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This blog provides environmental, social and governance (ESG) performance metrics for four global household products: Colgate-Palmolive (NYSE:CL), Kimberly-Clark (NYSE:KMB), Unilever (NYSE:UL) and Procter & Gamble (NYSE:PG). Note the links above are to financial analyses by Seeking Alpha contributors that provide a range of perspectives on whether to buy, sell or hold positions in these companies.

My contribution is to provide readers with current analytics that go beyond financial metrics, to evaluate how well these companies perform on comparable environmental, social and governance – or ESG – metrics, also known as sustainability metrics. Companies, through annual reports such as the 10-K and the corporate social responsibility (CSR) report, release corporate ESG data. Evidence (see p. 5 of whitepaper) is beginning to accumulate that companies that value and implement a sustainability strategy do financially outperform those companies that do not have one.

Our primary source for ESG data is Bloomberg’s Professional Finance and ESG database (Bloomberg). Since 2009, corporate ESG data has been available through Bloomberg. If a company sees an error in their public ESG data, it should have a corporate representative contact Bloomberg and get it corrected, as it would with public financial data.

Table 1 provides a basic due diligence screen of CL, KMB, UL, and PG on several key environmental metrics. Column 1 provides an aggregate ESG disclosure score for each company calculated by Bloomberg, which provides a quick read on how well a company makes ESG disclosures on a comparative basis. ESG disclosure scores also provide a quick read on how accountable and transparent a company chooses to be when it comes to sustainability performance. Bloomberg assigns to each company based upon a company’s full range of ESG disclosures. ESG scores range between 0 (no disclosure) and 100 (full disclosure).

Table 1: A Snapshot of Key Environmental Performance Indicators

Household Products Cos.

ESG Disc Score

Total GHG Emissions

GHG Scope 3

Total Water Use

Water Intensity/

Sales

Invest in Op Sust

COLGATE-PALMOLIVE

71

671

511

8,775

504

$22,500,000.00

KIMBERLY-CLARK

57

5,101

NA

93,000

4,397

$185,000,000.00

UNILEVER

48

1,953

NA

43,490

659

NA

PROCTER & GAMBLE

45

5,700

NA

74,300

883

NA

Source: Bloomberg Professional Finance and ESG Platform August 2014

With an ESG Disclosure Score of 71 (Col 2), Colgate-Palmolive leads among the four household products companies when it comes to providing key metrics valued by investors. Also, CL’s score reflects how well it competes when compared with top peers on key environmental metrics, which serve as proxies for operational and management efficiencies. For example, Table 1 provides a few key environmental metrics for the four companies. CL stands out for providing metrics for its own operations, and also the GHG emissions of its suppliers (Column 4). Once companies measure the environmental footprint of their enterprises, they learn where inefficiencies exist and usually work to eliminate or reduce them. The same logic applies to large companies managing important ESG issues related to their supply chain.

When a company brings efficiency to the process that brings a product or service to market, that usually results in reduced costs, which help companies compete on price in low margin sectors. From the ESG data in Table 1, CL uses much less water than its competitors do because it is a smaller enterprise. The ESG data also suggests that Colgate-Palmolive may manage its natural resource inputs better than its peers may. In Column 6, note CL’s low water intensity metric, expressed as a percentage of sales, compared to its peers. Lower water intensity numbers often correlate with using less water to make the same or similar product.

The other environmental metric that stands out is Kimberly-Clark’s water intensity metrics. Not only does KMB use much more water than its peers do, but its water intensity metric is multiples higher than the other companies are. High environmental intensity metrics should invite questions and raise concerns by investors, because high environmental intensity metrics can reflect high natural resource input costs, which drive the cost of delivering a product or service to market. KMB also has the highest reported budget for operational sustainability. If I were considering investing in KMB, I would look at the company’s recent sustainability report to see whether and how the company addressed water usage and efficiency issues within the $185M budget.

Note that Unilever and Procter & Gamble have not disclosed their Total Investment in Operational Sustainability. This ESG data point informs an investor about how much a company has spent in the prior year to increase operational or energy efficiencies, processes, or safety or other improvements that help implement sustainability goals for operations. By not providing this metric, companies (perhaps unintentionally) communicate a lack of financial commitment to continual improvement in sustainable operations.

Table 2: A Snapshot of Key Social & Governance Performance Indicators

Household Products Cos.

% Women Employed

% Women Management

% Women on Board

Community Spend

% Indep Directors

COLGATE-PALMOLIVE

39

34

20

$35,690,000.00

90

KIMBERLY-CLARK

31

29

25

$30,500,000.00

92

UNILEVER PLC

32

42

36

$771,525.29

86

PROCTER & GAMBLE

39

44

42

NA

92

Source: Bloomberg Professional Finance and ESG Platform August 2014

Table 2 shows that all four companies disclose the percentage of women employed in their workforce, in management and on the board. Overall, this industry group has more robust metrics on employing women than other industries. Unilever and PG have over 40% women in management. PG has 42% women on its board of directors. Only Colgate-Palmolive and KMC have less than 30% women on their boards.

All four of the companies have fairly high board independence. Further to our analysis of governance is the Community Investment metric (Col 5), which is a proxy that measures companies’ financial commitment to the communities where they are located. Proctor & Gamble, the largest company, did not disclose its Community Investment metric, whereas CL and KBM disclosed similar budgets between $30 million to $36 million. Two key issues to consider with evaluating a public company’s community investment budget are: (1) whether its community spending priorities align and drive the company’s sustainability priorities; and (2) is corporate governance sufficiently independent to insure that community spending dollars are not being allocated primarily for pet projects or marketing campaigns.

The household products industry is getting increased attention from investors. Beginning on August 6th, the Sustainability Accounting Standards Board (SASB), together with top global companies, institutional investors and public advocates, will begin work to develop a floor ESG accounting standard for public companies in the household products sector reporting to the SEC. From what I understand, there is considerable participation by companies in this sector to develop a standard that will guide future reporting.

Who values this data? Investors seeking long-term investments in maturely positioned companies to absorb identifiable risks and opportunities value the data. Other stakeholders -- such as future and current employees and customers -- value ESG data, too. If you want a deeper explanation of this megatrend towards corporate disclosures, here is a PowerPoint on the subject.

Disclaimer: The author does not hold a position in any of the stocks mentioned in this article, and has no plans to change that position within the next 72 hours.

Source: Head-To-Head Comparison Of Top Global Household Products Companies On Environmental, Social And Governance Metrics