About us
Mochachinomics, (pronounced Mo-ka-chi-no-mics) is a new way of looking at Socially Responsible Investing (SRI). SRI was once a small, esoteric investment category but has become a substantial and important segment of the investment management industry, with a little under $3 trillion in assets. With size comes dilution of the initial premise and the entry of players with little interest in the goals of SRI investors. According to Social Investment Forum (www.socialinvest.org), most practitioners of SRI investing utilize three primary strategies: screening, shareholder advocacy and community investing. Of those strategies screening is the strategy implemented for over 70% of the assets managed under the SRI umbrella.
SRI investing by screening presents a fundamental selection problem, as it necessarily requires implementing a rigid rules based approach. Rules based categorization generate broad based guidelines, which provides a binary decision, an investment is either black (not socially responsible) or white (it is socially responsible. For companies in business to sell alcohol, tobacco, firearms or to offer gambling oriented services, activities generally considered not socially responsible, this type of rules based system is very effective. However merely excluding alcohol, tobacco and firearms/defense and gambling companies from portfolios does not address the broader concerns that socially responsible investors are desirous of, such as environmental stewardship, respect for human rights, fair treatment of employees, customers and business partners, religious tolerance, community involvement, etc.
These issues are manifest in every business’s day to day decisions and represent the gray area between the extremes that are the heart and soul underlying the principles and values that socially responsible investing is about. The attempts to implement these kinds of categorizations end up in excluding large, critically important areas of the economy. These include necessarily environmentally “dirty” industries like mining and energy.
Using the principles based approach that Mochachinomics espouses, a company is socially responsible because of how it goes about doing its business. A alternative energy provider that treats its employees poorly, abuses its suppliers, provides substandard products is a poor corporate citizen and not a socially responsible investment.
Mochachinomics is looking for companies in any field (excluding alcohol, tobacco, firearms and gambling for obvious reasons) that go utilize values and principals that comport considered is one that has to do with rules versus principles. Rules can only exclude companies on the basis of vast generalities and will nearly always paint every company with the same brush, not accounting for qualitative differences that differentiate the companies that do more right than wrong or vice versa. With the exception of alcohol, tobacco, gambling and some firearms/defense companies, we would argue that every sector of our modern economies contain both socially responsible and socially irresponsible companies. Generic rules that for example treat all mining companies as one do not give credit to the companies that are good stewards of the land and treat their employees as important partners to their success, in what is both an essential economic activity for human life. From our perspective, it makes ample sense to reward the mining companies that have good practices, and walk away from those that don’t. To treat all mining companies as socially irresponsible, is to choose to artificially sever oneself from an important segment of the economy, and one that will likely pursue better policies if it believed it would be rewarded by investors.
In a nutshell, this is what we propose to do. We propose to find companies across a variety of economic activities, truly representative of the modern economies that encompass a principled approach to pursuing their business operations. In other words, rather than differentiate on the basis of arbitrary and rigid rules, we will differentiate on the basis of socially responsible principles. These principles are based on the concept of what Whole Foods CEO John Mackey calls “Conscious Capitalism” which argues that a company has responsibilities beyond that of making profits. These responsibilities include:
1. Treating its customers in a fair and reasonable manner
2. Treating its employees in a fair and reasonable manner
3. Minimize the detrimental impact of business activities on the environment
4. Treat suppliers and outside vendors as partners
5. Contribute to the community the business is located within.