Economic forum recognizes corporate leadership in environmental performance
Five Canadian organizations already known for their environmentally responsible policies and practices have been included in the second annual Global 100 Most Sustainable Corporations in the World. Released at the World Economic Forum in Davos, Switzerland, the list includes: Alcan (metals and mining sector); Enbridge (oil, gas and consumable fuels); Royal Bank of Canada (RBC, commercial banking); Sun Life Financial (insurance); and TransAlta (independent power producers and energy traders).
The Global 100 list was launched at last year's World Economic Forum. For Alcan, the 2006 ranking marks its second consecutive year at the top of the metals and mining sector. "Being recognized as best-in-class every year since the Global 100's launch is a credit to the hard work Alcan and its employees are doing everyday in addressing economic, social, and environmental challenges and opportunities and making sustainability a leading priority," company president and CEO Travis Engen commented.
This ranking is compiled by Innovest Strategic Value Advisors (www.innovestgroup.com), an environmental investment research advisory firm based in New York, Toronto and London. Founded and headed by Dr Matthew Kiernan, former director of the Business Council for Sustainable Development, Innovest specializes in analyzing non-traditional drivers of risk and shareholder value, including companies' performance on social, environmental and strategic governance issues.
The firm serves as the exclusive research analytic data provider for the Global 100 and also co-ordinates the research for the global Carbon Disclosure Project (CDP), which in its third year, has come to represent 155 investors with assets of $21 trillion.
To qualify for inclusion on the Global 100, a company must display a better ability than most of its industry peers to determine and effectively manage material environmental, social and governance factors affecting both the opportunity and risk aspects of its business.
Each year, Innovest screens 1,800 companies forming the reference MSCI World Index (Morgan Stanley Capital International, a major provider of equity, fixed income and hedge fund indices). Only the top 5% best performing companies make it to the final ranking.
The Global 100 project is a partnership between Innovest and Corporate Knights (www.corporateknights.ca), a Toronto-based media company and publisher of Corporate Knights, a magazine with explicit focus on corporate social and environmental responsibility. It also publishes the annual Best 50 Corporate Citizens in Canada.
Corporate Knights founder Toby Heaps, who announced the 2006 results, pointed out that "By whittling down over 1,800 firms from around the world to just the top 100 sustainability performers, the Global 100 helps to separate the sustainability pretenders from the sustainability contenders."
Innovest CEO Dr Matthew Kiernan said, "Global companies' performance on ESG (environmental, social and governance) issues is rapidly becoming more critical to their competitiveness, profitability and share price. The Global 100 companies...have already demonstrated that sustainability premium, and we believe that they are positioned to reward their investors even more heavily in the future."
The 2006 Global 100 includes 28 first-time entries, among them Canon, Nike and General Electric. British, U.S. and Japanese companies constitute more than half the list, with 30, 17 and ten entries, respectively. Notably, Sweden, with a population one-thirtieth that of the U.S., had eight companies on the list.
Among the other multinationals on the Global 100 are: Atlas Copco, Baxter International, Coca Cola, Eastman Kodak, Hewlett-Packard, ING Group, Johnson & Johnson, Lafarge, Novartis, Philips Electronics, Ricoh, Smith & Nephew, Stora Enso, Toyota, Unilever, United Parcel Service, Vestas Windsystems and Volvo.
In establishing the Global 100 ranking, Innovest and Corporate Knights acknowledge that it is difficult even to define sustainability with precision, let alone develop an authoritative blueprint for "sustainable behavior." What is clear, however, is that environmental, social and governance factors are increasingly relevant to financial performance. Companies that show superior management of these issues are fast gaining an edge over their competitors, an edge the two partners believe will translate into outperformance in the long term.
The Global 100 companies, therefore, are sustainable in the sense that they have displayed a better ability than most of their industry peers to detect and effectively manage material environmental, social and governance factors affecting both the opportunity and risk aspects of their business.
Finally, the partners say the Global 100 should be of interest to virtually everyone: managers who want to benchmark their company's sustainability performance; investors looking for enlightened companies with long-term business plans; governments looking to attract companies that will enhance their communities; consumers interested in purchasing from environmentally responsible producers; and citizen groups that want to know with which companies they may be able to create productive links.
More information is available on the Global 100 Web site, www.global100.org.