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Annual Stock Market Outperformance of 17% is Achieved by Environmental Leaders in the Global Pharmaceutical Sector

Annual Stock Market Outperformance of 17% is Achieved by Environmental Leaders in the Global Pharmaceutical Sector

Published 06-27-02

Submitted by Innovest Strategic Value Advisors, Inc.

NEW YORK, New York - Innovest Strategic Value Advisors, Inc., the global leader in intangible value analysis, has released a new 100-page report on the relative corporate environmental performance among 29 pharmaceutical companies in the U.S., Europe and Japan. Innovest found that companies with better environmental performance (eco-efficiency) outperformed laggards by 17% (1700 basis points) in the stock market since May 2001. The results of the study suggest that investor returns can be substantially improved by investing in companies with superior eco-efficiency. Mainstream Wall Street analysts typically overlook this increasingly important source of value-creation.

The analysis was conducted using Innovest’s EcoValue’21® environmental performance rating model. The model analyzes over 60 aspects of environmental risk exposure, management quality and business development. Investor risk exposure related to environmental issues is growing due to factors such as increasing regulation, growing consumer demands for environmentally responsible products and services, increasing public concerns about global warming and other environmental problems, and expanding information transparency through the internet, which makes it easier for stakeholders to identify a firm’s negative impacts on the environment.

Bristol Myers Squibb (BMY) achieved the top ranking with Innovest despite the fact that the company saw its stock drop by over 60%. During the last year, Bristol-Myers Squibb along with others in the industry have issued profit warnings because of expired patents, risky business deals with biotechnology companies and a lack of approved new drugs. (Bristol-Myers invested $2bn in ImClone in August 2001, hoping to develop a promising colon cancer drug, which was rejected by the FDA in December 2002.) In spite of a dismal six months for the company, Innovest still believes that Bristol-Myers Squibb is likely to rebound to pre-crisis levels due to a superior quality of management and strategic integration of environmental sustainability issues, as detected by Innovest proprietary EcoValue21® rating model.

Bristol-Myers considers that constructive action to support a clean and healthy environment is essential to achieving its corporate goals. Its environmental management system covers all aspects of the entire value chain. BMY already has 22 sites ISO14001 certified and more in the pipeline. It has an integrated environmental accounting system that allows for cost/benefit analysis of its EHS initiatives. BMY is also one of the few companies with a public policy addressing environmental and ethical issues associated with bio-prospecting.

At the other end of the spectrum, Elan Corporation obtained the lowest rating with EcoValue21®, Innovest’s proprietary analysis platform. Elan is an environmental laggard in its sector, as reflected by the company's incapacity to communicate anything about the state of environmental management and practices at its facilities. This demonstrates a lack of corporate vision and pro-activeness in creating strategic profit opportunities. Elan-Corporation obtained a ‘CCC’, Innovest’s lowest Eco-Value21® rating.

Innovest Strategic Value Advisors is an internationally recognized independent investment research firm specializing in environmental finance and investment opportunities. Innovest’s clients include the leading industrial companies and institutional investors throughout the world. Founded in 1995 by Dr. Matthew Kiernan, Innovest is headquartered in New York, with offices in London and Toronto. The company is chaired by Jim Martin, former Chief Investment Officer for North America’s largest pension fund, TIAA-CREF. For further information please visit the company’s website at www.innovestgroup.com

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Innovest Strategic Value Advisors, Inc.

Innovest Strategic Value Advisors, Inc.

Innovest Strategic Value Advisors is an internationally recognized investment research and advisory firm specializing in analyzing companies’ performance on environmental, social, and strategic governance issues, with a particular focus on their impact on competitiveness, profitability, and share price performance. Innovest currently has offices in New York City, Toronto, San Francisco, London, Paris, Sydney, and Tokyo.

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