With environmental, social, and governance (ESG) factors continuing to gain importance to business investors as evaluation criteria when deciding where to put their money, the rating of these factors by independent bodies is likewise increasing in importance.
It is therefore ever more significant to note when an organization like MSCI, formerly known as Morgan Stanley Capital International, rates a company – and also when it upgrades that rating. Just a year and four months after receiving an A rating from MSCI, LG Display has been upgraded to AA.
This puts LG Display in the highest category of companies in South Korea and also makes it the highest rated among display manufacturers worldwide.
How the grade is made
ESG factors are sometimes referred to as sustainable investment factors because they measure the ways a company takes care of the environment, the society it exists within, and its own leadership.
When an organization like MSCI seeks to determine a rating, it first examines how a company performs as a steward of nature. Then, it looks at its relationships with employees, suppliers, customers, and the communities in which it operates. And finally, it evaluates how the company deals with its own leadership, executive pay, audits, internal controls, and shareholder rights.
MSCI has seven different ratings that it gives out, divided into three categories. AA is in the top category alongside AAA, making LG Display one of the leaders in the electronic equipment, instruments, and components industry.
A resounding endorsement by a trusted benchmark
MSCI evaluated LG Display most favorably in the areas of chemical safety, controversial outsourcing, and opportunities in clean tech.
The company’s high rating in chemical safety indicates that it has a relatively low level of harmful substances in its product portfolio, is least at risk from chemical regulation changes, and makes comparatively strong efforts to develop less harmful chemical alternatives. Regarding controversial outsourcing, LG Display was found to depend on and purchase relatively few of its raw materials from conflict areas while exerting the most effort towards raw material traceability and certification compared to other companies in its industry. Meanwhile, the evaluation for opportunities in clean tech means that LG Display leads its industry in terms of developing clean technologies, starting strategic development initiatives, and generating revenue from clean technologies.
Such evaluations are especially meaningful given that MSCI is a leading U.S. investment bank that provides stock indexes as well as portfolio risk and performance analytics that are used all over the world to aid investment decisions. MSCI first gained international recognition in the 1980s when its indexes became the primary benchmark for companies outside of the U.S. Its ESG evaluation index is seen as the most popular and recognized of its kind in the world. BlackRock, the world’s largest asset manager, notably uses the index as a reference when making investment decisions.
LG Display is determined to continue to provide greater value to its customers and society as a whole through sound and transparent management. The company invites everyone to watch closely as it aims to create a brighter and more hopeful future through its ESG management.
