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11 May 2010
New study by M&E and LatinFinance shows Brazilian companies benefiting from high national sustainability standards
Source: www.management-rating.com
CPFL, VALE AND PETROBRAS ARE BEST IN THEIR INDUSTRIES IN SUSTAINABILITY
New study by M&E and LatinFinance shows Brazilian companies benefiting from high national sustainability standards; likely impact on debt costs/equity prices
Sao Paulo/Miami/Madrid, May 1st 2010: CPFL is Latin America´s most sustainable industrial company overall while Vale and Petrobras are the most sustainable in the mining and oil/gas industries, according to a study carried out by the sustainability specialists Management & Excellence (M&E) in cooperation with LatinFinance (LF), the Miami-based media group.
The annual M&E/LF study evaluated Latin America´s largest companies by current market cap in the power, mining and oil/gas industries according to 136 of factual compliance with standards of sustainability, corporate social responsibility and corporate governance. In the mining and power sectors Brazilian blue chips occupied the first and second positions. CPFL, the company with the highest scores in all areas, scored more than double of Enersis (Chile) and 21 percentage points over 2nd placed Endesa (Chile).
Although neither a member of ISE nor the Dow Jones Sustainability Index, Vale leads in its category by a wide margin over Usiminas. Vale gained a score of 91% in “Sustainability”, which was the area with the biggest weight in the study covering 86 points. Vale benefited from its listing as an ADR on the NYSE which involves a high level of transparency in financial and management data. It also demonstrated sophistication in its environmental and risk management processes.
In the oil/gas sector differences in performance were also considerable, with a difference where Petrobras scored more than twice as high as Copec (Chile) which came in last.
Of the three areas covered (sustainability, CSR, corporate governance), companies scored worst in governance. The exception was CPFL with a governance score of 97%. Copec scored worst of any company in any area with a 26% governance score.
The M&E/LF study comes at a time of huge capital flows into sustainable funds. A study of Robeco/Booz Allen predicts that US$ 25 trillion will flow into sustainably managed funds by 2015, as investors see sustainability as a beta-reducing risk hedge and source of better returns. The DJSI, which is de facto probably used as a main sustainability indicator worldwide, outperformed the comparable MSCI World Index by over 600 bps in 2009 in USD terms. Research by SAM, the Zurich-based company assessing companies for the DJSI, shows sustainability as a significant driver of company performance in three respects: 1) a risk premium on bonds/equity impacting the weighted average of costs of capital (WACC), 2) efficiency improvements impacting return on invested capital (ROIC) and thus free cash flows (FCF), and 3) sales performance and thus FCF´s.
Most Sustainable Large Latin American Power Corporations 2010:
CPFL 96%
Endesa 75%
Cemig 67%
Eletrobras 46%
Enersis 42%
Source: Management & Excellence
(Total scores in sustainability, CSR, Corporate Governance)
Most Sustainable Large Latin American Mining Corporations 2010:
Vale 88%
Usiminas 62%
Gmexico 55%
Southern Peru 49%
Cemex 49%
Source: Management & Excellence
(Total scores in sustainability, CSR, Corporate Governance)
Most Sustainable Large Latin American Oil/Gas Corporations 2010:
Petrobras 81%
Ecopetrol 61%
OGX Petroleo 46%
YPF 42%
Copec 35%
Source: Management & Excellence
(Total scores in sustainability, CSR, Corporate Governance)
For further information, see www.management-rating.com and contact tel. 55 (11) 3511 1145, e-mail: angelica.blanco@management-rating.com
This information is also available in
PDF-format
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Sustainable Investment Research Platform
Provided by Webforum