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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