We met with a New Zealand Retail Manufacturing company’s CFO in order to get an update on their ESG story. At the time, we had a fairly negative ESG opinion of them, given a relatively small amount of disclosure and a controversy related to the safety of a Chinese infant formula. During the meeting with the CFO, we learned that the company was doing a lot of interesting and positive things related to their ESG profile that were being undersold in their current communications to investors.
In health and nutrition, the company was offering a number of dairy products with better nutrition profiles, a key ESG growth area. In carbon emissions, the company was increasing its use of renewable energy to lower its carbon footprint. In packaging, the company was working with suppliers to reduce the amount of packaging it uses in its products. In these three key ESG factors for food and beverage companies, they were actively pursuing industry leading policies, yet investors would never have known unless they had a one-on-one company meeting.
We told management about the emerging importance of ESG to the investor community, and how absent any messaging from them, the most readily available ESG-related information on the company was their past troubles with the Chinese infant formula. From the time of our meeting, we have seen ESG more prominently featured in the company’s reporting, and ESG goals now featured alongside the company’s financial goals in investor presentations. We consider this a positive step for the company’s ESG profile, and a positive example of ESG engagement. While we take past missteps on product safety into account in our assessment of the company’s ESG profile, we do consider them to have an improving profile, and will review again when the next sustainability report is released.