Avoiding companies with corrupt practices is the leading ESG priority for investors, according to Hargreaves Lansdown.
More than eight in 10 (83%) clients ranked it ‘extremely’ or ‘very’ important, while more than two thirds (68%) prefer companies with a completely clean record and will avoid companies that have been through a scandal, even if they’re improving. Only just over a fifth (22%) said they would consider investing in a company if they felt improvements were being made after difficult times.
Investors’ caution follows a number of corporate scandals, with Glencore recently convicted of a decade-long bribery scheme to secure access to oil and generate illicit profit across Nigeria, Cameroon, Ivory Coast, Equatorial Guinea and South Sudan.
To help avoid scandal-hit companies, Hargreaves Lansdown said investors should look to integrate ESG analysis into their investment decisions.
Dominic Rowles, lead ESG analyst at Hargreaves Lansdown, said: “If a company is well managed and managers receive adequate challenge, that reduces the potential for individuals to get away with acts of fraud or deceit. It also means managers are more likely to take action to limit the company’s environmental and social impacts.”
Rowles cited two funds he believes could appeal to ESG investors; Legal & General Future World ESG Developed Index which invests in more than 1,400 companies across the developed world and excludes violators of the UN Global Company; and FSSA Asia Focus which has a philosophy founded on stewardship.
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