Chronic. Initially, as often in finance, there is a good idea. More and more investors want their money to go to ethical companies. This is particularly true among young generations who do not want to grow tobacco, weapons or pollution.
From this will, often sincere, was born a classification: environmental, social and governance criteria (GS) are attributed to companies. Gradually, a real industry has flourished on this idea, declining ever more sophisticated studies on societal practices, with Moult acronyms, scores and comparative tables.
up to 1,000 criteria
The MSCI World Index (formerly Morgan Stanley Capital International), specialized in the creation of stock indexes, note the ESG of CCC companies at “AAA”, on a model reminiscent of the rating agencies. Blackrock, the largest investment company in the world, prefers to assign notes between 0 and 40. ISS, a consulting firm, boasts more than 1,000 criteria in its methodology.
The emptiness of these rankings appeared with the Orpea retirement homes scandal. The group is accused of shameful practices in graves, the Victor Castanet (FAYARD, 400-pages, 22.90 euros). There is talk of older people left in their excrement because the layers are rationed, defective medicinal beds, big bodies like the fist, in the name of frantic financial profitability.
However, in his latest annual report, see before the scandal, the company boasted of its excellent ESG notes. ISS gave it “C” while 75% of the retirement home sector were doing less well. Gaïa Rating gave him 69 points, while the average sector was 52. How did ORPEA successful this miracle? The Group explained “making transparency by regularly responding to the questionnaires of extrafincial rating agencies”. He also organized establishments visits for ESG analysts. It is clear that these are completely passed next to the problem.
A good ESG note is not a simple marketing advantage. It also allows to attract investors. Thanks to its good note, ORPEA has found itself in a whole series of so-called virtuous stock market indexes: FTSE4Good, Stoxx France 90 ESG-X, etc. These indices are very influential today: an investor who is “responsible” can give as an instruction to put his money, without necessarily knowing in detail each of the companies the component.
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