Join our community of smart investors

ESG: The next big fraud?

Megan Boxall examines what 2021 could reveal when the tide washes out
ESG: The next big fraud?
  • Governance is a hard quality to measure, but rating a company’s environmental and social impact is even more challenging
  • Boohoo is not the only ‘green pioneer’ to face the wrath of the short sellers in 2020

 

Is there a greater corporate red flag than management who refuse to answer valid investor questions about the longevity of the business over which they preside? Those that are happy to send out PR representatives when pesky journalists come calling, but cannot find the time to explain how they plan to spend investors’ cash to grow the business.

A carefully engineered management smokescreen was chief among the sins that contributed to the eventual unravelling of Wirecard earlier this year. When a Financial Times investigation in early 2019 found that an executive in the payment processor’s Asia-Pacific division had been suspected of using forged contracts, management plagued the journalists with legal threats and allegations of collusion. In June 2020, those journalists were vindicated when Wirecard’s auditor admitted that it could not locate €1.9bn of cash. 

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in