Investors focus on value of sustainability performance to ABB’s business
ABB held a series of meetings with high-profile investors and engaged with a number of ratings agencies in 2016, as part of ongoing efforts to understand investor priorities on sustainability issues and explain the company’s challenges and opportunities.
ABB has held sustainability roadshows in different cities for four years, and met investors in Boston, Paris and Stockholm during 2016.
Some of the investor focus was directed towards ABB’s environmental performance, in particular the value of the company’s energy efficiency portfolio and how it is calculated. Several investors wanted to know how the company is going to achieve its 2020 objective of increasing revenue by 20 percent from energy efficiency-related products, systems and services.
Investors also asked about ABB’s and its customers’ carbon emissions, and whether the company would set a greenhouse gas reduction target in the near future. The issue of water scarcity, and how ABB operates and measures performance in water scarce or stressed areas was also raised.
During sustainability roadshows in recent years, ABB has noted increasing interest by both mainstream and socially responsible investment analysts and funds in the company’s environmental, social and governance (ESG) performance and its impact on the business.
ABB faced a wide-range of questions on its performance at the meetings. They included how the company manages and assesses the sustainability performance of its supply chain, including how ABB has been reporting on the issue of conflict minerals to the authorities in the United States.
The way in which sustainability is managed within the company, the level of executive involvement in leading and reviewing performance, and the integration of ESG issues into scorecards, are also areas of investor focus.
For one major investor in Sweden, there was also considerable interest in ensuring ABB carries out wide-ranging stakeholder engagement so that the company better understands and meets the expectations of societal, as well as business partners.
ABB also engages with a number of ratings agencies in Europe and the United States, often seeking greater detail and clarity on researchers’ questions, as well as the methodologies used to assess performance. These exchanges are, in general, useful to both sides, and help ABB to gauge which sustainability-related topics are of interest to shareholders, and material to ABB’s success.