Wednesday, September 27, 2017

Does An ESG Mandate Mean You Can't Invest In Electric Car Companies Using Cobalt Containing Batteries?

With a sizable chunk of the non-Chinese-controlled cobalt coming from artisanal—damn near child slave labor—and conflict metals area production it is probably time to figure out the pyramid of Environmental, Social, Governance priorities.
At least that's what I found myself thinking about while reading Institutional Investor.
From II, September 26:

Equity Investors Deliver Human Rights Warning
Ignoring companies’ human rights violations can have disastrous consequences in investment portfolios, fund managers say
Equity investors who overlook companies’ track records on human rights may miss an important aspect of their performance.

Human rights issues can do more than impact the value of an investment, according to Shami Nissan, who is the responsible investment director at Actis, a fund manager focused on emerging markets. They can “obliterate” entire investments, she said Tuesday at the Principles for Responsible Investment conference in Berlin.

Investors should calculate such risks as worker conditions and community engagement to estimate how they might impact a company’s value, according to Nissan. Representatives from KLP and MFS Investment Management also warned conference attendees that ignoring human rights violations may result in unexpected investment losses.

“Human rights drive stock prices,” said Rob Wilson, a research analyst at MFS. “That is the main reason why an investor would be interested in these topics.”

About 40 percent of senior business leaders in an Economist Intelligence Unit survey said adverse events associated with their suppliers, such as human rights breaches and criminal involvement, were becoming more frequent, the Financial Times noted in a report earlier this month....MORE
This Amnesty International report is getting a bit dated (January 2016) but it gives an overview of conditions in the DRC:
Democratic Republic of Congo: "This is what we die for": Human rights abuses in the Democratic Republic of the Congo power the global trade in cobalt