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  • David MacNeil

ESG Retrospective - Identifying Leaders for 2022

The topic of Environmental, Social and Governance (ESG) issues is one that is now widely understood and discussed in the world of finance and business. In addition to the increase in regulations and mandates surrounding ESG, public demands and shareholder expectations have also become a driver for meaningful change in the ESG space. The world is connected, and community voice has been amplified to new heights.


At Orenda, we conduct extensive research into the adverse effects of corporate ESG action on overall reputation and financial stability across global markets, and we can confidently state that companies which do good in the world do better on the market.


The findings presented in this case study aim to detail how a company’s commitment to positive ESG action often results in profitable financial outcomes and overall public acceptance within its operational environment. For the analysis to follow, we looked at some of the top ESG performers across numerous sectors for the calendar year of 2022 based on Orenda’s ESG and Social Positioning metrics.


Sector Selection


For this analysis, we first pulled the top 10 sectors covered by Orenda based on their average ESG and Social Positioning rating for January 2022 – November 2022 to determine which industries lead the charge for the year. The average sector scores are an aggregate of all the companies individual rankings for the year within each sector which are currently being covered by Orenda. This data was exported using the SIX iD Data Terminal.


As you can see, the top sectors currently being tracked and scored within Orenda’s database all bolstered around a 3.31 – 3.39 average ESG score for the year, with the average Social Positioning score falling within the 3.1-3.25 range. The finest ranked sectors for the year are what we have focused on throughout the analysis to come, which are the Alternative Energy, Health Care and Personal Goods sectors.


Sector Breakdown


As previously mentioned, we started by analyzing the top 10 sectors by ESG standing for the calendar year of 2022 before further narrowing it down to just the top three: Alternative Energy, Health Care and Personal Goods. We then dove deeper into these individual sectors by identifying the top 10 companies within each based on their annual average ESG and Social Positioning scores to determine which organizations were leading the charge. The results are as follows:



To uncover the cause behind the high level of ESG success accomplished by these companies in 2022, one company within each sector was selected for further analysis. Specifically, those with higher levels of daily online engagement in comparison to their top 10 peers were selected for the purpose of easily identifying key topics and indicators of ESG success. The selected companies are Enphase Energy, Ramsay Health Care, and Kose Corp.


Enphase Energy


Enphase Energy (ENPH) is an American energy technology company which focuses on developing and manufacturing solar micro-inverters, batteries and charging stations. The company has made its commitment to a sustainable future known, with their business model structured around providing access to renewable energy worldwide as they currently serve customers in 152+ countries. In fact, Enphase credits its products for the reduction of 31 million metric tons of greenhouse gases from entering the atmosphere since its inception in 2006.


Enphase Energy had a strong year from an ESG perspective, as is to be expected from a company focused on renewable energy strategies and with a clear, commitment to improving environmental sustainability standards on such a large scale. As you will see in the chart below, Enphase had an eventful end to the year as its scores peaked in August at a monthly average of 3.89, before falling to its lowest point in October at 3.70 and rising again to 3.87 in November. Additionally, the company experienced steady and significant stock growth throughout the year as a result of its forward progress, rising over 128% from $140.47 in January to $320.59 by the end of November.


In the chart below, we witness the overall ESG performance of Enphase Energy on a monthly basis in comparison to the Alternative Energy sector baseline. As you can see, Enphase Energy consistently outperformed the sector for the entirety of 2022.


For the time period of August – November when Enphase experienced extreme spikes in ESG favorability, the company was linked to the following:


August

  • Enphase works with Complete Solar, a residential solar energy company, to rapidly increase solar energy solutions to businesses and homes across the United States.

  • Enphase announces its plans to acquire GreenCom Networks, a German software solutions provider which allows customers to connect and manage energy devices within their home, with the goal of providing renewable energy sources to homes across the world.

November

  • Enphase Energy to become a component of the NASDAQ-100 Index, and is to be considered for the NASDAQ-100 Ex-Technology Index in 2023. • ENPH stock continues to reach new record highs as it expands its solar energy services across the US and Europe.


Ramsay Health Care


Ramsay Health Care Limited is an Australian multinational healthcare provider and hospital network. The company operates across four continents and specializes in surgery, rehabilitation and psychiatric care.


Over the past few years, there has been a major strain on the health care industry across the world, meaning that performance expectations are greater than ever, and for Ramsay Health Care, the bar was set high.


Ramsay Health Care is no stranger to ESG action, as it proudly represents its inclusion in the FTSE4Good Global Index, which it has been a part of each year since 2011. The FTSE4Good Global Index is an identifier of companies which demonstrate strong ESG practices measured against globally recognized standards. Ramsay Health Care claims that its vision is to be one of the word’s most respected companies but taking a leadership role in shaping society through meaningful ESG action, and continues to release new sustainability and impact reports each year to publicly measure its progress towards these goals.


Looking at Orenda’s ESG measurements on the company, it is clear that a year of consistency was achieved, as is visualized in the chart below. Ramsay Health Care kicked off the year with an ESG rating of 3.50 in January, and improved to a score of 3.87 by the end of November. Although there were some small ups and downs throughout the year, they managed an impressive average ESG rating of 3.94 for the year. Additionally, its stock price maintained an average of $44.44 over the 11 months recorded, a 15% increase from where it started the year.

In the chart below, we witness the overall ESG performance of Ramsay Health on a monthly basis in comparison to the Health Care Providers sector baseline. As you can see, Ramsay Health consistently outperformed the sector for the entirety of 2022.

In 2022, Ramsay Health Care was credited with the following:


January

  • Ramsay Health Care is one of numerous organizations to step up in support of the fight against the latest COVID-19 variant, Omicron, by offering space and resources as many hospitals and clinics begin to face staff and supply shortages.

April

  • KKR & Co. (Kohlberg Kravis Roberts & Co.) announces a bid of $14 billion to acquire Ramsay Health Care, which was later completed in May.

June

  • Ramsay Health Care releases an official report outlining its commitment to become a net-zero emissions company by the year 2040.

November

  • Ramsay Health Care opens Australia’s first specialized health facility for women dealing with trauma and violence in society.


Kose Corp


Kose Corporation is a Japanese multinational personal care company which specializes in areas such as skin and hair care products and is one of the largest cosmetic companies in the world.


In an industry known to have plenty of material waste, Kose Corp has had to make its commitment to environmental longevity and sustainability very clear – which is exactly what they have done. Not only does Kose have a sustainability report which is both regularly updated and completely open to the public, but they also have internal sustainability policies by which all members of the organization must abide.


Additionally, Kose Corp has committed to achieving the 10 goals identified within the United Nations Global Compact (UNGC), which include practices involving Human Rights, Environmental Sustainability and Anti Corruption. Kose has dedicated time and attention to the importance of corporate diversity, sound corporate governance and an adaptable working environment for all members of its organization, as is identified in its VISION2022 plan outlining targets for corporate growth, diversity and inclusion, and a sustainable business strategy.


As shown in the chart below, Kose Corp started the year on a slight downward ESG trend before turning things around in May, eventually rising from an annual low score of 2.89 in April to 4.50 in September – one of the highest monthly average scores among the entirety of its top 10 peers for 2022. Kose Corp also managed an average stock price of $19.69 from Jan-Nov 2022, with a peak of $22.99 in February.

Much of the success witnessed by Kose Corp was a direct result of its commitment to creating sustainable and adaptable products as the company grows its global presence. In late 2021 the company embarked on a comprehensive collaboration with Kao Corp, another leading cosmetics company in Japan, to pursue the sustainable cosmetics domain more heavily, stating its goal to “realize a more sustainable society”. Both parties agreed to pool their strengths in order to achieve this ambitious goal, which has carried over into 2022.


In the chart below, we witness the overall ESG performance of Kose Corp on a monthly basis in comparison to the Personal Goods sector baseline. As you can see, Kose Corp began the year with an early dip before recovering and vastly outperforming the sector baseline for the latter half of 2022.

In 2022, Kose Corp was credited with the following:


February

  • Kose announces a collaboration with Kao’s Horizontal Recycling of Cosmetic Plastic Bottles with the goal of Recycling Cosmetics into sustainable Paints.

October

  • Kose announces great progress towards its 2026 Vision Plan titled “VISION2026”, aiming to expand its business globally. The plan is documented as having three phases, Improving Customer Contact, Improving Customer Experience, and Becoming Customer Driven Worldwide, proving its commitment to the customer experience and abiding by customer and societal expectations.

Closing Remarks


The call for consistent and meaningful ESG action has been on the rise over the past decade and will only continue to become even more significant in the years to come. Corporations are now expected to dedicate significant time and effort to ensure that they are contributing to a healthier, greener and more inclusive future for all. Those which fail to align with society’s expectations are doomed to perform less desirably as they watch ESG conscious organizations surpass them on the market.


Orenda stives to prove that ethical and socially responsible investment opportunities are a worthwhile pursuit in the modern day, as they can be used as both a catalyst for change and for maintaining a profitable portfolio.


To learn more about Orenda’s unique ESG dataset or the benefits and features of the SIXiD data terminal, contact esg@orenda.digital today.


This material has been prepared by Orenda Software Solutions Inc (“Orenda”) for the exclusive use of the persons to whom Orenda delivers this material. This material or any of its content is not to be construed as a binding agreement, recommendation, investment advice, solicitation, invitation or offer to buy or sell financial information, products, solutions or services. It is solely for information purposes and is subject to change without notice at any time. Orenda is under no obligation to update, revise or keep current the content of this material. No representation, warranty, guarantee or undertaking – express or implied – is or will be given by Orenda or any of its parent, subsidiaries, affiliates and/or their branches (together, “SIX Group”) as to the accuracy, completeness, sufficiency, suitability or reliability of the content of this material. Neither SIX Group nor any of its directors, officers, employees, representatives or agents accept any liability for any loss, damage or injury arising out of or in relation to this material. The opinions expressed within this material are solely the author’s and do not reflect the official policy or position of the SIX Group. This material is property of Orenda and may not be printed, copied, reproduced, published, passed on, disclosed or distributed in any form without the express prior written consent of Orenda.

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