============

(Stacy was verrrrrry interested in Tracy's tales of chaining herself to various environmental crime scenes.) Stacy has been having a bit of a tussle with the UK tabloids lately, and she tried to goad the editor of the Daily Mirror to try something more effective than its petition against the war in Iraq: a boycott of Coke by Mirror readers to turn them into "Hedge Fund bait." So far, the Mirror hasn't shown the creativity or the cojones to take it up.

Max used to work on Wall Street, made his money, got disgusted, and got out before the crash. He founded the Hollywood Stock Exchange (fun) and then turned to the question of how to make activism more effective. His answer was Karmabanque's Boycott Vulnerability Ratio, a measure of just how much a company can be hurt by consumer action.

His logic is impressively cold-blooded. The thing that really hurts a company is depressing its stock value. So he looked at the problem the way a hedge fund would. The object, if you want to win, is to gather the critical mass of boycotters that you need to start sending a company's share price south. You then have to get the attention of hedge funds and other investment mechanisms that will see a profit potential in selling the stock short. (Selling short means you're betting the company stock will go down. If it does, you gain.) Once short-selling gathers momentum, stock price gets further depressed. And that's the point when you've got a carrot to offer the company: terms for calling off the boycott.

Max is a pretty hard-nosed guy. He doesn't have any compunction about bringing in forces that aren't driven by the morality of the cause - "all these guys care about is seeing a profit." He's basically latched on to a way to use a primary market force, greed, to drive positive change. Reminded me of the most ruthless man I ever knew, Greenpeace chair David McTaggart, who always dreamed of being able to walk into a CEO's office, put a piece of paper on the desk with his terms, and demonstrate that the company share price was going down ten points every minute the CEO didn't capitulate.

Max invented something called the BPR, or Boycott Profitability Ratio. The Boycott Profitability Ratio (BPR) roughly measures the impact that every dollar you DON'T spend with a company will have on its market capitalization. The higher the BPR, the greater the impact a boycott will have.

Boycotting a company like Esso/Exxon is tough. If you look at the relationship between stock value and revenue stream, the customer to stock value ratio, or the diversification of products and income sources, it all adds up to a company where individual retail customer defections have to be massive to make a difference.

Exxon carries a BPR, or Boycott Profitability Ratio, of 1.19. Coca Cola, on the other hand, has a BPR of 5.00: Highly vulnerable to boycott. They have a single product, the relationship between stock value and retail sales is almost 1:1. This in fact mirrors our experience with boycott efforts with these two companies to date. We had a relatively easy win against Coke on the issue of climate-killing chemicals in their refrigerators, simply by launching an internet-based pressure campaign on their CEO. Exxon has been less responsive, shall we say, to our boycott efforts, and while it's still early days and the campaign is gaining ground, they're certainly a hardened target. On the other hand, Deutsche Bank has made a caution to investors already that being branded "environmental enemy number one" by Greenpeace does amount to a risk for such a "customer facing company" as Exxon Mobil.

But one thing we took away from our discussion is an awareness that Karmabanque gives all of us an extremely useful tool for analysis. When considering boycotts or brand attacks, there's often a range of potential targets which are guilty of a particular policy or practice - Max and Stacy have provided some excellent information to help choose where we'll get the most bang for the buck.

Sign up at Karmabanque. It's a promising concept, and in some warped, Karmic Kapitalist way, like Max and Stacy, a bit mad, but outrageously inspiring.