“Traditional share analysis methods fail to account for some 70 percent of a company’s worth,” says Susanna Jacobson, an analyst with Innovest who specializes in environmental issues within the forestry and paper industry.
Environmental thinking is hardly a new issue in the business world. But in recent years, the many voices raised in alarm over global warming have spurred an increasingly intense debate, making the issue a priority for customers as well as for CEOs and investors. It is this third group, investors, who make up the primary target of Susanna Jacobson’s company, Innovest Strategic Value Advisors.
Sustainability is fundamental
“We look at extra-financial risk and opportunity,” says Susanna Jacobson. “This includes any environmental or social and strategy governance-related issues, and the hidden values that traditional financial analysts don’t tend to examine. We believe that around 70 percent of a company’s true value is not covered by traditional analysis. Long-term sustainability is fundamental, and we examine whether they have clear structures in place to mitigate risk, and strong R&D to identify early opportunities in the marketplace.”
"The outlook is very bright but there is a lot still left to do."
Innovest company scores are used to advise clients on investment potential. With a client portfolio of pension funds, advisory and consulting firms, industrial corporations and institutional investors such as UBS, Henderson Global Advisors, HSBC and BNP Paribas, Innovest is typically used as an add-on to traditional analysis.
Jacobson believes sustainable forest management is key to forest and paper companies. “Without it, they won’t survive in the long term,” she says.
A lot still left to do
In its analysis Innovest looks upon issues such as forest management, utilisation of biofuels, social issues – especially in new markets, certification, planting and conservation of forests.
Still, Jacobson believes the paper industry is inherently sustainable and will survive, but its strategy must be rethought. “They must use wood more efficiently and diversify into new, more sustainable products, use fewer chemical processes, and fewer non-renewable resources,” she says. “The outlook is very bright but there is a lot still left to do, and quickly, because these companies are facing increasingly stringent regulatory requirements.”
Innovest gives SCA top marks
- Innovest ranks SCA as one of the world’s leading companies when it comes to environmental and social issues and strategic planning.
- 2006 SCA was chosen again as one of the world’s most sustainable companies in Innovest’s Global 100.
- Ranked against 30 comparable international companies, SCA comes out above average and sits in the top quartile in the Innovest index for forestry and paper companies.
- Innovest points out that SCA is the biggest player within reclaiming and reusing recycled fibre. The company’s level of self-reliance in terms of energy and methods of reducing resource consumption are also exemplary, according to Innovest.