Climate Change/ ESG Scores
Thursday, June 10, 2021
Corporations exist in the broader context of a society and like other citizens of a society are expected to act in a responsible manner to hopefully benefit both the corporate entity and society. Unfortunately, sometimes this relationship breaks down such that the corporation appears to benefit while society losses. There are extreme examples of these breakdowns which in many cases are in-part rectified by litigation. For example, the opioid crisis and the Deepwater Horizon well disaster resulted in major fines, although many rightly argue much of the damage remains unaddressed.
Unfortunately, the damage is rarely assessed or addressed. So, who pays the cost for intentional and unintentional harm? The simple answer is broader society. Hence, one could soundly argue that a corporation could engage in baneful activities, earn profits from such activities, and leave the broader society to absorb the cost for any consequence. Unfortunately, this has been and remains the case.
While society could pass laws, which transfer the cost of corporate misdeeds back to the corporation, the reality is the passage and policing of such laws is difficult. Hence, to spotlight and curtail some particularly pernicious activities of corporations, Egan-Jones is including an analysis of such activities in its Climate Change/ESG reports.
We like to see corporations act like responsible citizens in all areas. Nonetheless, climate change is probably the area where the negative impact persists for decades. Other areas which need attention are diversity, pay, and corporate governance issues. Our view is that companies should strive for continual improvement and therefore we score firms on both their current state and trend.
Egan-Jones Ratings is particularly well-positioned to address these issues because for most of its coverage of publicly traded firms, it is NOT paid by the corporate issuers, but rather by investors
How we can help
Prospective clients have often asked how we can help them and what areas we consider are particularly
strong. In response, below are the areas worth reviewing:
Private Placement Ratings – assisting investors access private markets via ratings on private placements.
Subscription Ratings – we have had a strong track record in providing early, accurate independent credit
Climate Change / ESG Scores – an assessment of entities’ current and prospective scores.
Independent Proxy Research and Recommendation/Voting – assisting fiduciaries in fulfilling their voting and record-keeping obligations.