Alcohol is not only a widely accepted cultural good, it has, consumed irresponsibly, potentially negative consequences for consumers’ health and the environment. From an ESG perspective, the risks of alcohol and its production need to be considered in investment decisions, shows the Erste AM in their latest ESG letter.
Alcohol-producing companies are already running numerous campaigns on responsible consumptions. Their sustainability efforts aim to forestall government regulations to avoid the fate of the tobacco industry, whose license-to-operate was continuously reduced, explains Dominik Benedikt, Senior Research Analyst at Erste AM. Within a sustainable business model, consumption needs to be moderated.
Sustainable investors also need to consider the role of production and its impact on the environment. Here, Benedikt sees problems regarding high water consumption, the impact of biodiversity, and the producer’s carbon footprint. Especially climate change threatens the supply of raw materials along the complete value chain.
Sustainable investors must consider a range of criteria when evaluating alcohol-producing companies. In its ESG Letter on Alcohol, the Erste AM shows how investors can actively contribute to driving sustainability programmes.