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
How Cities In Canada Are Addressing Climate Change
10 Tax Incentives for Businesses That are Lowering their Carbon Footprint
How to Manage Anxieties About Climate Change
Green Brands Must Understand Their Customers to Market Wisely
Key Necessities for Starting an Eco-Friendly Freelance Business
6 Ways To Overcome Cash Flow Challenges as a Green Business
Going Cashless Lowers Our Carbon Footprint and Has Other Pros and Cons
How to Be as Eco-Friendly as Possible on a Trip to New York
Why Brazed Plate Heat Exchangers Are Eco-Friendly
6 Steps For Making Crypto & Blockchain Eco-Friendly
Building a Career in Green Construction: Tips and Insights
Top 5 Benefits of Workplace Sustainability
The Role of Smart Technology in Managing EV Charging Stations
4 USA Vacation Destinations for an Eco-Friendly Trip
6 Wastewater Management Tips to Reduce Water Pollution
Why Internet Faxing Is A Sustainable Business Move
5 Ways Eco-Friendly Employers Can Boost Efficiency
What to Look for When Choosing an Eco-Friendly Locksmith
Flexible Return Policies Can Make Retail More Sustainable
Using Green Patents to Drive Sustainability & Eco-Friendly Designs
- Environment3 months ago
6 Home Improvements You Can Make to Help the Environment
- Environment10 months ago
4 Countries That Have Banned Single-Use Plastic
- Features9 months ago
5 Huge Support Tips for Eco-friendly eCommerce Brands
- Environment7 months ago
How to Ensure Your Home’s Eco-Friendly During Construction?