Classic Capitalism Is So Over: Here's How You Can Profit from That

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Whole Foods Market Co-CEO Walter Robb
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While profit-seeking motives and greed have not been wiped out, serious changes are under way in American capitalism.

Need proof?

Look no further than your environmentally conscious Prius-driving neighbor, Whole Foods' Whole Planet Foundation, and even crowd-sourcing websites like Kickstarter. Each is an example of people and businesses casting aside selfish greed and acknowledging that caring for the world at large might be a more noble pursuit than money alone.

Tom Serres, founder and CEO of Rally.org, a crowd-funding website devoted to raising money for charitable and political endeavors, says such altruistic outcroppings are creating what he calls a "cause-based economy." And it's growing like wildfire.

Also known as "conscious capitalism" -- after the book of that name by Whole Foods co-founder John Mackey and Bentley University marketing professor Rajendra Sisodia -- this movement champions the idea that, at their best, companies should create value not just for customers, employees, and stakeholders but also for society at large.

Make no mistake: These do-good companies are no weaklings when it comes to traditional, financial measures of success. In fact, they've provided a bright spot in a dismal economy. Companies like Whole Foods (WFM), Google (GOOG), and Chipotle (CMG) have proven that good deeds and good business do indeed mix.

Some Not-So-Obvious Investment Angles

Of course, for investors who want to devote a portion of their portfolio to companies that do good, Whole Foods is the obvious example. As a health-focused grocer with award-winning company benefits and socially conscious business practices -- all with tremendous growth potential -- it is the poster child for conscious capitalism.

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A not-so-obvious but just as attractive company is Waste Management (WM). The trash and recycling hauler has made green trash management a priority. It's making investments now to transform trash into a source of renewable energy. As a result, it has been named one of the world's most ethical companies for six straight years.

Another company that's cashing in on doing well in the world is Clean Harbors (CLH). It's the largest hazardous-waste disposal company in North America. But it also is the go-to company for big environmental messes like the BP oil spill. It similarly looks out for the environment in its own operations, preferring lower-emitting transportation options like railroads to freight trucks.

Of course, these aren't the only companies making positive changes today that will have a lasting impact on the world. Even mainstream companies like Walmart (WMT) and McDonald's (MCD) are incorporating business practices that would have seemed completely out-of-character just a few years ago, becoming better stewards of the Earth by focusing on using recyclable packaging, increased use of renewables, and boosting energy efficiency. (Here are a few other big companies making changes you might not expect.)

Some companies are created to help foster a cause-based economy. Others are integrating these ideas slowly into their traditional approach to business. However it comes about, someday we may look back and call this the time when Wall Street and Main Street recognized that capitalism and conscientiousness could successfully coexist.

Classic Capitalism Is So Over: Here's How You Can Profit from That

Organic brands Cascadian Farm and Muir Glen may make you think "small." Don't they both sound kind of pastoral, the sort of products that might come from family farms? Think again: Both brands are owned by food giant General Mills (move over, Betty).

Vans footwear calls forth images of rebellious skater youth, not to mention some musical credibility, given its frequent sponsorship of the annual Warped Tour. However, it may lose a few counterculture points given it's owned by brand giant VF Corporation (VFC), which also owns Timberland, SmartWool, 7 for All Mankind, Lee, and Wrangler, to name just a few.

In Maine circa 1970, a guy named Tom and his partner Kate dreamed up a whole slew of natural products for folks who, like them, yearned to simplify their lives. Certainly some of Tom's customers really wanted to stick it to The Man and all his chemical-laden merchandise, too. In 2006, consumer giant Colgate-Palmolive (CL) acquired Tom's of Maine. But let's face it: Tom's of Colgate-Palmolive just doesn't have the same ring.

Trader Joe's products always give a mysterious, boutique sort of feel, like some remarkable merchant named Joe has gone all over the world picking out exotic goods to stock the shelves. It's a nice thought, but in 2010 Fortune magazine revealed that some of Trader Joe's store brands are actually made by big companies like PepsiCo's (PEP) Frito-Lay. Incidentally, Trader Joe's is owned by Germany's Albrecht family, which also owns the Aldi Sud global supermarket chain. (U.S. Aldi supermarkets are owned by a different part of the same family.)

Morningstar Farms may sound like it should be just up a country road from Cascadian Farm, but the veggie-burger maker is owned by Kellogg (K). Who knows if Tony the Tiger participates in "Meatless Mondays" after a hearty breakfast of Kellogg's Frosted Flakes? Meanwhile, Kashi might make a lot of people want to don their tie-dyes and grab handfuls of granola, but it also happens to be a Kellogg subsidiary.

The fact that many brands boast counter-cultural appeal but are actually parts of huge conglomerates isn't necessarily awful. For example, Kashi says it's still run independently in La Jolla, Calif., according to its original business philosophy. In fact, it says its mission expanded in 2000 "with a little help from a friend." (Kellogg's one heck of a big friend, that's for sure.)

Likewise, Tom's of Maine still claims to be holding true to its original all-natural mission, despite Colgate-Palmolive's involvement. On the Tom's website, it claims, "Our simple, direct approach hasn't changed one bit: we listen to what our customers want (and don't want) in their products, we learn how it can be done, and we respond with effective natural (and sustainable) solutions."

Still, from the consumer viewpoint, it's always good to know a little bit more about what you're purchasing -- and putting in or on your body -- and from whom. Your dollars equal support, after all. Betty Crocker never had a choice as to which products she'd purchase (she was obviously a General Mills gal all the way!), but American shoppers do.

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Motley Fool contributor Adam Wiederman has no position in any stocks mentioned. he Motley Fool recommends Chipotle Mexican Grill, Google, McDonald's, Waste Management, and Whole Foods Market. The Motley Fool owns shares of Chipotle Mexican Grill, Clean Harbors, Google, McDonald's, Waste Management, and Whole Foods Market. Read Adam's free report for two more investing ideas aligned with conscious capitalism.
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