In our dedicated ESG and climate piece tomorrow we will focus on the progress and lack of progress at COP26 and discuss some of the likely consequences (intended and unintended) for the energy and materials industries. One of the subjects we touched on in the energy section of today's daily report, is how to craft a methane emission initiative that does not result in a decline in natural gas production before we see a needed recovery as the last thing the world needs now is more limited natural gas availability. Methane emission reduction looks like it is one subject on which there appears to be broad global agreement.
Otherwise, there has been a lot of focus on the need to stop talking and start doing, both at the government level and the corporate level, and as we are in the middle of earnings season we are seeing a mix of inadequate and barely adequate ESG messaging on this basis. Even though some companies (Linde would be a good example) are investing in ESG related projects, the messaging is still generic – talking about longer-term goals with more vague timelines. For example, in the Univar chart below, there are guidelines with respect to ESG objectives. This will need to change quickly in our view, and if our inbound calls are any measure, we see a greater interest in transitioning from something conceptual to something concrete. That said, the companies (and there are very few) with more concrete examples of what they are doing are not seeing any reflection of that action in their relative share price – this applies equally to the chemical and the energy companies.
Source: Univar 3Q21 Earnings Call Presentation, November 2021
We also highlight that our ESG weekly reports are available in LINK.