ESG Investing @ Worm Capital

 

Where socially-responsible investing meets technological disruption

 Published: April 2018

Published: April 2018

 
 
We believe the economics of going green are simply better for the customer—and for us.
— Arne Alsin

Our Philosophy:

Worm Capital employs a mission-driven, earth-first ESG investment philosophy that is built on one simple, but profound premise: We believe the economics of going green are simply better for the customer—and for us.

As investors, we eagerly await—and expect to participate in—the remarkable shift to renewable energies that will touch nearly every aspect of our lives, from computing to transportation to commerce itself.

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Environment: Going green.

Since  our  firm’s  founding,  we  have  viewed  disruption as the key to opportunity.

Similarly, we envision the massive shift to a more sustainable future as the “renewable energy revolution” of our generation. It’s a categorical shift, not an incremental one. Transportation will go electric. Energy will be drawn from renewable, clean sources. Dirty polluters will fall by the wayside.

For investors, the opportunity is enormous: This revolution will yield an astonishing redistribution of wealth as legacy business models can no longer compete with innovative upstarts. Pensions and other long-term investors can no longer afford to be committed to old business models. We’re entering a paradigm shift—and it’s happening fast.

Unlike other investment management firms that view ESG missions as a token symbol of responsibility, our ESG investment commitment is born out of simple economic reality: Going green is good for business.

The value proposition of a cleaner planet with responsible businesses is a better value for its inhabitants, and in the long-term, the customer value proposition always wins: Just like mainframe shifted to cloud, or retail has shifted online, the transformation to clean energy will be driven by consumer demand.

Social: “Be responsible, always.”

Investors should not be made to feel squeamish when looking at the companies in their portfolio.

We treat our investments as if we are the “owners” of these businesses. And some businesses we simply do not want to own. Worm Capital deliberately screens out investments in tobacco manufactures, gun makers, private prison companies, and other firms that do not meet our internal code of ethics.

Corporate responsibility comes in many forms, but it’s our view that the most pressing existential question of our era is how corporations choose to treat the planet that we live in. The battle lines are clearly defined, and Worm Capital is committed to seeking to capitalize on these changes in both long and short formats.

Fossil fuels are poisoning that atmosphere. Sustainable alternatives are available, and a clean environment is ours for the taking. Our team takes a no-compromise approach. The old guard will kick and scream in an attempt to slow down this progress. But the ‘revolution’ is inevitable. The only question right now is a matter of timing. How fast will the world adapt—and how can we be involved?

That’s where our shareholder activism and views on corporate governance comes to play.

Corporate governance: “We think like owners—and we’re not afraid to speak up.”

For far too long, shareholders have been effectively been locked out of corporate boardrooms.

That vacuum of oversight has enabled corporate greed and short-term thinking to metastasize. Worm Capital takes an active approach: We openly criticize obscene CEO pay packages that do not align with interests of long-term shareholders, especially in the case of pension funds and retirees.

Often, we document cases of egregious mis-management, corporate financial waste, and specifically how stock buybacks have led to soaring rates of income inequality, stagnant wages, and wealth disparity.

Worm Capital views itself as more than just an investment management firm: When possible, we shine a light on irresponsible corporate behavior, in hopes that shareholders rise up, take a stand, and demand more accountability and transparency. In the future, we envision a world where corporate boards yield to the demands of long-term shareholders—not the other way around.

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Disclosures:Worm Capital, LLC does not accept responsibility or liability arising from the use of this document. No document or warranty, express or implied, is being given or made that the information presented herein is accurate, current or complete, and such information is always subject to change without notice. Shareholders and other potential investors should conduct their own independent investigation of the relevant issues and companies involved in this article. This document may not be copied, reproduced or distributed without prior consent of Worm Capital. The opinions expressed herein are those of Worm Capital, LLC and are subject to change without notice. This information should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the investments or strategies referenced were or will be profitable, or that investment recommendations or decisions we make in the future will be profitable. Past performance is no guarantee of future results. Worm Capital reserves the right to modify its current investment views, strategies, techniques, and market views based on changing market dynamics. This article contains links to 3rd party websites and is used for informational purposes only. This does not constitute as an endorsement of any kind. Worm Capital, LLC is an independent investment adviser registered in the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Worm Capital including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request. WRC-18-03

 
Eric Markowitz