The ethical and governance issues faced by investors are making headlines at the moment, thanks to the scandal that’s embroiled Boohoo. The online fast fashion retailer is alleged to have contracted work to Leicester companies paying employees less than the minimum wage. 

The ethical ins and outs of Boohoo stock were discussed at length in the comments to Monday’s SCVR. If nothing else, I think these events are a useful reminder of how difficult it is to define a widely acceptable set of criteria for ESG investing (Environmental, Social and Governance). 

It’s food for thought. Fortunately, I don’t take a fixed stance on ESG issues in the SIF portfolio, which is run according to a set of financial rules. With that in mind, let’s move on to this week’s stock, agricultural supplier Wynnstay (LON:WYN).

A safe bet for ESG investors?

As a UK-based agricultural supply company that’s been supporting British farmers with things like feed and fertiliser for over 100 years, you’d probably expect Wynnstay to score well on ESG issues. 

I wouldn’t necessarily disagree with this view. But I think it’s fair to say that many environmentalists would argue that the modern farming industry - especially meat and dairy - contributes heavily to problems such as river pollution, environmental damage, food inequality and excess carbon emissions. Maybe not so great in ESG terms?

That’s a debate for another day. What interests me now is that AIM-listed Wynnstay appears to tick all the boxes in my full-strength SIF screen. It even boasts a 4.6% dividend yield, recently confirmed!

Cheap, defensive and durable?

For a £60m firm in a rather dull and defensive line of business, Wynnstay has had a lot of coverage recently on Stockopedia

  • 24 March 2020: Jack commented on Wynnstay in the SCVR, noting early signs of improving momentum and strong value metrics, despite low margins.

  • 15 June 2020: Jack revisited Wynnstay in a feature looking at quality dividend stocks. An apparently solid dividend is a key attraction for me, too.

  • 24 June 2020: Paul mentioned the firm’s half-year results in the SCVR. He commented that strong trading in a difficult period suggested Wynnstay might be worth a closer look.

I have to admit this stock has flown below the radar for me due to its small size.…

Unlock this Article with a 14 day free trial

or Unlock with your email

Already have an account?
Login here