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Wells Fargo fraud, Samsung recalls, and Enbridge offer on Spectra

September 29, 2016

Welcome to MSCI ESG Top Picks Alert. Our team of analysts have hand-selected the latest ESG research and investment insights we think matter to you. 

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In the News

   

  • Wells Fargo's (B, downgrade) recent settlement for 180M highlights internal control lapses and incentive misalignment for front line employees which permitted fraudulent activity since 2011. Our ongoing tracking of customer complaints reveals that, of the top US banks, Wells Fargo has most complaints issued since 2012 (per billion gross assets). This indicates the company is more likely at the beginning of customer and regulatory attention rather than the end.

   

  • As part of the Samsung Galaxy 7 recall, Samsung Electronics (AA, maintain) will move from sourcing batteries from SDI (a subsidary) to a Chinese battery maker. Over the long term the company's incentive is to return to Samsung SDI as a battery provider given the highly interconnected relationship between Samsung, Samsung SDI, and the 65 other Lee family controlled companies

   

  • Enbridge (A, maintain) announced on September 6th an agreement to purchase Spectra Energy (AA, maintain) in a USD 28B deal. The deal will allow Enbridge to access Spectra's natural gas asset network and hence its lower carbon risk profile.  However, it may elevate the firm's exposure to methane emissions regulations being proposed by the U.S. EPA in 2016.

   

       

 

SPOTLIGHT CHART
A key tenet of “Abenomics” has been increasing the capitalization rate of women in the workforce, but structural barriers are significant.  From our report, Measuring the Sustainability of Abenomics: “In sectors such as Energy and Materials, roughly 2% of managers were women. Our analysis indicated that many companies in these sectors are headquartered in regions facing severe child care shortages, making it difficult to retain and develop the already small pool of female staff (13% of staff for Energy, and 11% for Materials).”
 
*All letter ratings in this alert refer to MSCI ESG Ratings. MSCI ESG Ratings range from AAA-CCC.
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