Samsung Electronics

Driving the sustainability agenda in emerging markets

Our Global Equity ESG strategy aims to invest in companies with a combination of time-tested fundamental and environmental, social and governance (ESG) characteristics that are attractively priced. We believe that companies with a competitive advantage and sustainable business models are likely to offer visibility of earnings growth. This can be demonstrated through our exposure to South Korean consumer and industrial electronic equipment company, Samsung Electronics.

Assessing Samsung Electronics’ long-term prospects

We use the Alpha Model, our proprietary system, to assess the attractiveness of a company across a number of factors – profitability, growth, sentiment, valuation, corporate behaviour, capital structure – over the long term. This combination of proven fundamental characteristics is crucial to our investment approach.

Our assessment of Samsung Electronics using the Alpha Model shows that it is attractively valued for the majority of metrics relative to its peers. The company has a strong balance sheet, positive expected earnings and it has a good and improving QESG score, our proprietary assessment of a company’s ESG characteristics.

As an emerging-market company, it seeks to meet global standards, such as those set out by the Global Reporting Initiative, the Taskforce for Climate-related Financial Disclosures and CDP¹, thereby helping it lead the way in sustainability in the region. In addition, the company’s exposure to a number of the Sustainable Development Goals (SDGs) alongside its Global Goals app help to promote the SDGs and, at the same time, educate consumers.

Engaging to generate ESG outcomes

Alongside our colleagues at EOS at Federated Hermes, we have successfully engaged the company since 2013 on a myriad of issues including capital allocation, board structure and gender diversity, workers’ safety, product safety and supply chain management for cobalt. Indeed, Samsung Electronics has demonstrated a positive approach toward participating in the circular economy, CO₂ emissions and remuneration matters.

For a deep dive into Samsung Electronics’ fundamentals and ESG characteristics, read the full case study here.