"ESG is just one aspect of a company’s overall business performance."
Please be aware the below blog is older than 12 months, therefore the information may not be relevant or up to date.
As part of my on-going exploration into the complex world of ESG, I am going to look at companies that are leading the way and have fully embraced it, as well as those that haven’t quite got there yet. My findings are based on many reliable sources, listed below. In no way does this blog constitute investment advice or recommendations. Rather, it just goes to show that ESG is just one aspect of a company’s overall business performance, and that the angels and devils can be found in surprising places…
Leading the way
AstraZeneca – Say what you want about the Covid Vaccination programme, AstraZeneca committed to sell its vaccine on a not-for-profit basis at a cost of just $4 per dose (Pfizer/BioNTech has agreed to sell its vaccine at $19 a dose and Moderna at around $30). AstraZeneca is committed to supplying its product to the whole world rather than to just those countries that can afford to buy it. Couple that with its ongoing commitment to minimising levels of discharge into water systems and pledge to achieve net zero emissions by 2050 and AZ is leading the way in the pharmaceutical industry.
Ben & Jerry’s - Who doesn’t love ice cream? And ice cream that’s doing good for the world is even tastier! Ben & Jerry’s is a certified B Corp and has been an advocate for change for well over 30 years. The company has its own foundation which encourages employees to give back to their communities and offer grants for social justice programs.
In 1989, Ben & Jerry’s opposed the use of Recombinant Bovine Growth Hormone in cows. In 1995, the company joined a cooperative campaign with the national non-profit, Children's Defence Fund. In 2013, it committed to transitioning all of its ingredients to non-GMO and was the first ice cream maker to use Fairtrade-certified ingredients. More recently, it’s been a strong advocate for Black Lives Matters and trans rights.
Haven’t got there yet
Amazon – It might be one of the biggest companies in the world but Amazon regularly hits the headlines for all the wrong reasons: tax avoidance, staff treatment, fake reviews, data gathering and, of course, a massive carbon footprint thanks to energy-guzzling data centres.
More recently, Amazon has been in the news following reports that it plans to use Covid19 tests from a Chinese company whose technology could allegedly threaten security in the USA.
Amazon is definitely a company that could do better!
Boohoo - Another company that could do better is Boohoo. All was looking pretty rosy last year until allegations of modern slavery emerged. Employees in Leicester factories were said to be underpaid and working in dangerous conditions that put them at risk of contracting Covid19.
On the plus side, Boohoo has committed to righting its wrongs and have developed its Agenda for Change, an initiative to promote ethical and sustainable working practices across its supply and logistics network.
Surprising us
Tiffany & Co – You might think that a company that relies on mining can’t truly be ESG but these guys really sparkle! Tiffany was ranked America’s 4th most sustainable company on Barron’s annual list in 2020 and has dedicated the last 20+ years to improving processes and conducting business responsibly. It is currently one of just two jewellery companies classed as ‘strong’ in the Human Rights Watch. Tiffany’s 2025 Sustainability Goals rest on 3 pillars - People, Planet and Product - and show a strong commitment to improving conditions of all those in the supply chain.
British America Tobacco - Can a tobacco company ever really be seen as fulfilling its ESG commitment? Apparently so. British America Tobacco (BAT) has been ranked the third highest ESG-rated FTSE-100 company by Refinitiv. BAT achieved an impressive ESG score of 91 out of 100 and is the highest-rated business in the food and tobacco sector globally.
“But how?” I hear you ask. BAT is currently investing heavily in upgrading its factories and renewable energy in preparation for being carbon neutral by 2030. It has a global programme that focuses on sustainable farming and improving the livelihood of the 90,000+ farmers it employs. The company is also exploring the e-cigarette market and is committed to “reducing the health impact of our business by offering a greater choice of enjoyable and less risky products for our consumers”.
ESG is an emotive and fast-changing area. With ever-increasing pressure both internally and externally, companies are having to adapt the way they carry out business. I think over the coming years we can expect to see greater transparency and improved ESG monitoring. This will hopefully make it easier to see exactly how organisations are doing in terms of continual improvement and commitment to ESG practices.
By Daren Wallbank FPFS
Resources:
https://www.csrhub.com/CSR_and_sustainability_information/Tiffany-and-Co
https://www.benjerry.co.uk
https://newsnationusa.com/news/finance/banking/amazon-wants-to-test-workers-for-covid-19-using-tech-from-a-chinese-company-that-even-andy-jassy-says-may-threaten-national-security/
https://www.bbc.co.uk/news/business-53305006
https://www.morningstar.co.uk/uk/news/210388/stock-of-the-week-astrazeneca.aspx
https://british-american-tobacco.befirm.be/bat-ranked-in-top-three-ftse-100-esg-performers
