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Global Good is a Good Investment
February 11, 2022
By David MacNeil
Introduction
Corporate expectations, financial markets, business operations and the very society we live in are
being continuously shaped by one common element: community voice. The importance of
understanding and taking into consideration the perceptions, opinions and emotions felt by those
within our key communities cannot be overstated. At Orenda, we not only aim to understand these
factors, but to quantify them in a way that can be effectively implemented into financial processes,
with a focus on creating value in ESG (Environmental, Social & Governance) oriented investments.
In a society now globally linked via online communities and social media, companies are consistently
being dragged into the spotlight, and the social expectations of shareholders, stakeholders, and
consumers are continuously rising. In today’s environment, a company must have an ESG action plan
in place to align with the values of these key communities.
Orenda has extensively covered the adverse effects of corporate scandals and poor ESG
performance, and the impact it has on financial markets. However, we’ve always preached that
companies that do good in the world, do better in the market. The findings presented in this paper aim
to present how a company’s commitment to positive and consistent ESG action can provide a reliable
boost to its overall financial performance, and how online communities are far more likely to publicly
support organizations that are making a conscious effort to adhere to a positive ESG standing and
achieve the 17 goals set out by the United Nations in its established Sustainable Development Goals.
Failure or neglect to do so will often bring upon undesirable results such as poor ESG performance,
negative brand reputation, company boycotts, public protests, and social movements.
The data presented throughout this paper represent some of the top performers in ESG action from
January – November of 2021 across three different sectors, as identified by Orenda’s scoring
methodology. The sectors selected are:
• Consumer Digital Services Sector
• Pharmaceuticals Sector
• Semiconductors Sector
The sector analysis presented throughout this paper was collected using the SIX iD Data Terminal.
Core Elements of ESG
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Before analyzing some notable performers of ESG action for January – November of 2021, it is
important that we first understand the core elements of ESG, and how Orenda categorizes different
types of corporate actions into its ESG performance data.
Environmental
The first core element of the ESG spectrum is the Environmental aspect. Society expects
organizations to have a plan in place to contribute to a clean, green, and sustainable environment.
Issues such as climate change, fossil fuel reliance, depletion of natural resources, pollution, plastics
usage, water management, greenhouse gas emissions, and waste management are all examples of
issues that corporations can act upon to ensure a more sustainable future for all.
Social
The second core element of the ESG spectrum is the Social aspect. Corporations must adhere to the
highest possible social standards to maintain a positive relationship with society. Issues such as
diversity and gender inclusion, employee and customer welfare, human and animal rights, and local
community impact are all examples of issues that corporations can act upon to ensure a healthy
social environment.
Governance
The third and final core element of the ESG spectrum is the Governance aspect. Corporations must
ensure that its Governance actions are responsible and justified to maintain a reputable corporate
image and ensure comfort and fairness to its shareholders and workforce. Issues such as corporate
behaviour, company values, employee relations, executive compensation levels, and employee
compensation levels are all examples of things corporations can act upon to ensure an acceptable
and fair level of organizational governance.
Overall ESG
Orenda also provides insight into a fourth category which we call the Overall ESG performance of a
company, which takes into consideration and equally weights a company’s ESG action in its entirety.
This provides an all-encompassing view of an entity’s current standing in its communities and can be
used to identify companies that are wholly committed to positive Environmental, Social, and
Governance change in the world, as well as those which are not.
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Global Good is a Good Investment | 02|03|2022
Sector Analysis
As previously mentioned, analysis was conducted upon companies across three unique sectors for
this exercise. We then selected the top 10 companies with the highest ESG performance scores
within each sector as of the end of November 2021 and proceeded to calculate the 11-month average
Overall ESG score for each sector based on the companies within.
SECTOR BREAKDOWN
Consumer Digital Pharmaceutical Semiconductor
Alphabet Inc Bausch Health Analog Devices
Envestnet Cardinal Health Broadcom Inc.
Eventbrite ELI Lilly & Co. Microchip Tech.
Groupon Glaxo Consumer Micron Tech.
Jumia Tech Johnson & Johnson Mediatek Inc.
Kakao Group Pfizer NXP Semiconductors
Meta (Facebook) Roche Holding AG ST MIcroelectronics
Shopify Sanofi ADR Qualcom Inc.
Trustpilot Valneva SE Texas Instruments
Upwork Inc. Viatris Inc. Xilinx Inc.
As displayed in the table below, the semiconductors sector was the leader of the group in ESG
performance, while the Pharmaceuticals sector, which was faced with plenty of adversity since the
beginning of the pandemic, fell slightly short.
Average Overall ESG Score
Sector for Sector (Jan-Nov 2021)
Semiconductors 3.745
Consumer Digital Services 3.482
Pharmaceuticals 3.317
STMicroelectronics (STM)
The first company analyzed was STMicroelectronics, a French-Italian manufacturer of
semiconductors and electronics.
Of the top 10 companies that are listed in the sector, STMicroelectronics had the highest average
Overall ESG score within the sector with a score of 3.961: a moderately higher score than the sector
average for the 11-month period.
STMicroelectronics is a sector-leader when it comes to environmental, sustainability and climate
concerns. In 2021, STM was credited with the some of the following ESG-focused achievements:
March - STM collaborates with OQMented on MEMS (Microelectromechanical Systems) technology
in an effort to eliminate environmental contaminants while also reducing power usage.
May - STM releases an updated sustainability report and steps up its commitments and programs to
meet its goal to become carbon neutral by 2027.
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Global Good is a Good Investment | 02|03|2022
June - Ferrari names STM executive as new company CEO as it aims to embrace the transition to
electric vehicles.
July - STM announces the manufacturing of its first 200mm Silicon-Carbon bulk wafers for prototyping
next-generation power devices with more efficient energy usage and lower cost of ownership.
September - STM releases the design for the worlds first LoRa system-on-chip (SoC) developed to
automate rubber-tapping in trees, while prolonging tree lifespan and increasing both efficiency and
sustainability.
As displayed in the chart below, STMicroelectronics boasted an extremely positive ESG standing in
2021, despite experiencing two sharp declines in March and August. However, these declines are not
indicative the company experiencing moments of weak ESG performance, as even the lowest points
of the year were still well above sector average during the period analyzed. More realistically, these
periods were moments where STM’s ESG performance regressed closer to the sector average,
before once again shooting up into extremely favourable scores in the following months.
STMicroelectronics vs. Sector Benchmark Overall
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STM MICROELECTRONICS NV SECTOR BENCHMARK
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Global Good is a Good Investment | 02|03|2022
Additionally, we witness a compatible trend between stock price growth and the company’s Overall
ESG score throughout the duration of 2021, rising from an annual-low of $16.07 in mid-March, to
$39.34 by the end of November – an increase of 145%.
STMicroelectronics - ESG Overall vs. Monthly Price
4.200 $45.00
4.100 $40.00
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STM MICROELECTRONICS NV STM MICROELECTRONICS - Monthly Price
Shopify Inc.
Next, in the Consumer Digital sector, we’ve analyzed Shopify Inc., a Canadian multinational E-
Commerce company known for its online stores and retail point-of-sale systems.
Of the 10 companies listed within the consumer digital sector, Shopify was a standout performer,
consistently maintaining scores well above the sector average in ESG standing from January –
November of 2021. It should come as no surprise that a company specializing in online convenience
performed well during a pandemic where many were required to work out of their own homes, and
found comfort in online shopping as a way to maintain physical distance from others during times of
uncertainty. In fact, Shopify is so committed to making health and safety a priority that they
announced that all employees would have the option of working from home permanently, even after
the pandemic ends.
Shopify has also done an extraordinary job at pushing climate change issues to the forefront, proving
numerous times throughout the year its very real commitment to implementing change in the world to
ensure a more sustainable future for all. This, combined with the explosion in demand for online
services for the purpose of health and safety, separated Shopify from the pack.
In 2021, Shopify was received recognition from stakeholders for some of the following actions:
January – Announces a full-time work from home policy for all employees during and after the
pandemic to ensure health, safety, and comfort.
February – Commits to spending $5m annually to combat climate change.
May – Teams up with a carbon accounting software company to create a free “carbon footprint
calculator” to help corporations manage their carbon output.
June – Releases a 50 page “playbook” on how it intends to kick start the carbon removal market.
October – The director of Shopify’s sustainability fund, Stacy Kaulk, releases an article outlining the
company’s dedication to tackling climate issues and makes suggestions for how other large
corporations can and should do the same.
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Global Good is a Good Investment | 02|03|2022
In the chart below, we can visualize the trends in ESG scoring over time for Shopify in comparison to
its sector benchmark. As you can see, Shopify maintained an above sector-average score for the
entirety of the year as a direct result of its ESG conscious actions and valuable product offering.
Shopify vs. Sector Benchmark Overall
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SHOPIFY INC - CLASS A SECTOR BENCHMARK
When analyzing the market trend in comparison to its ESG performance, we witness another
extremely positive trend, as Shopify’s stock price increase was consistent with its positive ESG
scoring; resulting in a 42.6% increase from January – November of 2021.
Shopify - ESG Overall vs. Monthly Price
3.900 $1800.00
$1600.00
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SHOPIFY INC - CLASS A SHOPIFY - Monthly Price
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Global Good is a Good Investment | 02|03|2022
Roche Holdings Inc.
It should come as no surprise the pharmaceuticals industry has faced some serious challenges over
the past few years considering the COVID-19 pandemic. For most within this sector, the focus on
vaccine production, distribution, and public health and safety have been at the forefront.
While not known as one of the large four vaccine manufacturers (Moderna, Pfizer, AstraZeneca, and
J&J), Roche contributed to public health in other ways throughout 2021, such as developing into a
world-leader in COVID-19 testing, all while maintaining a consistently positive ESG standing.
In 2021, Roche Holdings Inc. was credited with the following actions which boosted its overall ESG
market performance:
February - Roche becomes one of the first organizations to receive authorization for emergency use
of rapid COVID-19 tests to allow healthcare workers to make faster and safer decisions within
minutes.
March - Roche receives approval for a new diagnostic to more rapidly identify lung cancer in patients,
and prolong patient life.
April - Roche vows to boost its corporate diversity by setting out to double the hiring of Black and
Latinx executives and spend $1B with diverse suppliers.
May - Roche is named by Forbes as one of the top 500 companies dedicated to diversity in 2021.
August - Roche receives $5B in investment dollars from SoftBank Group as it believes in Roche’s
strategy and plans surrounding its COVID-19 testing.
October - Roche ramps up its COVID-19 test distribution in light of the new Delta variant in an attempt
to help prevent spread and lighten the workload on front line health care workers.
As you can see in figure 5 below, as a result of its commitment to positive ESG action throughout the
year, Roche Holdings maintained a considerably above sector-average ESG standing for the duration
of the year. So much so, that even its lowest point of 2021 still materially outperformed the sector.
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Global Good is a Good Investment | 02|03|2022
Roche Holding vs. Sector Benchmark Overall
3.800
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ROCHE HOLDING AG-GENUSSCHEIN SECTOR BENCHMARK
Complimentary to its sector dominant ESG performance, we also see a directly correlated trend in
company stock price in figure 6 during the same time frame. Over 11 months, Roche’s stock rose
from ₣298.16 in January to ₣357.50 (Swiss Francs) by the end of November.
Roche Holding - ESG Overall vs. Monthly Price
3.800 380.000
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ROCHE HOLDING AG-GENUSSCHEIN ROCHE - Monthly Price (Swiss Francs)
Conclusion
The call for consistent and meaningful ESG action has been on the rise over the past decade and will
only continue to become even more significant in the years to come. Corporations are now expected
to dedicate significant time and effort to ensure that they are contributing to a healthier, greener, and
more inclusive future for all. Those which fail to align with society’s expectations are doomed to
perform less desirably as they watch ESG conscious organizations surpass them on the market.
Orenda has proven time and again that by turning to ethical and socially responsible investment
opportunities, investors can make an impact on the issues that matter to them most, do good in the
world, and maintain a profitable portfolio all at the same time.
To learn more about Orenda’s ESG dataset or the benefits and features of the SIXiD data terminal,
contact esg@orenda.digital today.
This material has been prepared by Orenda Software Solutions Inc (“Orenda”) for the exclusive use of the persons to whom Orenda delivers this material. This material or any of its content is
not to be construed as a binding agreement, recommendation, investment advice, solicitation, invitation or offer to buy or sell financial information, products, solutions or services. It is solely for
information purposes and is subject to change without notice at any time. Orenda is under no obligation to update, revise or keep current the content of this material.
No representation, warranty, guarantee or undertaking – express or implied – is or will be given by Orenda or any of its parent, subsidiaries, affiliates and/or their branches (together, “SIX
Group”) as to the accuracy, completeness, sufficiency, suitability or reliability of the content of this material. Neither SIX Group nor any of its directors, officers, employees, representatives or
agents accept any liability for any loss, damage or injury arising out of or in relation to this material.
The opinions expressed within this material are solely the author’s and do not reflect the official policy or position of the SIX Group. This material is property of Orenda and may not be printed,
copied, reproduced, published, passed on, disclosed or distributed in any form without the express prior written consent of Orenda.
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