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 code | Bloomberg code | |
| ams | AT0000A18XM4 | AMS SW Equity |
| ASML | NL0010273215 | ASML NA Equity |
| BHP Group | GB00BH0P3Z91 | BHP LN Equity |
| British American Tobacco | GB0002875804 | BATS LN Equity |
| Cairn Energy | GB00B74CDH82 | CNE LN Equity |
| Deutsche Boerse | DE0005810055 | DB1 GY Equity |
| Entain | IM00B5VQMV65 | ENT LN Equity |
| Equinor | NO0010096985 | EQNR NO Equity |
| Experian | GB00B19NLV48 | EXPN LN Equity |
| FLSmidth & Co | DK0010234467 | FLS DC Equity |
| GEA Group | DE0006602006 | G1A GY Equity |
| Gn Store Nord | DK0010272632 | GN DC Equity |
| Imperial Brands | GB0004544929 | IMB LN Equity |
| ING Group | NL0011821202 | INGA NA Equity |
| NN Group | NL0010773842 | NN NA Equity |
| Nordea | FI4000297767 | NDA SS Equity |
| OC Oerlikon | CH0000816824 | OERL SE Equity |
| Orsted | DK0060094928 | ORSTED DC Equity |
| Royal Philips | NL0000009538 | PHIA NA Equity |
| Siemens Gamesa Renewable Energy | ES0143416115 | SGRE SM Equity |
| Sika | CH0418792922 | SIKA SE Equity |
| Skandinaviska Enskilda Bank | SE0000148884 | SEBA SS Equity |
| Swiss Re | CH0126881561 | SREN SW Equity |
| Swisscom | CH0008742519 | SCMN SW Equity |
| Unilever | GB00B10RZP78 | ULVR LN Equity |
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