According to a new report by Morgan Stanley analyst Jay Sole, Nike Inc NKE, Hanesbrands Inc. HBI and VF Corp VFC are the top companies among apparel and footwear names when it comes to managing environmental, social and governance (ESG) issues. The three companies scored highest on the Sole Sustainability Index (SSI), and Morgan Stanley upped its price targets for all three names.
What Is The SSI?
The SSI is Morgan Stanley’s attempt to provide quantifiable data on hard-to-measure ESG performance. “A company’s SSI score is primarily driven by disclosure quality, plus the existence of targets and trends,” Sole explained.
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Top Performers
Sole praises Nike, Hanesbrands and VF Corp for environmental initiatives such as limiting water usage, reducing waste and conserving raw materials. On the social side, each company has made efforts to manage its supply chain and engage with local communities. Finally, the companies’ internal governance indicates that each takes sustainability extremely seriously and has demonstrated this commitment consistently in recent years.
Other Top Names
Although Sole focuses on the top three names in the report, other companies also demonstrated high SSI scores. PVH Corp PVH, Deckers Outdoor Corp DECK and Columbia Sportswear Co COLM round out the top six scorers.
Outlook
Morgan Stanley currently has Overweight ratings on Nike and Hanesbrands and an Equal-Weight rating on VF Corp. The firm now has a $119 target for Nike, a $36 target for Hanesbrands ad a $77.50 target for VF Corp.
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