Historically, evaluating investments focused solely on financial returns. However, with the growing significance of climate change, the concept of “triple bottom line” or financial, environmental, and social impact has been gaining traction. This push to look at investment decisions more holistically has given rise to ESG (Environmental, Social, and Governance) practices and policy.
ESG measures the societal and sustainability impact of every business activity. Investors are now looking to responsibly invest in companies that manage their impact on the environment and society at large. To serve this need of investors.
ESG rating agencies use analysts to measure the performance of various companies and compare them through ratings and rankings, this does not always show the full picture as the rankings can sometimes be as old as 6-12 months.
ESG Analytics is a platform that uses artificial intelligence and alternative data (data outside of corporate disclosures) to benchmark company ESG performance, this allows for more company coverage, real time insights and the ability to look beyond a score to determine whether a company meets the ESG criteria you are looking for.
We took a look at the Materials industry, to understand the best performers. Read on to learn how industry leaders like DuPont de Nemours, PPG Industries, International Paper Company, FMC Corporation, Corteva demonstrate a well managed company, with low ESG controversy risk.
How were these companies selected?
Each day, ESG Analytics processes millions of documents to identify and manage ESG risk using our proprietary Natural Language Processing (NLP) algorithms. Once we identify a material event, we classify it according to the industry leading SASB framework (26 different ESG topics) and then run sentiment analysis to determine how positive of negative the event is. This chart below shows the ESG Pulse of companies in the Materials sector. For accuracy, we excluded companies that did not meet a minimum threshold of events.
Here is the full list:
1. DuPont de Nemours
DuPont de Nemours, Inc. provides technology-based materials, ingredients, and solutions in the United States, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa. The company provide Electronics & Imaging segment supplies materials to manufacture photovoltaics and solar cells; materials and printing systems to the advanced printing industry; and materials and solutions for the fabrication of semiconductors and integrated circuits addressing front-end and back-end of the manufacturing process.
DuPont's ESG Pulse is 1 out of 1 over the last year, indicating a well managed public profile, free of ESG controversy.
2. PPG Industries
PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials worldwide. The company's Performance Coatings segment offers coatings, solvents, adhesives, sundries, and software for automotive and commercial transport/fleet repair and refurbishing, light industrial coatings, and specialty coatings for signs; and coatings, sealants, transparencies, transparent armor, adhesives, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft.
PPG Industries ESG Pulse is 0.96 out of 1 over the last year, a standout performer using ESG Analytics AI based methodology.
This chart highlights their overall ESG Pulse by topic (which is derived from the industry standard SASB classification).
3. International Paper Company
International Paper Company operates as a paper and packaging company primarily in United States, the Middle East, Europe, Africa, Pacific Rim, Asia, and the Americas. It operates through three segments: Industrial Packaging, Global Cellulose Fibers, and Printing Papers. The Industrial Packaging segment manufactures containerboards, including linerboard, medium, whitetop, recycled linerboard, recycled medium, and saturating Kraft.
International Paper Company has an ESG Pulse of 0.92 out of 1. This pulse score highlights an extremely low controversy risk, and a well managed company from an ESG perspective.
Some initiatives over the last year include:
- International Paper: COVID-19 Resiliency With Long-Term ESG Thesis
4. FMC Corporation
FMC Corporation, an agricultural sciences company, provides crop protection, plant health, and professional pest and turf management products. The company develop, markets, and sells crop protection chemicals, which include insecticides, herbicides, and fungicides that are used in agriculture to enhance crop yield and quality by controlling a range of insects, weeds, and disease, as well as in non-agricultural markets for pest control. It also offers biologicals products, such as bionematicides under the Quartzo and Presence names.
FMC Corporation lands an ESG Pulse of 0.98 out of 1, and has a low amount of contraversies.
Over the last year, FMC Corporation Received Perfect Score on 2020 Human Rights Campaign's Corporate Equality Index.
Corteva, Inc. provides agriculture products worldwide. The company develops and supplies germplasm and traits in corn, soybean, and sunflower seed markets. It also supplies products to the agricultural input industry that protect against weeds, insects and other pests, and diseases, as well as to enhance crop health. The company is based in Wilmington, Delaware. Corteva, Inc. is a subsidiary of DowDuPont Inc.
Corteva has a ESG Pulse of 0.99 out of 1, and has no material ESG controversies of note.
Over the last year, Corteva and Indigo Ag teamed up on carbon credit program for U.S. farmers - Reuters.