A very boozy Christmas

A very boozy Christmas
A very boozy Christmas
© iStock
Share post:

Who doesn’t know it – sitting together in a boisterous atmosphere, with a glass of champagne in your hand. Or two. Christmas is the celebration of joy, of Christmas markets, and of excessive alcohol consumption: a good reason for us to dedicate this ESG Letter to the topic of alcohol.

When you talk to someone about sustainability, the answer is often that an investor has to forego a certain amount of yield for sustainable forms of investments, with the Vice Fund almost inevitably serving as evidence: a US fund that invests exclusively in tobacco, gambling, arms, and alcohol companies. The message behind it seems clear: an investment in alcohol is obviously the exact opposite of a sustainable (responsible) investment.

What are the main issues in terms of sustainability when it comes to alcohol? The first one is definitely the issue of the social responsibility of companies as they are handling alcohol. The company faces the question of responsibility from a multitude of angles.

Alcopops and binge drinking

Let’s discuss the issue of alcohol marketing. Who is the target? How is alcohol portrayed? Are there products that target certain groups in particular who should actually not be drinking alcohol or who are at risk of developing a problematic consumer pattern? Just think of the intensive discussion about alcopops and binge drinking a few years ago, which was all about those questions.

Another issue is the access to alcohol. In Austria, the law stipulates who has access to alcohol. How compliant are companies? This question concerns more the retail sector and the hotel, gastronomy, and leisure industry rather than the producing sector. This is not simple at all, given that one has to weigh social against corporate responsibility. Even better if companies succeed in this tightrope walk and take responsibility.

Alcohol is challenging to businesses also because many are directly affected by alcohol abuse. According to estimates, 4 to 6% of the Austrian population suffer from alcoholism. This means that statistically, more than 10,000 enterprises have at least one alcoholic among the staff. That, too, is a challenge for businesses from a social and economic perspective.

This adds to the challenges in production. 200 years ago, working on a sugar cane plantation was tantamount to a death sentence. Hardly anyone would survive that sort of work for more than a few years. While we are luckily past those days, the sugar cane harvest is still not exactly a walk in the park (N.B. sugar cane is one of the most important raw materials for the production of alcohol). On top of that, there are classic environmental questions that range from the carbon foot print to water consumption and the cultivation of monocultures.

The good thing about alcohol, from a sustainable investor’s point of view, is that one does not need it. Just compare the performance of the Vice Fund over the past five years with our Erste Responsible Stock America, and you will see that vice has not paid off. I hope you will find this ESG Letter informative and exciting, and that it will lift your spirits without the use of spirits.


Gerold Permoser

 

Read more articles from this issue of our ESG letter here.

*ESG stands for Environmental, Social and Governance“ – These are the three broad categories according to which companies are examined in sustainable investment.

 

Legal note:
Prognoses are no reliable indicator for future performance.

DOSSIER

RESPOND TO THE ARTICLE

Legal disclaimer

This document is an advertisement. All data is sourced from Erste Asset Management GmbH and ERSTE Immobilien Kapitalanlagegesellschaft m.b.H. unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH and for ERSTE Immobilien Kapitalanlagegesellschaft m.b.H. pursuant to the provisions of the AIFMG in connection with the InvFG 2011 and regarding ERSTE Immobilien Kapitalanlagegesellschaft m.b.H. published in Amtsblatt zur Wiener Zeitung or at the web site www.erste-am.com or www.ersteimmobilien.at.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG and the key investor document/KID can be viewed in their latest versions at the web site www.erste-am.com or www.ersteimmobilien.at or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document/KID is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com or www.ersteimmobilien.at.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.