Companies with strong ESG credentials make better investments
Companies with better environmental, social and governance (ESG) standards are more profitable and trade at a premium to rivals, according to new research by the Boston Consulting Group. Based on the analysis of more than 300 of the world’s largest pharmaceutical, consumer goods, oil and gas, banking and tech companies, the study revealed that those with more ethical operations, for example those seeking to conserve water, make bigger profits and are valued more highly than competitors. For oil and gas companies, the valuation premium was almost a fifth for those that combat corruption, have better health and safety processes or attempt to limit environmental damage. Wendy Woods, one of report’s authors, said improved transparency had made it easier to measure the financial impact of ESG issues. According to Ronald O’Hanley, chief executive of State Street Global Advisors, such measurements will make it easier to invest responsibly. (Financial Times)*
Energy
Big oil companies are investing billions to gain a foothold in clean energy
The world’s biggest oil companies are closing more clean energy deals, according to a new study by Bloomberg New Energy Finance (BNEF), as acquisitions, project investments and venture capital stakes doubled in 2016 compared to 2015. Solar energy generated the largest number of projects while wind came as the second-highest volume of deals. Investments in biofuels showed to be on the decline, with zero deals in 2017. Total concluded the highest number of acquisitions and joint ventures with clean energy companies, buoyed by its purchases of a majority stake in SunPower and battery maker Saft Groupe. Despite still representing a fraction of the money invested in oil, the research found that at least $6.2 billion building stakes were invested in clean energy companies, with an emphasis on power storage and digital technologies. (Bloomberg)
The findings come as the ‘Oil and Gas Climate Initiative’ (OGCI), a group of 10 oil and gas majors including BP, Shell, Statoil, Total and Saudi Aramco, have pledged to accelerate low-carbon innovation efforts. The first wave of investments from their $1 billion investment fund will focus on low-emission cement manufacture, high efficiency vehicle engines, and the installation of carbon capture and technology at gas power plants. (Business Green)
Environment
Record surge in atmospheric CO2 seen in 2016
Concentrations of CO2 in the Earth’s atmosphere surged to a record high in 2016, according to new study by the World Meteorological Organization, with last year’s increase 50% higher than the average of the past 10 years. Researchers say a combination of human activities and the El Niño weather phenomenon drove CO2 to a level not seen in 800,000 years. Based on measurements from research stations across 51 countries, the figures showed what is left in the atmosphere after greenhouse gases are absorbed by the Earth’s “sinks”. The report also noted the worrying, and mysterious, rise of methane levels, also larger than the average of the past 10 years. Observers said the implications of these new measurements for the Paris Agreement targets were quite negative. The report comes as country negotiators are expected to meet in just a week at the UN climate talks in Germany to advance and clarify the Agreement’s rulebook. (BBC)
Governance
Facebook says it will make ads more transparent
Facebook has announced a plan to increase transparency about its role in political advertising, ahead of congressional hearings this week on social media companies and Russia’s meddling in last year’s U.S. presidential election. It follows Twitter’s announcement of new disclosure requirements for advertisers promoting content on its platform. Facebook said it will launch a publicly searchable archive next year containing details about the size of spending and the demographics of the audience the ads related to the US election reached. In a blog post, Rob Goldman, Facebook’s Vice President for Ads said that transparency helped to “keep advertisers accountable for who they say they are and what they say to different groups”. In the future, advertisers on Facebook will also be required to include a disclosure in election-related ads, to read: “Paid for by,” the company said. (Reuters)
Corporate Reputation
Nestlé, Hershey and Mars accused of ‘breaking promises over palm oil use’
Just days before the annual Halloween confectionery frenzy, Nestlé, Mars and Hershey have been accused of breaking pledges to stop using “conflict palm oil” from deforested Indonesian jungles. According to the Rainforest Action Network (RAN), consumers have been “deceived” by promises from the brands to clean up their supply chains which were subsequently delayed, revised or watered down. Laurel Sutherlin, a RAN spokesman said the companies “cherry-picked” their palm oil targets and “moved the goalposts” after failing to achieve them. The brands are believed to source palm oil from this 2.6 million hectare in the Indonesian region of Leuser, and to sometimes involve traders linked to illegal logging. Despite companies’ efforts, the scale of the issue has been recognised as impossible to fully address in just a few years, leading them to systematically defer their commitments. (Guardian)
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