sustainability
fashion retail
earning per share (EPS)
Área
Artigos Aplicados
Tema
Gestão Socioambiental
Autores
Nome
1 - David Douek Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo - FEA - Administração
2 - Francisco Javier Sebastian Mendizabal Alvarez UNIVERSIDADE DE SÃO PAULO (USP) - Escola de Artes Ciências e Humanidades (EACH)
3 - Claudio Felisoni de Angelo UNIVERSIDADE DE SÃO PAULO (USP) - FEA
Reumo
The fashion industry has long been criticized for its social and environmental impact. To address this problem a new sustainability index has been proposed. This article discusses the relationship of this index with investments in fashion listed companies within a Covid-19 background.
Sustainability has long been presented as a basic requirement for the survival of companies in the future. To track sustainability in the fashion industry, which accounts for a 3.5 trillion dollars market (according to a research carried out McKinsey) an index was created by the Business of Fashion (BoF). However, the level of commitment with sustainability of the biggest players in this sector varies considerably and, in the first BoF first report, scores were low. The question that this context rises is: should investment decision be based on this index?
The problem to be addressed is the relationship between the BoF sustainability index and the financial results calculated by earnings per share (EPS) of the stocks of fifteen listed companies of the fashion industry. The reason behind the comparison is to understand if the proposed index could be used as decision tool.
To pursue the goal of analyzing the relationship between the sustainability score and the financial performance, the recently created Business of Fashion (BoF) sustainability index is compared to the earnings per share (EPS) disclosed annually. The companies researched are: Kering, PVH Corp, Hermès International, LVMH, Richemont, H&M group, Levi Strauss & Co, Inditex, Gap Inc, Fast retailing, Nike, Puma, VF Corp, Adidas and Under Armour.
The analysis indicates a lack of correlation between the index and the earning per share (EPS) of the studied companies. However, the existence of an outlier, which has the lowest score and the worst earning er share (EPS) could be considered as an indicator that if there is no guarantee that lower levels of sustainability mean low returns, investing in companies that disregard sustainability might mean bad investment decisions.
This paper contribution to two research areas: sustainability and investment decisions by providing a comparison between a sustainability index and the earnings per share (EPS) of fifteen listed companies.