In recent years, ESG Investing, also popularly known by many as sustainable investing, has gained increasing traction in the investment world – as both retail and institutional investors become more concerned about the broader social and environmental impacts of the companies they invest in.
For those who are not familiar with ESG, its stands for Environmental, Social & Governance. These are the key areas that ESG investors can look for when identifying quality companies to invest in. This is, of course, on top of ensuring that the companies can generate a good investment return.
Unlike analysing the financial results of a company, it’s trickier to analyse just how “good” a company is when it comes to its ESG performance. This is why the Singapore Exchange (SGX) partners with leading rating providers to provide these ESG ratings to show how well these companies manage ESG issues that are material to their businesses.
Since all these ratings are calculated based on their own models, there is no single score for ESG. If you are keen to find out more about how the ESG rating works, do read up more on the SGX ESG Stock Rating page.
In this edition of 4 Stocks This Week, we take a look at 4 stocks that are on the SGX that is also faring well when it comes to their ESG performance.
City Development (SGX: C09)
City Developments Limited (CDL) (SGX: C09) is one of Singapore’s largest real estate companies with a portfolio of residential, commercial, hospitality and retail space spanning 112 locations in 29 countries and regions.
When it comes to ESG matters, CDL appears to be doing an excellent job with a rating of 4.1 for the FTSE Russell Rating, the best currently on SGX. MSCI gives it a AAA rating while the S&P Global ESG Score is 72.
A glance at the CDL website makes it easy to see why CDL is doing well on the ESG front. The company makes it a point to introduce green innovations for the buildings it develop. From first-of-its-kind developments that enhance eco-friendly lifestyles to industry-changing methods that promote recycling, reduce waste and raise productivity, CDL is constantly trying its best to innovate, invest in and improve the way buildings sustain life. Projects such as Tree House condominium, which has the world’s record for largest vertical garden and D’Nest, the largest solar panel in a Singapore condominium, help CDL promote green living among its home buyers.
Due to a one-off impairment of $1.78 billion on Sincere Property Group investment, CDL recorded a loss after tax and non-controlling interest of $1.9 billion for FY2020. Excluding the one-off, non-cash impairment and allowance for foreseeable losses for development, CDL would have registered a profit before tax of $120.8 million for FY2020. The company was particularly affected by the decline of its revenue for the hotel operations segment as the pandemic continues to curb travelling.
CDL is currently trading at a price-to-book value of 0.733.
DBS (SGX: D05)
DBS (SGX: D05), Singapore and Southeast Asia largest bank, isn’t just a bank that does well when it comes to its financial results, but also in its ESG ratings. It currently has a rating of FTSE for 3.7 for the FTSE Russell Rating and a MSCI rating of AA, while its S&P Global ESG Score is 68.
DBS is very active in championing social causes both in Singapore and the overseas markets it operates in. One such example is the DBS-NUS social venture challenge, which aims to identify and support social ventures that have the potential to generate scalable and sustainable social impact. DBS itself is also a big advocator of ESG investing, providing access to investors who want to invest in ESG portfolios.
For the 1Q2021, DBS quarterly net profits crossed the $2 billion mark for the first time in DBS’ history. Like its other local banks counterparts, DBS share prices have done very well, increasing about 18% since the start of 2021. It’s currently trading at $30.12.
Capitaland (SGX: C31)
With its headquarters in Singapore, Capitaland (SGX: C31) is one of Asia’s largest diversified real estate groups. The group is present in 38 different countries across 250 cities and manages or owns about 1,125 properties in total, including business parks, commercial buildings, retail malls and residential properties.
Similar to CDL, Capitaland aims to incorporate environmentally sustainable solutions in the buildings it develops and manages. The company also publishes its annual Sustainability Reports where it shares more about what it is doing to promote sustainable living among its stakeholders.
Since suffering a steep decline in March 2020, Capitaland has bounced back strong. The share price has climbed from $3.25 on 5 January 2021 to $3.81 as of 16 July 2021. The company is currently trading at a price-to-book value of 0.849 and has market capitalisation of about $20 billion.
Semb Corp Industries (SGX: U96)
Since its demerger with Semb Corp marine, Semb Corp Industries (SGX: U96) is now mainly focused on two main areas, utility and urban development. Under its utility business, Sembcorp Industries provides utilities and integrated services for industrial sites. This includes services such as power, gas, steam, water, wastewater treatment and other on-site services. With urban development, Semb Corp is a leading Asian developer that undertakes both private-sector and government-supported projects in countries such as Vietnam, China and Indonesia.
Give that the company is heavily involved in the use of natural resources in its day-to-day operations, it comes as no surprise that Semb Corp Industries takes its ESG responsibilities seriously. The company has a Climate Action Plan to outline how it would do its part in protecting our environment. It also tracks its own ESG performance, which shows how the company has performed over time in various environmental indicators.
Semb Corp industries has a rating of 3.5 on the FTSE Russell Rating and an A rating for the MSCI Rating. Its S&P Global ESG score is 59. The company is currently trading at $2.13 having started 2021 with its share price at $1.76.
Find out more about these ESG stock ratings on SGX.
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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.