Wednesday, August 21, 2019

ESG Investing: The Case of Ecolab

Ecolab Inc. (ECL), headquartered in St. Paul, Minnesota, is an American global provider of water, hygiene and energy technologies and services to the food, energy, healthcare, industrial and hospitality markets.

Lately, I've been tracking companies that rank higher on various ESG guidelines. ESG refers to the three central factors in measuring the sustainability and ethical impact of an investment in a company or business: Environmental, Social and Governance. For instance, Ecolab is the 2nd biggest position (after Microsoft) in the MSCI USA ESG Select Index. This index is optimized to be sector diversified, targeting companies with high ESG ratings in each sector.

The question is whether these criteria could help to better determine the future financial performance of companies and the potential return for its investors. Let's take a look at Ecolab and discuss whether it can be a good addition to your portfolio at current prices.

1 comment:

  1. Ha! I just mentioned in my comment about MO about ethical reasons and here you have another investing metric ESG. Regarding ESG rankings I'm all for it if it's what you want to do, but I recall hearing on a podcast how the ESG rankings aren't all that pure. I can't remember what exactly the gripe was about it but it was something along the lines of being filled out by the company and the company had to pay to get on the list or something weird. So that's one thing to look into. Although I do think ECL would rank pretty damn high on a true independent list of ESG. I really want to buy shares of ECL but I think it's probably going to have to come when the markets are going crazy again. It started to get interesting back in December last year but I think it's pretty overvalued right now.