A lesson in the realities of ESG – from reality TV

A business may be the equivalent of the most-watched TV show in the world but, if our process suggests it is too risky in environmental, social and governance or ‘ESG’ terms, we will reach for the remote



Kevin Murphy
Co-head Global Value Team

Congratulations, then, to Amber and Greg for seeing off the considerable threat of bookie’s favourites Mollie-Mae and Tommy on Monday night to emerge as winners of the most recent series of Love Island.

Earlier that day, achieving rather less notice than the surprise result of another UK-based vote, came media regulator Ofcom’s announcement of plans to protect reality TV participants.

In addition to programme-makers and broadcasters having to take due care with the “welfare, wellbeing and dignity” of participants, they will also have to ensure members of the public are not “caused unjustified distress or anxiety by taking part in programmes or by the broadcast of those programmes”.

The code looks set to apply to almost all radio and television programmes other than dramas, sitcoms and soap operas.

This is both commendable and timely as, to judge by recent media allegations, the behaviour of some reality TV makers has left a lot to be desired.

Some unsettling stories have been met with some robust denials by those responsible for a number of the UK’s most popular TV programmes – and indeed the Ofcom proposals appear to have been developed partly in response to the death of a participant on The Jeremy Kyle Show.


If you find yourself wondering what on earth could lead The Value Perspective to The Jeremy Kyle Show, which was cancelled in May after 16 series that regularly attracted a million-plus viewers a day, the short answer is ‘ESG’.

The slightly longer answer is the ‘environmental, social and governance’ elements of sustainability those letters stand for and on which some TV shows would appear to have fallen short.

Over the last couple of years, ‘sustainability’ has become quite the buzzword – but that should in no way diminish its significance to investors.

The simple fact is that any business that does not pay sufficient regard to ESG considerations risks becoming unsustainable – which is hardly an attractive prospect from an investment point of view.

Take the ‘S’ element of ESG.

Stakeholder risk is an important consideration for us, here on The Value Perspective, because it encompasses every relationship a business has outside management. It is its customers, its employees, its suppliers and its competition as well as the regulators and governments of wherever it operates and, as such, it is something we think about deeply in relation to every company we analyse.

And while the ‘S’ of ESG takes in everything except management, the ‘G’ is management (ok, Governance).

For any business, good governance means ensuring the right people are running the business and that they are paid and incentivised appropriately, with the right checks and balances in place.

Fail on these issues and your business is unlikely to prove sustainable – and it appears the same can be said for certain TV programmes.

In effect, a failure to acknowledge ESG risks was sufficient to end one of the UK’s most-watched daytime television programmes – to ensure it was not sustainable.

Sustainable businesses endure

Here on The Value Perspective, meanwhile, we come across plenty of companies whose business practices suggest they, or at least their current levels of profitability, are unsustainable and therefore the associated risks are too great to invest.

As we have written before in article such as Forget the acronyms, we do not focus on ESG because it is now fashionable to do so but because, in helping us to identify stakeholder and governance risks, we believe it improves investment performance for our clients.

A business may be the equivalent of the most-watched TV show in the world but, if our process suggests it is too risky in ESG terms, we will reach for the remote.

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Kevin Murphy
Co-head Global Value Team


The Value Perspective
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