Google Finance has spoken. Recently, the financial section of Google inserted a new dimension to its “key stats and ratios” section by adding the Carbon Disclosure Rating amongst other well known financial metrics, including profit margin and return on equity, on the main summary page. Why? Who? Where? What the?
This is actually rather groundbreaking in terms of trying to measure individual companies along with making a stock selection for your own portfolio. Google has taken the initiative to include this metric and for this it should be applauded.
However, let’s take this with a grain of salt. Keep in mind that not all companies have responded to the necessary CDP questionnaire so the pool of companies is limited. On top of this, as I look through the Industrials Sector I see the large military aircraft supplier Boeing with a comparatively high score of 87. I also see the 4th largest oil behemoth Chevron with an even better score of 88. We need to beg the question, “what is the methodology?”
There are mainly two criteria: 1) The level of action being taken by the company to manage its impacts on climate change and 2) simply reporting on emissions regardless of what their CO2 footprint is. If you would like to divulge in further detail here, is the link to the rating methodology.
By making the move to include the CDP component, Google is definitely differentiating itself. In a world where stakeholders are demanding change and transparency, this addition to the financial criteria of publicly traded companies is a step in the right direction.
Dale Wannen is a portfolio manager with Harrington Investments a Napa, CA, firm specializing in Socially Responsible Investing. He previously worked as a financial advisor for UBS in San Francisco. Also, Wannen is currently an MBA student in sustainable management at San Francisco’s Presidio Graduate School and, as an avid bird enthusiast, sits as the treasurer and board member for the non- profit San Francisco Bay Bird Observatory.