Thursday, 4 June 2020

LafargeHolcim ‘performs top in construction materials sector for ESG risk rating’

LafargeHolcim – the world's largest cement producer, and parent company to Aggregate Industries – wants to keep "raising the bar":


The bar to sustainable construction is obviously still quite high for LafargeHolcim, given that the company's carbon emissions amounted to some 148,000,000 tonnes of CO2 in 2019 alone – more than many countries, and, as opposed to further accelerating, still 2% higher than its like-for-like emissions two years earlier.

Despite this cost to our environment and our society, LafargeHolcim is proud; proud that it performs top in a list of industry peers for risks linked to ESG – environmental, social and governance – factors. LafargeHolcim's Chief Sustainability Officer says:
We are very proud of this industry-leading ESG ranking. It positions LafargeHolcim as the number one construction materials company within Sustainalytics’ ESG Risk Rating, as well as the very first to rank below 20 in its “low risk” category. We are proud of the results of this assessment and are encouraged to keep on raising the bar to further accelerate the transition to sustainable construction.
If LafargeHolcim – with its country-beating carbon footprint – tops ESG risk rankings, "leading the way in sustainable construction", what does it say about the rest of the industry?

Investors are becoming increasingly concerned about sustainability issues. ESG ratings can be a signal of earnings risk. The company cites analysis performed by Sustainalytics:
Modern investors in public and private markets are demanding ESG data, research, ratings, and solutions in order to make informed, meaningful investing decisions. From climate change to supply-chain practices, the nature of the investment process is evolving and shining a spotlight on demand for stakeholder capitalism. Whether assessing the durability of a company's economic moat or the stability of its credit rating, this is the future of long-term investing.
LafargeHolcim claims:
The Sustainalytics report states that the company is at low risk of experiencing material financial impacts from ESG factors due to its strong management of material ESG issues. The company is especially recognized for its strong corporate governance performance and its improvement across all seven of the material ESG issues and corporate governance factors that were analyzed. According to the report, LafargeHolcim’s strongest areas of ESG risk management are its global business ethics programs, its broad range of sustainable products & services and its responsible use of resources, notably in terms of water management.
Which sounds great, but LafargeHolcim ignores the line from Sustainalytics' overview that recognises:
the company has a moderate level of controversies...
Despite the limited amount of publicly-available information at the time, LafargeHolcim has been on Sustainalytics’ radar for several years through our country involvement research. As part of our newly-developed Human Rights Risk Monitor, we now track company involvement in 14 countries and regions where there is a particularly high risk of companies being complicit in human rights violations. This includes conflict areas, such as Syria, but also disputed territories and authoritarian states where human rights abuses are rife.
LafargeHolcim would point to progress in this area:

I hope that by giving my personal commitment to this Call to Action we can highlight the importance of this topic for LafargeHolcim. We have always strived to be a valued member of the communities where we live and work and a model corporate citizen on a global level. Standing up as a promoter of human rights shall further advance these goals
Some would argue with always, given that not long ago the company was embroiled in this controversy:



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