Random June Thoughts

This past week, 3BL presented their annual rankings of 100 Best Corporate Citizens – ostensibly using ESG factors.  Being one that is – and has been – on the lookout for unbiased metrics to use as a partial basis in my investment decisions.  Since initially posting my thoughts, if anything, it has become an even more difficult endeavor – particularly with the advent of Covid-19.  Any attempt at ratings – whether MSCI based or self generated – will have inherent biases.  MSCI identifies this stating, “A mining company and a financial company, for example, may be faced with different key ESG risks and opportunities and therefore evaluated on the key issues specific to their respective industries”.  In a nutshell, the playing field isn’t level for all participants.

Reviewing 3BL’s list in greater detail reveals companies that are currently under dividend suspensions, at least one that was embroiled in activist investor engagement and some engaged in production that could require a carbon cap-and-trade mechanism to meet ongoing environmental goals.  Many of these issues could logically exclude companies depending on the weightings allocated to stakeholders.  Considering much of the data is self-reported, one has to also speculate to a degree as to its veracity.

Therefore, I’m tabling my ESG quest to focus on the ability of a company to sustain itself through the current environment with the secondary metric being DGI.  Within this construct will be factors – perhaps company or industry specific – that I personally deem important, which may vary from factors important to others.  These factors may also be either primary or secondary in nature.


One has to wonder if Quaker realized the hornet’s nest they’d stir up with the announcement that Aunt Jemima was retiring.  One example from the right: “If this company merely wanted to update their packaging, why the formal announcement and media hype? Companies charge(sic) packaging all the time with no such media ploy. Or is this some pathetic attempt to align to some misguided sense of political correctness?

I remain slightly amused by this defense as the Aunt Jemima concept appears to be rooted in a blackface minstrel show portrayed by a white male.  Remember, these are the same people that demonize RuPaul.  Tongue-in-cheek hypocrisy aside, I do not venture a guess as to whether corporate America’s actions are too much or not enough.  My preference is to leave these decisions in the hands of the brand marketers and remove my investments when my disagreement with actions (or inaction) is severe.  (Sidenote: I remain invested in Pepsi.)


In a similar vein (without the fanfare), Novartis ended its hydroxychloroquine trial for Covid-19 patients, this being the Trump-touted (and advertised) miracle drug.  One has to wonder the economic carnage of this failed attempt – ramping up production, diverting research and the drug shortages incurred by legitimate hydroxychloroquine patients.  Aside from the stockpile accumulated by this administration – much of it donated, the real question for investors is why Novartis allowed itself to be sucked down this rabbit hole given that its’ very existence is based on sound scientific principles.  Certainly a question to be answered by the CEO and Swiss regulators.

As always, hoping your month is well and good.