Sometimes life can’t help but put you between a rock and a hard place. There's a trade off and you just don’t know what to do. In the latest in our series on ESG investing, we’ll be looking at when wrong feels right.
Missed our other ESG articles? Take a look, here.
Let’s explain. There you are, researching a mining company. Mining, in an ESG article you say? Yes, bear with us.
You’ve looked through the financials, checked out the management structure, delved into competitors and really shone a light into the company. This is a viable long term investment, given the minerals they are excavating are being used in the batteries of electric cars. But, it’s still not really ticking the ‘E’ in ESG.
Then you consider the employees. This mining company employs a region; a total of 21,961 men and women. Without this mining company, these people would have little income or stability. This mining company allows other businesses in the area to thrive - agricultural farms, shops selling food, clothes, electronics, and transport companies. This mining company also built schools educating the children of its workers for free, and offering evening classes to adults.
So where does this rank on the ESG scales?
Environmentally, this company is failing. It scars the soil, digging deep into the earth's core. It uses heavy machinery that billow diesel fumes into the sky, and has driven the local wildlife far away. All this for electric car batteries? What’s the pay off here? Are the environmental savings in one place worth it for the pollution of another?
But socially and from a governance perspective however, it’s the opposite. It’s brought prosperity to a region. Many businesses, and therefore families, thrive from the economy of this mine, allowing prosperity to spread. It’s managed by a diverse group of community-focussed executives who pay and treat their staff and contractors well.
On top of this, it is educating many thousands of children, allowing them to expand their horizons and maybe go off to university to become doctors or lawyers or mining company executives.
What's the call you make?
Well, only you can decide. ESG investing is like that. Personal opinions are personal opinions, and one person's pain point is another person's easy ride. Here at Upside, we love choice. Our ecosystem encourages the ideas people to submit all the research they can on an idea, allowing the investor who buys it to fully understand everything about the stock they are about to buy - from the environmental detriments to the educational benefits.
There’s an Upside to choice, and a science to being right.