Capital Group investment analyst Frank Beaudry goes the extra mile to research a company’s approach to environmental, social and governance (ESG) issues.
Beaudry recently bicycled through the Dolomites in Italy alongside the CEO of energy company Enel. Previously head of the company’s renewables division, Francesco Starace is changing Enel’s way of doing business. It was not a typical research trip, but being on the ground gave Beaudry a chance to gain a deeper understanding of how the company is managed.
“Looking at external ESG metrics a few years ago, one might have seen Enel as an example of a state-owned, carbon-emitting, sleepy giant,” Beaudry says. “But it has transitioned to become a completely different company.” While biking up winding inclines, they discussed the learning curve, approach to risk management and the long process of developing renewable energy.
“I wouldn’t have seen any of that with a color-coded outside rating five years ago,” notes Beaudry. “I needed to be talking to the CEO and CFO about their vision of the cycle from capital expenditure to earnings with renewables.”