WHEB Commentary

Clare Brook

The Most Sustainable Companies in the World?


Amidst a fanfare one would expect from anything announced at the World Economic Forum in Davos, the Canadian firm Corporate Knights announced its tenth annual list of the world’s most sustainable companies, also known as the Global 100, on Wednesday last week.

A quick glance at the list: http://global100.org/global-100-index/ reveals some surprising constituents.  The world’s most sustainable company, apparently, is Westpac, the Australian bank.  Coming in at number four is Statoil, the Norwegian oil major.  Indeed, oil companies feature heavily in the list, which includes Royal Dutch Shell at no. 51.

A look at the methodology explains a lot:  As it says on the website, Corporate Knights ‘unpackage “corporate sustainability” into its component parts, and stick to the numbers.’  Those ‘numbers’ focus on twelve quantitative key performance indicators that range from water use to safety performance to CEO versus average worker pay.  Many of these indicators are akin to those used by us at WHEB in our assessment of a company’s quality.

However, where our methodology differs markedly from that used by Corporate Knights and a number of similar sustainability rating agencies, is that we believe that the starting point of assessing a company’s sustainability must be what it does rather than how it does it.  If the focus is the ‘how’ rather than the ‘what’, it is possible to include oil majors in your top 100, even if one of your criteria is Carbon Productivity, defined thus: ‘this metric divides a company’s total revenue by total GHG emissions and gives us a sense of how companies are exposed to the new GHG regulatory environment.’  In order to include a company such as Shell in the top 100, one must assume that this criterion looks at a company’s greenhouse gas emissions in the extraction and distribution of their oil reserves, not – emphatically not – in the greenhouse gas emissions created by combusting that oil.

The extent to which this does not capture the complete picture of a company’s sustainability is misleading, not just because it lauds companies which are continuing to cause rather than solve the most serious problems facing the planet, but if an index like this directs investment towards those companies, investors will be misled into believing that a company such as Shell will be a beneficiary of ‘the new GHG regulatory environment’ when this is far from the case – unless Shell substantially changes its business model and leaves its oil reserves untouched in the ground and unburned.

It is surprising that indices such as the Global 100 still continue to get so much attention and coverage (presumably it is the companies they celebrate who love them so much).  We have surely moved on from the days of ‘best in class’ where companies making efforts in how they operate were applauded, while ignoring what it is that they actually sell.  These days, good corporate responsibility is simply part of good business.  The companies who should be top of the ratings tables are those who are actually – and often without much fanfare – getting on with the serious business of providing solutions to our major crises of climate change, water shortages and pollution.

 

Recent posts

  • This year’s new killer
  • Seeing the bigger picture – Cooper Companies and myopia
  • What does 2020 hold for sustainable investing?
  • Politics playing catch-up on climate change
  • The great smog; London’s dirty air
  • Lessons from Woodford
  • Varian and the changing nature of cancer care
  • The bigger picture; declaring a climate emergency
  • Better out of it: the price of oil politics
  • Greta gets clean away
  • Archive

  • February 2020 (2)
  • January 2020 (1)
  • December 2019 (1)
  • November 2019 (2)
  • October 2019 (3)
  • September 2019 (1)
  • August 2019 (2)
  • July 2019 (3)
  • June 2019 (2)
  • May 2019 (3)
  • April 2019 (1)
  • March 2019 (1)
  • February 2019 (2)
  • January 2019 (3)
  • December 2018 (1)
  • November 2018 (2)
  • October 2018 (4)
  • September 2018 (2)
  • August 2018 (4)
  • July 2018 (1)
  • June 2018 (1)
  • May 2018 (1)
  • April 2018 (2)
  • March 2018 (2)
  • February 2018 (1)
  • January 2018 (1)
  • December 2017 (3)
  • November 2017 (1)
  • July 2017 (3)
  • June 2017 (1)
  • May 2017 (1)
  • April 2017 (1)
  • February 2017 (2)
  • November 2016 (1)
  • August 2016 (1)
  • July 2016 (1)
  • June 2016 (1)
  • May 2016 (1)
  • April 2016 (2)
  • February 2016 (1)
  • December 2015 (1)
  • November 2015 (3)
  • October 2015 (1)
  • September 2015 (1)
  • July 2015 (2)
  • April 2015 (2)
  • February 2015 (2)
  • December 2014 (2)
  • November 2014 (3)
  • October 2014 (4)
  • August 2014 (1)
  • July 2014 (3)
  • June 2014 (1)
  • April 2014 (2)
  • March 2014 (2)
  • February 2014 (3)
  • January 2014 (4)
  • December 2013 (4)
  • October 2013 (5)
  • September 2013 (3)
  • July 2013 (4)
  • June 2013 (2)
  • May 2013 (4)
  • April 2013 (2)
  • March 2013 (4)
  • February 2013 (6)
  • January 2013 (2)
  • December 2012 (3)
  • November 2012 (1)
  • October 2012 (4)
  • September 2012 (2)
  • August 2012 (1)
  • July 2012 (3)
  • June 2012 (3)
  • May 2012 (6)
  • April 2012 (4)
  • March 2012 (5)