce each other."

The awardees are:
  • Green Mountain Coffee Roasters. GMCR's stock has increased in value by a factor of more than eight since the WGI was started, from $3.50 a share on July 31, 1999 to $25.10 on Dec. 31, 2004.

    GMCR is an active supporter and participant in the Businesses for Social Responsibility (BSR). It supports the Rainforest Alliance, and its CAFE (Community Action For Employees) program enables employees to take paid time off to volunteer in their community. In addition to energy reduction and recycling programs, it is working to reduce its packaging, and a majority of its coffee is either certified organic, Fair Trade or purchased directly from a particular farm.

  • Timberland. Timberland is a global leader in the design, engineering and marketing of premium-quality footwear, apparel and accessories “for consumers who value the outdoors and their time in it.” Timberland’s stock has more than tripled in value since the WGI was started, from $20.33 a share on July 31, 1999 to $62.67 on Dec. 31, 2004.

    Timberland was a founding sponsor of City Year, the Boston-based "urban Peace Corps" that brings together young people from diverse backgrounds for a year of full-time community service. Its Path of Service program gives employees 40 hours of paid time-off a year to serve their communities. Last year on Earth Day, Timberland partnered with schools and communities for hands-on volunteer projects around the world.

    Timberland has also taken steps to be environmentally responsible in its manufacturing processes. For example, the company is increasingly using solvent-free glue to produce its footwear.

  • Trex Company. The stock of Trex Co., which makes residential and commercial decking, has increased in value from $28.25 a share when the WGI was started to $52.44 on Dec. 31, 2004. Trex Co. turns millions of pounds of recycled and reclaimed plastic and waste wood each year into Trex decking and railing, a weather-resistant, splinter-free, low-maintenance option for decking. Most of the raw materials used to produce its deck materials come from recycled plastic grocery bags, reclaimed pallet wrap and reclaimed hardwood. Trex purchases an estimated 300 million pounds of recycled or reclaimed polyethylene and approximately the same amount of hardwood sawdust each year that would otherwise end up in landfills. The company estimates that it receives about 50% of the recycled grocery bags available on the market.

    “We believe companies that take advantage of environmental opportunities can gain a competitive advantage over their peers through cost reductions, quality improvements, increased profitability, and access to new and growing markets,” Robinson said. “Environmentally responsible companies also have less risk of environmental liability, which could have a major impact on future stock prices.”
“Green Mountain Coffee Roasters, Timberland and Trex are just a few examples of companies that have done well by doing good,” Robinson said. “Their performance, and the performance of the WGI, provides further evidence that green begets green,” he concluded. “They offer additional evidence that companies that care about the environment are well positioned to produce better returns than companies that don’t.”

The awards will be presented on Earth Day, which takes place April 22, 2005.