Stock of the Week: Linde

Surprised the world’s largest industrial gas supplier leads the pack on ESG?

Andrew Willis 22 April, 2022 | 9:24AM
Facebook Twitter LinkedIn

 

 

Explore more Stock of the Week episodes here

Andrew Willis: It’s not every day that you come across a gas giant with a negligible ESG Risk Rating. But if companies like Linde (LIN) are pulling it off, they could be pointing the way forward.

Linde is the leader in gas products for industrial purposes, one of the most greenhouse gas-intensive businesses out there – yet a vital necessity for the continuation of business. From oxygen to argon, to hydrogen and helium, factories, refineries and hospitals have few other alternatives to these essential ingredients.

Understandably, Linde’s customers prefer long-term contracts, and are willing to pay a premium to guarantee continuity, which contributes to the company’s economic moat, says equity analyst Krzysztof Smalec. At the same time, these companies are governed by regulatory developments intended to limit their carbon emissions, according to Morningstar Sustainalytics. Industrial gases allow customers to save energy and emissions or help industries thrive in a low-carbon economy, by providing to fuel cell producers, for example.

Linde’s in the commodity business, but their customers need a business partner. It’s no surprise then that the company has a strong emissions reduction programme, declining carbon intensity and executive pay tied to ESG targets. If customers are facing the same existential problems, chances are they’ll want someone who knows what they’re doing.

For Morningstar, I’m Andrew Willis.

Get the Latest Stock Insights in Your Inbox

Subscribe Here

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Linde PLC320.33 USD1.42Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

© Copyright 2022 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy