WOOD’s Universe – ESG: I'm in a sustainable state of mind

What is not sustainable fails, over time. When auditors (or journalists, or activist investors) raise going concern issues, the market’s reaction is immediate, and ESG issues are becoming the same, we believe, albeit with a somewhat longer time horizon. Corporations with a sustainable attitude are taking a long-term, risk-aware approach towards their business and industry; this is something that investors, on the whole, should welcome. However, ESG corporate performance metrics are in their infancy compared to financial statements, in our view. This said, we believe that, having regular contact with the companies under our coverage, we are close enough to them to comment on their ESG attitudes. Our aim is not to crunch numbers and produce another ESG rating; rather, it is to compile data and impressions to aid investors in their own, independent, risk assessment process. Here, we attempt to highlight companies that have sustainable business model strategies, i.e., those that are aware of the long-term financial and non-financial risks. We approached most of the 196 companies under our coverage, with a questionnaire covering each aspect of ESG issues; and we talked to investors about their approach.