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Jean-Baptiste Rouphael & Marc Lavaud
ESG Analysts at ODDO BHF
A record number of companies attended the ESG meetings. The key points are: 1/ the search for companies offering low-carbon solutions to build portfolios aligned with the Paris agreement (opportunities), 2/ the still important role played by turnover in labour-dependent industries (risks); and 3/ growing demands by investors for quality reporting, as they themselves have to report on their SRI strategies.
Record number of ESG meetings and growing interest by investors
Some 63 companies attended ESG meetings at the ODDO BHF forum (one in four companies present). This compares with just 43 in 2019, itself a record year. This sharp increase is explained above all by growing demand from investors: alongside historical SRI investors, who have been active in the field for a long time, fund managers are seeking to fine-tune their analysis of companies’ performance in a sustainability perspective. In total, close to 100 meetings were dedicated to companies’ CSR performance strategies.
A search for companies offering low-carbon solutions
The vast majority of discussions about the environment addressed energy-climate issues (see our summary table below), with questions about the measurement of carbon footprints, among other things. The climate strategies of Gecina, Icade, Solvay and Eurazeo were outlined and debated. Investors seeking stocks to incorporate in portfolios aligned with the Paris agreement were particularly sensitive to low-carbon solutions, typically in energy with NEOEN or Voltalia, in construction with Hoffmann Green or in transport with Plastic Omnium. GTT was able to defend before investors its vision of gas as a transition energy in shipping transport.
The other dominant theme was the circular economy, a growth opportunity for groups such as Tarkett, Manitou, Quadient or Serge Ferrari. A supplier of the luxury goods industry such as PSB Industries needs to adapt to new customer requirements for plastics.
Turnover and well-being: leading indicators of efficiency
Business services and healthcare companies, for which drudgery in the work place is a key issue, were strongly represented at the forum. For fund managers, the employee turnover rate or the measurement of employee satisfaction are increasingly seen as leading indicators of operational efficiency. Elis, Korian, Solocal and Orpéa reported on the deployment of their CSR strategies. Female representation in management positions was also addressed in many discussions, reflecting how much progress still needs to be made. Teleperformance presented its new initiative in this area. Lastly, the employee shareholder is seen as a tool to improve companies’ social performance, particularly at Kaufman & Braud.
CSR governance: growing reporting requirements
Many companies were questioned about their compliance with the GDPR, a subject that raises financial and extra-financial questions, especially for Edenred. New ethical issues are appearing in the media: Atresmedia discussed its policy for managing fake news. Almost all companies were questioned about their CSR strategies, with growing demand for quantified figures and targets, as investors themselves have to provide information about the extra-financial impacts of their funds. Size is no longer an excuse: CSR is more than ever on the menu of mid-caps, fuelled by new consumption trends (LDC) or regulations.
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At the time of publication of this document, ODDO, and/or one of its subsidiaries may have a conflict of interest with the issuer(s) mentioned. While all reasonable effort has been made to ensure that the information contained is not untrue or misleading at the time of publication, no representation is made as to its accuracy or completeness and it should not be relied upon as such. Past performances offer no guarantee as to future performances. All opinions expressed in the present document reflect the current context which is subject to change without notice. The views expressed in this Research Report accurately reflect the analyst’s personal views about the subject securities and/or issuers and no part of his compensation was, is, or will be directly or indirectly related to the specific views contained in the Research Report. This Research Report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice.
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