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Overview
Historically, evaluating investments focused solely on financial returns. However, with the growing significance of climate change, the concept of “triple bottom line” or financial, environmental, and social impact has been gaining traction. This push to look at investment decisions more holistically has given rise to ESG (Environmental, Social, and Governance) practices and policy.
ESG measures the societal and sustainability impact of every business activity. Investors are now looking to responsibly invest in companies that manage their impact on the environment and society at large. To serve this need of investors.
ESG rating agencies use analysts to measure the performance of various companies and compare them through ratings and rankings, this does not always show the full picture as the rankings can sometimes be as old as 6-12 months.
ESG Analytics is a platform that uses artificial intelligence and alternative data (data outside of corporate disclosures) to benchmark company ESG performance, this allows for more company coverage, real time insights and the ability to look beyond a score to determine whether a company meets the ESG criteria you are looking for.
We took a look at the Industrials industry, to understand the best performers. Read on to learn how industry leaders like Masco Corporation, Eaton Corporation plc, Fortive Corporation, Wabtec Corporation, AMETEK demonstrate a well managed company, with low ESG controversy risk.
How were these companies selected?
Each day, ESG Analytics processes millions of documents to identify and manage ESG risk using our proprietary Natural Language Processing (NLP) algorithms. Once we identify a material event, we classify it according to the industry leading SASB framework (26 different ESG topics) and then run sentiment analysis to determine how positive of negative the event is. This chart below shows the ESG Pulse of companies in the Industrials sector. For accuracy, we excluded companies that did not meet a minimum threshold of events.
Here is the full list:
1. Masco Corporation
Masco Corporation designs, manufactures, and distributes home improvement and building products in North America, Europe, and internationally. The company operates through two segments, Plumbing Products and Decorative Architectural Products. The Plumbing Products segment offers faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures, toilets, acrylic tubs, shower trays, spas, exercise pools, and fitness systems; brass, copper, and composite plumbing system components; thermoplastic extrusions, extruded plastic profiles, specialized fabrications, and PEX tubing products; and other non-decorative plumbing products.
Masco's ESG Pulse is 1 out of 1, indicating a well managed public profile, free of ESG controversy.
There is virtually no identifiable controversy risk for the company, and this is echoed by other external providers with a score of 25.8 from Sustainalytics and a BBB from MSCI.
2. Eaton Corporation plc
Eaton Corporation plc operates as a power management company worldwide. Its Electrical Products segment offers electrical and industrial components, wiring devices, and structural support systems; and residential, single phase power quality, emergency lighting and fire detection, and circuit protection and lighting products.
Eaton Corporation's ESG Pulse is 1 out of 1 over the last year, a standout performer using ESG Analytics AI based methodology.
This chart highlights their overall ESG Pulse by topic (which is derived from the industry standard SASB classification).
3. Fortive Corporation
Fortive Corporation designs, develops, manufactures, markets, and services professional and engineered products, software, and services worldwide. Its Professional Instrumentation segment provides test tools, and thermal imaging and calibration equipment for electrical, industrial, electronic, and calibration applications; online condition-based monitoring equipment; portable gas detection equipment, consumables, and software as a service offerings; subscription-based technical, analytical, and compliance services; and software, data analytics, and services for critical infrastructure in utility, industrial, energy, construction, facilities management, public safety, mining, and healthcare applications, as well as environmental, health, and safety applications.
Fortive Corporation has an ESG Pulse of 1 out of 1, and is not included in any negative screens.
This pulse score highlights an extremely low controversy risk, and a well managed company from an ESG perspective.
4. Wabtec Corporation
Wabtec Corporation provides technology-based equipment, systems, and services for the freight rail and passenger transit vehicle industries worldwide. It operates through two segments, Freight and Transit. The Freight segment manufactures and services components for new and existing freight cars and locomotives; builds new commuter locomotives; rebuilds freight locomotives; supplies railway electronics, positive train control equipment, signal design, and engineering services; and provides related heat exchange and cooling systems.
Wabtec lands an ESG Pulse of 0.99 out of 1, and has a low amount of controversies.
5. AMETEK Inc
AMETEK, Inc. manufactures and sells electronic instruments and electromechanical devices worldwide. It operates through two segments, Electronic Instruments (EIG) and Electromechanical (EMG). The company's EIG segment offers advanced instruments for the process, aerospace, power, and industrial markets; process and analytical instruments for the oil and gas, petrochemical, pharmaceutical, semiconductor, automation, and food and beverage industries; and instruments to the laboratory equipment, ultra-precision manufacturing, medical, and test and measurement markets.
AMETEK has an ESG Pulse of 0.99 out of 1, and has no material ESG controversies of note.
There is virtually no identifiable controversy risk for the company, and this is echoed by other external providers with a score of 26 from Sustainalytics and a BBB from MSCI.
