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Oddo Securities ESG Integration Case Solution

Solution Id Length Case Author Case Publisher
2263 648 Words (3 Pages) George Serafeim, Paul M. Healy, Aldo Sesia Harvard Business School : 111085
This solution includes: A Word File A Word File

The financial performance of France Telcom was satisfactory in 2007 however the indicators slightly weakened during the subsequent year. The company's gross margin declined from 23% in 2007 to 19.7% in 2008. This shows that the cost of sales increase substantially during 2008 whereby the growth in revenue was only 0.3%. As a result of the upwards shift in direct cost, the NOPAT margin also decreased from 18.4% in 2007 to 12.3% in 2008. Pertinent to mention that the company has reported significant improvement i9n profitability in 2007 as compared to 2006 however did not seem to hold the profitability trend in the period under review. 

Following questions are answered in this case study solution

  1. Compare British Telecom's and France Telecom's financial performance in terms of profitability.

  2. Compare British Telecom's and France Telecom's ESG Performance.

  3. Would you rather invest in British Telecom's or France Telecom's stocks? Briefly explain your decision.

Case Analysis for Oddo Securities ESG Integration Case Solution

British Telecom has reported satisfactory financial performance where profitability indicator is healthy and showing improvement during last three years. The gross margin of the company has improved from 45.5% in 2006 to 55.9% in 2007 on account of effective cost-cutting measures taken by the company. The direct cost of the company is under control even with the increase in revenues the cost remains stable. However, the operating expenses have increased substantially during 2008 from 45.5% in 2007 to 55.9% in 2008 which requires the immediate attention of the management. As a result of a surge in operating expenses, the NOPAT margins have taken a hit and reduced to only 2.4% in 2008 as opposed to 11.6% in 2008. 

2. Compare British Telecom's and France Telecom's ESG Performance.

France telecom has a total ESG score of 53.8 as compared to British Telecom which has scored 74.1 considerably higher than France Telecom. France telecom lags behind in the installation of the environmental management system, its products and services have relatedly high impact on the environment and also has more risk of exposure to electromagnetic waves. Moreover, British Telecom has strong compliance with environmental regulations, more established intellectual capital including human resources, organizational, and ecosystems. This shows that British Telecom has satisfactory performance sustainability and societal impact of an investment in the business. In addition, the company has also shown more compliance to the social aspect of ESG. France Telecom has shown lower commitment in regards to sustainability development strategy & corporate governance & business ethics thereby achieving a lower score of 21.5 as compared to 31.3 of British Telecom.

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