Sustainability: European top picks

AlphaValue tracks the sustainability of every one of the 475 odd stocks under its coverage. The rules are strictly the same, with the view that a financial asset needs to be read easily to be arbitraged. All of the stocks see their target prices being impacted live by changing sustainability metrics as these shift in absolute and relative terms.

This reflects the fact that there is no absolute when it comes to assessing a given company’s path to sustainability. It reflects also the fact that all stocks make progress as they answer the hard push from European regulations and from investors themselves asked to explain or abstain in ESG matters. Sustainability cannot be judged on a rigid benchmark. It is about movement and an accelerating one.

As of 21/05/2021, the distribution of the scores was as follows, with the bulk of the universe requiring more work to match sustainability requirements. That is the point of SFDR: encourage portfolios to make room for issuers with progressing sustainability metrics. In a perfect world the distribution chart would thus eventually go flatter, not more to the right as such metrics are largely relative (more here).

The bottom of the sustainability bottle is of little use as it reflects companies which are mostly lagging information-wise. It is normal to apportion them a poor score for lack of data but it does not tell a story.

The other extreme, do-good firms,  is dominated by companies which happen to do well on the governance front. There is indeed no way a company will stick to its sustainability agenda if this is not backed by a willing and competent governance. In AlphaValue’s measurements, this largely hinges on the independence of the board. 

Our list of 25 names with top sustainability scores will probably be a surprise as ‘ugly’ oils show up. This list fits the SFDR bill though: as a shareholder, it is more beneficial to sustainability to take on board and support companies bound to book big gains that vote with the green ETF crowds.

ISIN codeBloomberg code
amsAT0000A18XM4AMS SW Equity
ASMLNL0010273215ASML NA Equity
BHP GroupGB00BH0P3Z91BHP LN Equity
British American TobaccoGB0002875804BATS LN Equity
Cairn EnergyGB00B74CDH82CNE LN Equity
Deutsche BoerseDE0005810055DB1 GY Equity
EntainIM00B5VQMV65ENT LN Equity
EquinorNO0010096985EQNR NO Equity
ExperianGB00B19NLV48EXPN LN Equity
FLSmidth & CoDK0010234467FLS DC Equity
GEA GroupDE0006602006G1A GY Equity
Gn Store NordDK0010272632GN DC Equity
Imperial BrandsGB0004544929IMB LN Equity
ING GroupNL0011821202INGA NA Equity
NN GroupNL0010773842NN NA Equity
NordeaFI4000297767NDA SS Equity
OC OerlikonCH0000816824OERL SE Equity
OrstedDK0060094928ORSTED DC Equity
Royal PhilipsNL0000009538PHIA NA Equity
Siemens Gamesa Renewable EnergyES0143416115SGRE SM Equity
SikaCH0418792922SIKA SE Equity
Skandinaviska Enskilda BankSE0000148884SEBA SS Equity
Swiss ReCH0126881561SREN SW Equity
SwisscomCH0008742519SCMN SW Equity
UnileverGB00B10RZP78ULVR LN Equity

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Posted in ESG