Blog

02
Feb

Global LAMP Index® Returns 2015 – Affirming the Nexus Between Bio-mimicry & Profit

Over the past 20 years the Global LAMP Index® beat its global benchmarks 18 times. Last year was one of the rare anomalies when it lagged. That said, it wasn’t off by much.

In the competitive world of global equity indices, such consistent excess performance is unheard of. Given the low turnover of companies in the Index (less than 1% per year on average), this suggests that LAMP companies have discovered a more effective model of management than their global peers.

More interestingly, a 7-company sub-set of the LAMP60, selected for their leadership in living asset stewardship (LAS) best practices, has performed even better. Although more volatile due to its overweight in cyclical manufacturing companies, such as steel, capital goods and specialty chemicals, this “Focus Group” proves an essential point: that LAS often performs best in industries where people think it’s most likely to fail.

It’s worth noting here that the four other Focus Group companies in our 7-company sub-set include manufacturers of consumer durable goods (apparel), non-durables (household products) and pharmaceuticals plus a bank. Not sexy high-tech names, such as Apple or Google, which would have biased results in a desired direction.

So let’s back up and see what’s going on here. LAMP60 companies were selected for their leadership in LAS across a broad range of global industry/sectors. By seeking out the “best of breed” within a representative universe, the goal was to make the LAMP60 comparable to global benchmarks, such as the MSCI World, the FTSE World and the S&P Global 100 indices. With such comparability, we could then make reasonably meaningful tests on relative financial performance.

The ideal of LAS is grounded in bio-mimicry. It looks on companies as living systems – communities of people with shared goals – living and working at the intersection of biosphere and society. Within this web of life there resides enormous intelligence, much of which remains undiscovered. LAMP companies tap into this intelligence in two key ways: (1) through mimicking natural processes in the ways goods and services are produced (via industrial ecology); and (2) by awakening the spiritual intelligence (SQ) of employees, which resides in the interconnected neurology of their hearts, brains and guts. Spiritual intelligence is often referred to as our highest intelligence because it guides our IQ and emotional intelligence (EQ). Through the modern science of cognition we are presently learning how these processes work.

The operating leverage of LAMP companies is spiritual.  When people are inspired, when they sense that their work has meaning beyond earning a living, when they can connect it to their highest ideals, they work with their hearts as well as their minds.

While one can dispute this theory, it is hard to gainsay the results of LAMP companies – particularly those that manifest LAS best practices. The shareholder returns of the LAMP60 and Focus Group are shown in the table below.

GLOBAL LAMP RESULTS VS. LEADING BENCHMARKS
ANNUAL INVESTMENT RETURNS (IN PERCENT)

chart-feb2

Because the Global LAMP Index® was created as a learning lab, there has been negligible turnover in its composition. Since 2004, there have been only six name changes: four due to mergers and acquisitions and two due to original selection errors on my part. This is not to say that I’d select the same sixty companies today if I were to start the Global LAMP Index® from scratch. Some early LAS pioneers have fallen behind best practices while younger companies have become LAS leaders. I have nevertheless retained those early pioneers in the Index because change is never a smooth process. More than once I have seen a company fall behind best practices, then later regain leadership after a period of introspection.

JHB











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