Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Investor Ubben warns more stocks vulnerable to social, environmental selling

Stock MarketsOct 13, 2020 09:30PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Jeffrey Ubben, Founder & CEO at ValueAct Capital, speaks on the Reuters Newsmaker event "The Future of Shareholder Activism" in Manhattan, New York, U.S.

By Lawrence Delevingne

BOSTON (Reuters) - Jeffrey Ubben, the former activist turned ethical investor, said on Tuesday that environmental, social and governance concerns will increasingly hit companies' stock prices, just as climate change hurt oil and gas companies' shares.

Ubben, who retired from the $16 billion activist firm ValueAct Capital Management LP in June to start Inclusive Capital Partners LP, an ESG-focused fund manager, said stock prices of many large companies had yet to fully reflect the global problems to which they contributed, such as McDonald’s Corp (N:MCD) on obesity and Coca-Cola Co (N:KO) on plastic waste, but that was beginning to change.

"The externalities of the core business are now starting to be reflected in the stock price,” he said in an interview at Reuters Events’ ESG Investment North America conference https://reutersevents.com/events/esg-investment-north-america.

In an emailed statement, a spokeswoman for Coca-Cola said that the company was "committed to being a responsible business" and has invested globally to increase bottle and can recovery while already using at least 50% recycled content in all packaging. Representatives for McDonald’s did not respond to an email seeking comment.

Ubben also decried what he called the “productizing” of ESG investing through exchange-traded funds, products that invest in a basket or index of stocks known as ETFs, saying they allowed investors to feel good but that their money was not being used to cause major change.

ESG exchange-traded funds managed by BlackRock Inc (N:BLK) and others own too many widely held stocks that satisfy “checklist” criteria but whose broader businesses could be problematic, Ubben said.

“They own the same 10 stocks as the S&P,” Ubben said, citing Google (O:GOOGL) and Facebook Inc (O:FB) as examples. “It allows people to run away from the problem and think they are doing something.”

A spokesman for BlackRock declined to comment. The firm has seen some $25 billion flow into its ESG ETFs this year, double the amount in 2019, according to its earnings report on Tuesday.

CEO Larry Fink said in a January letter to company chief executives that BlackRock was expanding its suite of ESG products because it wanted to "make sustainable investing more accessible to all investors."

Ubben said he was supportive of Fink's broader efforts to increase its engagement with companies on ESG issues. 

Ubben said Inclusive, which managed $1.3 billion as of July and is backed by Affiliated Managers Group (N:AMG), would look for investments in growth companies with strong potential for ESG impact, or those that traded lower after belatedly accounting for external ESG impact and were committed to change.

Inclusive’s portfolio so far, Ubben said, includes wood pellet maker Enviva Partners LP (N:EVA); renewable diesel company Darling Ingredients Inc (N:DAR); indoor farmer AppHarvest; educational technology business Strategic Education (O:STRA); and electric truck maker Nikola Corp (O:NKLA).

Nikola, for which Ubben is a director, has recently come under pressure to prove its nascent hydrogen-powered technology.

“When the price will presume the status quo, we come in and change the strategy," he said. "That’s the idiosyncratic return that we seek.”

Investor Ubben warns more stocks vulnerable to social, environmental selling
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email