ESG Cooling and Corporate Values

“2023 saw a real cooling in chatter around ESG and in some quarters, quite a pronounced attack on what ESG was about.”

— Joe Dubbin, managing director at executive search firm Cripps Leadership Advisors

BHP is shutting a mine (Mt Arthur)  that makes A$2.5 billion a year based on Greta Thunberg’s school project. 

As I have been pointing out, we may well have reached “Peak Pious” and the products that allow society to thrive and function can now come out of the closet like a Trump voter in November. 

This article in today’s WSJ shows the number of ESG Commandants at corporate America is on the wane.

This trend matters enormously to us because there is no way - ever again - we will be able invest in a company on an a forecast ebitda multiple of .8 x for high-quality assets, with a multi decade mine life, managed by a team with an incredible track record of success in their field. 

There is nothing in anyone’s model, pricing forecast or valuation matrix that deals with coal stocks reducing their weighting in the hate index. Think about this, just 1x improvement in the ebitda multiple would more than double the value of Malabar. That would take the company from a forecast .8 x ebitda at current Coal prices to 1.8 x – still a very compelling valuation.

With less paid cheerleaders from the Coal Vilification team, I feel the scenario out lined above is a very likely outcome.