Sustainability analysis of companies
The assessment of ecological and social criteria takes place on the sector as well as company level.
- Industry analysis: All industries are classified on the basis of their environmental and social opportunities and risks.
- Company analysis: Based on the findings of the industry analysis, the concrete behaviour of companies is scrutinised.
| Environmental analysis... |
...uses comprehensive sector-specific criteria to assess how environmentally friendly companies design their products and manufacturing processes. Here the entire life cycle of products is taken into account: from pre-production sourcing, through to production, use and disposal. |
| Social analysis... |
| …looks at how the management of a company shapes its relations with stakeholders who are vital for its long-term financial success: employees, investors, suppliers, investors, the general public and the government. |
Multi-facetted research provides a solid decision base
Sarasin Sustainability-Matrix clearly shows the approach we use for sustainability analysis.
Industry sustainability on the X axis:
We look at the specific risks that the industry in question poses to people and the environment. Some of the questions we ask for every industry include, for example:
- How high is resource consumption of the industry as a whole?
- How high are emissions?
- What are the potential conflicts of interest for that particular industry both inside the company (e.g. workers’ rights) and outside the company (e.g. product safety)?
Company sustainability on the Y axis:
Next we look at how companies actually manage the environmental and social risks for their specific industry compared with their peer group. Here too we analyse a multitude of facts and answer a series of questions to establish the rankings for all the companies we rate within an industry, such as:
- How high is the company’s energy and material intensity?
- Is the company committed to using renewable resources?
- How does a company conduct its relations with suppliers, the general public and its workforce
Avoiding outsized risks
Many industries or business segments which currently seem to be financially attractive are so heavily exposed to risks that they are excluded from Bank Sarasin’s sustainability portfolios. For example, companies are ruled out if they earn more than five per cent of their sales from the manufacture of the following products: Nuclear power, Weapons, Chlorine and agrochemicals, Tobacco, Pornography and GMOs used in agriculture.
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A well managed company will seek to balance the aspirations of all its stakeholders in a fair manner. Failure on this point would detract from its ability to make the best of its potential, as attention would invariably and unpredictably be diverted to conflict-solving activities. Erol Bilecen, Head Client Services Asset Management |
