Stock performance study shows companies should take environmental and social factors seriously

2/7/2020 3:28:00 PM

Stock performance study shows companies should take environmental and social factors seriously

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Stock performance study shows companies should take environmental and social factors seriously

Societe Generale studied the impact on companies following an ESG high controversy event, finding that stocks typically underperformed by 12% over the following two years.

Key PointsThe firm identified 12 companies that have recently experienced "high ESG controversy events," including Wells Fargo, Chevron, Vale, Boston Scientific and Boeing.grows, Societe Generale quantified the potentially large consequences for companies that don't follow suit.

Traders on the floor of the New York Stock Exchange"A controversy event will halt the rise in a stock price, and for a sustained period: a solid two years ... Prior to the high controversy occurring, these companies were typically performing in line with the market," analysts led by Charles de Boissezon said.

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Published Fri, Feb 7 2020 7:26 AM EST @PippaStevens13 Key Points Societe Generale looked at the impact of "high ESG controversy" events on stock performance, and found that two thirds of the time shares underperformed the broader market by an average of 12% over the subsequent 2 years.SEC filings show .There’s a scene in the 1994 screwball comedy Dumb And Dumber that can be converted into pretty bulletproof financial advice..

"A controversy event will halt the rise in a stock price, and for a sustained period: a solid two years .. Bezos – the world’s wealthiest man with an estimated fortune of $126 billion, according to the Bloomberg Billionaires Index – scheduled the sales to occur after Amazon blew away earnings forecasts last week.. . Prior to the high controversy occurring, these companies were typically performing in line with the market," analysts led by Charles de Boissezon said. The company has benefited from its explosive cloud-storage business, Amazon Web Services, as well as popular offerings such as its voice-controlled smart devices and video-streaming service. The firm identified 12 companies that have recently experienced "high ESG controversy events," including Wells Fargo, Chevron, Vale, Boston Scientific and Boeing. I've spent the past week testing out the main ones to see what matters and what doesn't.

As the ESG and sustainable investing movement grows, Societe Generale quantified the potentially large consequences for companies that don't follow suit. You have the right and freedom as an investor to do exactly as Carrey does in Dumb And Dumber . The firm found that in two thirds of "high ESG controversy" cases a company's stock experienced "sustained underperformance," trailing the global index by an average of 12% over the course of the following 2 years. The firm defined a "controversy" as "when a company's activity has unintended and/or undesired negative environmental and/or social effects on stakeholders, with corresponding reputational risk," adding that it's the "extreme ESG downside risk, with at times a massively negative impact on company share prices." Traders on the floor of the New York Stock Exchange Brendan McDermid | Reuters The firm based its analysis on 80 past ESG controversies, dating back to 2005 and spanning regions and sectors. In fact, odds are you likely will be far better off doing so than if you were to pay close attention to the theatrics. "A controversy event will halt the rise in a stock price, and for a sustained period: a solid two years . When it comes to fumet, the aim is generally to lean toward freshness and delicacy, not pungent fishiness.

.. On the other side, those betting against these speculative assets might have lost their shirts, or held on long enough to earn some profits, but it’s about as risky a way there is to try and make money. Prior to the high controversy occurring, these companies were typically performing in line with the market," analysts led by Charles de Boissezon said. In addition to underperforming the MSCI World Index by 12%, the stocks typically lagged their regional sector by 4%. The firm noted that a stock's drop can contribute significantly to the performance of its regional sector, which is why the underperformance relative to the global benchmark was more extreme.S. This is even more true with fumet, because the cooking time is so much shorter.

ESG investing strategies grew to more than $30 trillion in 2018, according to Global Sustainable Investment Alliance , and that number is set to keep rising as consumer tastes shift and investors demand more transparency. By many accounts, companies can no longer afford to ignore these factors. Sustainable investing was a key theme at this year's World Economic Forum in Davos, with a number of world leaders and CEOs stressing the urgency of the climate crisis. You, as an investor, have a few options here if you don’t already own Tesla. "All investors are saying, 'I want you to invest in companies doing right by society,'" . "We have $25 billion in ESG funds, and more is going there. Given the short cooking time, it makes sense to maximize the ratio of bones to liquid to avoid watered-down results—reducing a thin fumet isn't a great option, since it can lead to murky flavors and a loss of freshness.

" This follows that the climate crisis is about to trigger "a fundamental reshaping of finance" as issues like climate change "become a defining factor in companies' long-term prospects. Or you can perch on the edge of your seat watching financial television and every tick of Tesla’s volatile stock, shifting between pangs of “FOMO” and Schadenfreude, depending on where the stock heads." VIDEO .