Good Cop, Good Cop

Put aside the financials for a moment and consider: what makes a good or a bad company?
This article appeared in Vol. 17, No. 6 - 2020


Good Cop, Good Cop

Put aside the financials for a moment and consider what makes a good or a bad company. A good company comes up with the next arthritis drug and a bad company is in the arms trade. Too simplistic? A good company invests in the local community while a bad company invests in influence. Too nuanced? Perhaps – and indeed charges of bribery could be just around the corner.

Good companies, in the traditional sense, deliver good returns for their shareholders, whether they are refining oil or making baby wipes. Good companies do whatever it is they do responsibly. Targeting zero fatalities is a given for the responsible oil company but so too is carbon reduction and for some a tentative step away from fossil fuels altogether. 

The Finnish oil company Neste, which was founded in 1948 to protect its country’s oil supply, goes one step further. “We have a purpose to create a healthier planet for our children,” said Salla Ahonen, the company’s VP for Sustainability, somewhat disarmingly at a recent Frontier Energy event. “This is why the company exists.”

  • Neste’s renewable diesel (left) burns cleaner that its fossil neighbour. © Neste.

Gosh! Here is an oil company, albeit partially state-owned, whose primary aim is to make the world a healthier place. In Neste’s case this is ostensibly being achieved by moving toward renewable raw materials: for example waste fish fat – Finnish to the core – used cooking oil and fat from food industry waste. According to Ahonen, the company now makes 80% of its profits from renewable diesel businesses for road transport, aviation and shipping. Not content with this, “We’re hoping to process a million tonnes of waste plastic annually from 2030 onwards,” she says, “and we want to help customers reduce Greenhouse Gas emissions by 20 million tonnes by 2030.”

With revenues of €15.8 billion in 2019, you could say that Neste is a good company on all fronts. They are on an already eventful transition journey and, adds Ahonen, “our investment decisions are designed to support carbon neutral growth.” This would arguably be good news for the 300 institutional investors who took part in a recent EY survey on ethical investment. The survey reveals that investors want more disclosure around Environmental Social and Governance (ESG) risks. They want to see a positive response, for example, to climate change risk, and they want a plan of action in place. Good profits yes, but the good company ethos must go hand in hand.


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