This week we are featuring “Top Movers” by ESG impact, highlighting the companies with the largest sentiment moves in the Retail, Services, Finance and Communications sectors. Going a step further, we determine if these companies have any risk from a greenwashing perspective.

By
Sam Leavitt
|
July 29, 2021

ESG Spotlight: Looking at ESG Top Movers with an Eye on Greenwashing

Article
ESG Spotlight: Looking at ESG Top Movers with an Eye on Greenwashing

This week we saw several storylines develop with our new Top Movers feature. Home Depot and McDonald’s made commitments to further their social and environmental initiatives, while Brookfield Asset Management had a huge fund raise for their energy transition fund. In a negative light the Communications sector blundered with Akamai’s service outage and Activision’s harassment allegations.

Identifying change is a major component in any analysis. Using the new Top Movers feature on the Amenity ESG Safeguard platform does just that. This tool gives analysts the ability to identify positive and negative sentiment movement by comparing a customizable baseline score with a given comparison score. For this article we are using a baseline score from an 180-day range and comparing it to sentiment scores from the most recent 7-day period. This allows us to see what the greatest changes in ESG sentiment have been, while adjusting for a large enough sample size in baseline metrics.

ESG Safeguard Platform: Top 7-Day ESG Movers, 180-Day Baseline Period

Home Depot

Home Depot (HD) has made significant improvements to their ESG score this week with the announcement of sustainability targets which also included reflections on their progress so far. The retailer aims to have renewable energy powering all of their facilities by 2030. In 2020 alone they were able to reduce electricity consumption in stores by 14% through lighting and building automation improvements. Addressing packaging also is a priority for Home Depot as it seeks to remove EPS foam and PVC film from products by 2023 in favor of more environmentally friendly materials.

Company Announcements like these always compel us to look at our Greenwashing model. Over the same 180-day baseline period Home Depot had a Sentiment Difference of -103.5 between External News and Company Statements, putting them in the High Risk category in our Greenwashing model. The majority of Company Statements have revolved around Corporate Philanthropy while External News have focused on the retailer's Reputational Profile and reluctance to take a stance on Georgia’s voting restrictions. For the most recent 7-day comparison period that we examined with our Top Movers tool, Home Depot’s Sentiment Difference was -28.8 indicating a relatively low divergence between Company Statements and External News.

McDonald's

We discussed the restaurant giant a few weeks ago while covering labor shortages and the associated upward wage pressures as the economy opens up. Now McDonald’s (MCD) has entered our Top Movers category, again in a positive light. In an effort to address past criticisms, McDonald’s this week committed to increase spending with minority-owned suppliers to 25% of its supply chain by 2025. In recent years, the company has come under fire for lack of support towards their minority franchisees and not buying media time from minority-owned networks and outlets. If Mcdonald's actually follows through with this commitment, they will have demonstrated that the criticism at some level, has been heard.

From a greenwashing standpoint, McDonald’s has had a -64.7 Sentiment Difference over the last 180 days and a -34.2 Sentiment Difference in the most recent 7 days. This indicates a Medium Risk category for greenwashing and has improved over recent weeks. One-year removed from their former CEO’s misconduct scandal and continued allegations of poor diversity measures, McDonald’s finally seems to be taking action to right the ship.

Brookfield Asset Management

The Canadian asset manager grabbed headlines this week raising $7 billion for their Global Energy Transition fund. The fund has a goal of $12.5 billion and thus far has secured two major funders; the Ontario Teachers Pension Board and Singapore’s sovereign investment organization, Temasek Holdings. Brookfield (BAM) has a track record of clean technology development, including recently collaborating with Tesla on a Tesla Solar neighborhood in Austin, TX. From a greenwashing standpoint, Brookfield is at Low Risk, with a Sentiment Difference of positive 10 for a 180 day period and a slight change to 0 Sentiment Difference in the most recent 7 days. This change is most likely due to increased news volume for the company.

Akamai and Activision

The Communications sector has recently experienced major issues in the Cyber Risk and Diversity and Inclusion categories, which we recently highlighted. Last week Akamai (AKAM) experienced an outage that caused access issues for several major corporate websites. For a company with a relatively quiet news cycle, Akamai has had 46 news mentions in the past 7 days as compared to 33 in the past 365 days before the outage. Our Greenwashing platform indicates Akamai had High Sentiment Differences for the recent 7-day period as well as over the previous 180 days. Prior to this most recent outage, Akamai did have a service outage on June 17th that also made headlines, albeit to a lesser extent.

Elsewhere in the Communications space, Activision Blizzard (ATVI); who we covered last week, was hit with a massive lawsuit by the California Department of Fair Employment and Housing . The lawsuit stems from a two-year investigation and alleges misconduct in the form of Equal Pay violations, sexual discrimination and sexual harassment. This was highlighted in our Top Movers feature where Activision had the eighth highest movement on our ESG dashboard on our Sentiment Decrease ranking.

Surfacing the Loud and Quiet News Cycles

Top Movers is the latest tool in our Amenity suite of features that makes ESG analytics user-friendly and meaningful. Just as our Greenwashing feature adds additional dimensionality to our core ESG product, Top Movers highlights companies using scores from our ESG dashboard and can be used to surface meaningful stories on the companies you care about. This week alone Top Movers called our attention to some interesting stories from companies we have been keeping track of; like McDonald’s and Activision, as well as companies with quieter news cycles like Akamai and Brookfield Asset Management.


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About Amenity

Amenity Analytics is the industry leader in providing insights from unstructured text by using Natural Language Processing (NLP) assisted by Artificial Intelligence (AI) and Machine Learning (ML). Amenity’s NLP system is a sector-agnostic, language-dependent tool for quantitative text analysis that is deployed across the financial services industry and beyond.

This communication does not represent investment advice. Transcript text provided by FACTSET and S&P Global Market Intelligence.

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