Investment

Chart of the Month – Sustainability practices gained traction in luxury

by Marie-Caroline Fonta

Sustainability practices gained traction in luxury

Source: Bloomberg, RobecoSAM, Notz Stucki

Environmental, Social and Governance (ESG) are today on many people’s lips. This scatter chart shows an interesting attribute of Luxury. When it comes to deep analysis of those ESG criteria, we find a lot of specialists, and we have selected the RobecoSAM Total Sustainability rank(1) to illustrate our purpose.

To compose our Luxury portfolio, European, American and Swiss Luxury conglomerates have been selected. First, in Euro zone, the now very famous KHOL (Kering, Hermès, l’Oréal, and LVMH), Cie Financière Richemont for Switzerland and Estée Lauder, Tiffany and Tapestry (Coach, Kate Spade, Stuart Weitzman) composed our American Luxury leaders. We compare this portfolio and all its components to the MSCI World Index, in abscise the RobecoSAM Total Sustainability Rank, higher score is the better, and on the y-axis, last 5Y performance in USD.
This Luxury portfolio (equally weighted positions) outperformed the MSCI World Index both in last 5Y performance and Sustainable issues.

GOOD NEWS

The Luxury sector is resilient, enjoys exceptional fundamentals, strong balance sheets, and growth potential. Companies pursue restructuring. After falling into disgrace with some sales issues and economic slowdown, Hard Luxury (Watches and Jewelry) subsector is now in better shape and Swiss watch exports are now positive for the 15th month in a row. A new wind blows on Luxury. Companies have to adapt to younger customers who are more demanding, more sensitive to the world in which they are growing, evolving, building their future. Respectability, Traceability, Equality, Impact are now common sense. The number of people dedicated to sustainable development in Luxury companies is increasing and radiates in each business, product and strategy.

Luxury looks like a good investment, offers growth and sustainability. There is no reason not to put more effort in Sustainable, ESG factors that are real contributors to the performance.

 

 

(1) RobecoSAM is an investment specialist focused exclusively on Sustainability Investing. A company’s Total Sustainability Score encompasses three dimensions (Economic, Environmental and Social). Scores are ranged from 0 to100.
RobecoSAM Total Sustainability Rank for MSCI World Index is weighted average of scores of all companies.

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Antonio Mira joined NS Partners in 2006 as Group Chief Financial Officer. He heads the corporate functions and is involved in coordinating and implementing the decisions of the Executive Committee.
An experienced bank auditor, Antonio started his career in 1995 with Arthur Andersen, where he worked for some 7 years before joining Ernst & Young in 2002 as a Senior Manager.
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