The Volkswagen emissions scandal may lead socially responsible investors to be better investors, and at long last, outdo traditional investment managers over the long-haul. While the impact of the scandal was immediately reflected in Volkswagen’s stock price, the long-term impact remains a developing story. By Gregg Sgambati, Head of ESG Solutions, S-Network Global Indexes.
Investing for the long-term is the purview of socially responsible investors. Traditional investment analysts will stress if the market has priced in the cost of the scandal in Volkswagen’s stock price (efficient markets should do this of course). But, the real cost to the company is connected to the magnitude of fines, the loss of goodwill, and the consumer.
The first two are most directly reflected on the company’s balance sheet and have definitive timelines. Fines will be accounted for when levied or paid; while loss of goodwill will be reflected in the next annual report. But the consumer response has a less definite time frame and falls into a long-term perspective. Add activist shareholders to the equation, and we expect lower sales.
However, this is not a prediction of the end of Volkswagen nor a post-traumatic resurgence. Either is possible, and socially responsible analysts will look at the company’s economics. It is in the non-economic domain of this scandal where analysts have had the most to learn.
It is clear that VW’s corporate governance had a failure. Whether it was an unaudited internal process that went awry, dismissing the legal and social boundaries created by regulation, or it is a corporate culture that suppresses undetectable cheating, governance is relevant and today it is a measured, non-economic metric. The Thomson Reuters Corporate Responsibility Ratings rated VW below the 38th percentile in corporate governance in the last eight years, out of a global universe of 4,6oo companies. Governance is what socially responsible investors will be looking at the most closely after Volkswagen 2015.
Like our Facebook Page
Can You Maximize Your Profits While Investing Ethically?
Environmental Benefits of Living in Miami. Why Is It Worth Moving There?
5 Ways To Shift To Green Energy At Home
Advantages of Free-Range Farming for Eco-Friendly Consumers
What is Eco-Friendly Investing and How Can You Embrace It?
Green Software Ideas to Implement with an Offshore Development Team
5 Things Eco-Conscious Consumers Should Know About Private Wells
The True Environmental and Social Costs of Mined Diamonds
20 Incredible Facts Eco-Tourists Should Know About Dubai
5 Massive Benefits of Turning to Renewable Energy
6 Tips For Getting the Most from a Solar-Powered Home
7 Excellent Ways to Live a Greener Lifestyle in 2021
How the Property Industry Is Embracing Eco-Friendliness Across the Board
Sustainability in Construction: Methods to Mitigate Environmental Impacts
New Company is Driving ESG Infrastructure Development in Mining
10 Tips to Turn Your Next Holiday into an Eco-Friendly Celebration
4 Benefits of Commuting with a Bicycle as an Eco-Friendly Consumer
Some Important Facts about Eco-Friendly Glass Railings
Impact Proof of Stake Ethereum Mining on Power Industry Sustainability
7 Business Survival Guidelines All Eco-Friendly Entrepreneurs Must Follow
- Features12 months ago
Eco-Friendly Interior Design Is Easier Than You Might Think
- Features10 months ago
Eco-Friendly Hacks To Create A Durable Shop For Your Home
- Energy6 months ago
Eco-Friendly Homeowners Lower Carbon Footprints through Greater Air Conditioner Efficiency
- Features5 months ago
Seven Health and Safety Tips for Eco-Friendly Products in a Green Home