Controversies
Definition from Merriam-Webster dictionary: A discussion marked especially by the expression of opposing views.
In the context of sustainable investing, a controversy is a scientific, legal or ethical issue that may cause some uncertainty on how well a company is managed. It is not necessarily a reason for exclusion from our SRI portfolios. Companies international scope and the sheer volume of information available require an evaluation of each situation on a case-by-case basis, and separating isolated cases from major alerts. Even so, a series of controversial events may point to a drift on the scale of the entire company. That s why the number and degree of controversies must be factored into the ESG score.
Some examples of controversies and their financial materiality
BP p.l.c. STOXX Europe 600
40
60
80
100
120
140
160
dec-08 dec-10 dec-12 dec-14 dec-16 dec-18
Bayer AG STOXX Europe 600
135
115
95
75
55 sep-16 mar-17 sep-17 mar-18 sep-18 mar-19 sep-19
On 20 April 2010, an offshore oil platform, the Deepwater
Horizon exploded, and BP s safety measures were
quickly blamed. For the first time, a company s environmental
liability was recognised. BP would ultimately pay more than $50bn
in fines and damages between 2010 and 2015.
Bayer finalised the acquisition of Monsanto in May 2018
while several lawsuits were pending. An initial guilty
verdict was handed down in June 2018, followed by another one
in March 2019, and fears increased of a class action lawsuit.
In April 2019, 55% of shareholders voted against Bayer manage-
ment s strategy.
ODDO BHF AM 2020
16