The BP oil-spill disaster and the Goldman-Sachs investigation are reviving public discourse about corporate social responsibility. Far from being only a trendy catchphrase, social responsibility can be a means to long-term business growth. “Companies that treat their employees well, conduct their businesses in an environmentally sustainable way, and have solid corporate governance policies will face much less risk and uncertainty, and enjoy much greater staying power, over the long haul,” Alyce Lomax writes in a recent Motley Fool article.
Socially responsible investing (NYSE:SRI) has grown exponentially over the past 20 years, and the returns have been strong. According to the Social Investment Forum, a trade association dedicated to SRI, a number of studies have found that SRI mutual funds perform on par with non-SRI funds. In addition, the FTSE KLD 400, the longest-running SRI index, has yielded an average annual return of 9.51% since its 1990 inception, compared to 8.66% for the S&P 500 over the same period.
Environmental awareness falls under the broad definition of social responsibility. Some of the potential benefits of a well-executed corporate environmental strategy include reducing the risk of project failures and setbacks, reducing operational costs by improving efficiency, building a strong reputation leading to new business opportunities, and increasing value to shareholders and the community.
Environmental responsibility is one of the founding values of NovaGold Resources Inc. (TSX: NG) (NYSE Amex: NG), a precious metals company engaged in the exploration and development of mineral properties in North America. The Company, headquartered in Canada, seeks to increase value for shareholders through a strategy of responsible development that includes complying with environmental regulations and best practices, engaging with local stakeholders to derive value from their expertise, and utilizing long-term planning to minimize project risks and delays. NovaGold recently filed its first sustainability report to provide an overview of the Company’s sustainability efforts and goals. The report includes data from NovaGold’s 2009 operations and a summary of its past activities. Sustainability efforts included:
- Diverting local waterways around mine sites to mitigate impacts on the water supply.
- Using pipelines for fuel transport to minimize effects on the habitat.
- Exploring alternative fuel sources such as natural gas and wind power.
- Eliminating disposable tableware and providing employees with reusable lunch kits for field use.
- Donating logged trees to the community for use as winter fuel.
- Hiring locally to benefit the community and reduce the financial and environmental costs associated with air travel.
NovaGold has one of the largest resource bases among its peers, totaling more than 31 million ounces of gold, 157 million ounces of silver and 9.1 billion ounces of copper. The Company owns 50% interests in two of the world’s largest undeveloped gold and copper-gold deposits and owns 100% of a high-grade copper-zinc-gold-silver deposit. All of the Company’s mines are located in North America, which translates to lower risk and higher potential value than many other small mining companies can provide. NovaGold combines an impressive resource base with a strong corporate strategy, making it a stock to watch.
Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit www.redchip.com/disclosures.asp?src=rcv.