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Sector Reports - 05/10/2018

The Mechanical Components & Equipment sector: limited overall ESG performance with sector leaders concentrated in Europe

With an overall weak climate change & energy transition score, 28% of companies showing an adverse or highly adverse contribution to the Sustainable Development Goals and 27% of the companies facing ESG controversies, the Mechanical Components and Equipment sector ranks 22nd out of Vigeo Eiris 39 sectors.

Key Findings:

  • The Mechanical Components and Equipment sector contains companies engaged in metalwork, manufacturing of industrial equipment and machines, precision equipment, elevators and escalators, packaging, transportation equipment and leisure good parts and components.
  • Vigeo Eiris awarded an average overall score of 30 to companies in the Mechanical Components and Equipment sector, on a scale of 0 to 100. The sector’s performance remains unchanged since our previous analysis.
  • The sector ranks 22nd out of Vigeo Eiris’ 39 sectors, from a total research universe of 4,500 companies.
  • Sector leaders are concentrated in Europe, whilst laggards are mostly listed in Emerging Markets and North America.
  • The Mechanical Components and Equipment sector disclosure rate is 61%, which is above the universe average (55%). European companies are most transparent on this topic.
  • ESG risk mitigation scores are limited in relation to reputation (31/100) and operational efficiency (32/100), and weak in relation to human capital (29/100). In terms of managing issues affecting legal security, Mechanical Components and Equipment companies display a limited average score (32/100), in line with the universe average (32/100).
  • The willingness and capacity of the sector to tackle climate change and support the transition to a low-carbon economy remains weak (24/100). Some European companies stand out, leading the sector in efforts to adapt their business model and manage the risks and opportunities associated with the transition to a low-carbon economy.
  • 11% of Mechanical Components and Equipment companies display a major or significant level of involvement in sustainable products and services, such as sustainable transportation and renewable energy technologies. However, approximately one-third (28%) of the companies show an adverse or highly adverse contribution to the Sustainable Development Goals.
  • The sector faces 39 controversies, one of which is critical. For companies facing controversies, the severity level is critical for 1%, high for 11%, significant for 11% and minor for 4%. The most frequent controversies relate to anti-competitive practices and corruption. 73% of companies do not face any controversies.

Takeaways

  • The Mechanical Components and Equipment sector makes extensive use of recyclable and reusable raw materials such as metals, glass and plastic and could play a key role in the transition towards a circular economy. However, the sector’s overall performance on environmental strategy and eco-design is limited and companies’ efforts to minimise the environmental impacts from their products’ use and disposal are weak.
  • Mechanical Components and Equipment companies are highly vulnerable to the risk of conflict minerals entering their supply chain and are subject to evolving legislation on the matter. Only 12% of companies in the panel have a specific policy on conflict minerals, whilst 21% of companies report on conflict minerals due diligence.
  • Hiring subcontract and precarious workers is a rising global trend which may weaken social dialogue and the respect of fundamental labour rights. Only 6.7% of Mechanical Components and Equipment companies in the sector currently report on the ratio of contract workers in their total workforce.
  • The Fourth Industrial Revolution is innovating the way companies do business and Mechanical Components and Equipment companies have started to embrace opportunities arising from this Revolution: for example by investing in R&D despite facing related risks such as business model disruption and a loss of jobs.
  • Occupational and product safety is a key issue for the sector and, although only few companies are involved in related controversies, companies in the sector display a weak average performance with regards to product safety and a limited average performance on health and safety issues.

Best performing areas:

  • Shareholders
  • Audit and Internal Controls
  • Environmental strategy

Worst performing areas:

  • Atmospheric emissions
  • Use and disposal of products
  • Water

Top Performing Companies:

  • Europe: SKF (57/100)
  • North America: Owens-Illinois (37/100)
  • Asia Pacific: NSK (51/100)
  • Emerging Markets: WEG ON (35/100)

Companies making best progress since 2017:

  • Europe: DS Smith (+9)
  • North America: No progress
  • Asia Pacific: Disco; NSK (+8)
  • Emerging Markets: No progress

To view an excerpt of our 2018 Mechanical Components and Equipment sector report, download the document below.
To enquire about accessing our sector reports, please contact the relevant team below:
If you are an investor: investorcustomer.service@vigeo-eiris.com
If you are a corporate entity: corporatecustomer.service@vigeo-eiris.com
If you are an NGO or a university: contact.academique@vigeo-eiris.com
If you are a journalist: news@vigeo-eiris.com

Download :
icon-download-34x36 Key Findings_Mechanical Components and Equiment_August 2018
Keywords : ESG