Are you curious to know which companies care most about sustainability? Here we present the Top-10 most sustainable companies of today’s world.
Using publicly available data, Corporate Knights rates large firms on 14 key measures, evaluating their management of resources, finances and employees. Annual ranking of corporate sustainability performance released each January at the World Economic Forum in Davos, Switzerland. Before diving into the Top10 companies of 2017, let’s have a look at how the ranking works. For the ranking, Corporate Knights considers about 4,000 companies with market values of at least $2 billion. The good thing is that it’s a data driven approach that incentivizes more disclosure and is not based on any subjective judgement of any experts. Companies related to products such as tobacco and defense armament are not qualified for the ranking and companies that are involved in human rights, labour, environmental, anti-trust and community-related violations are also eliminated from the ranking . The ranking is meant to be representative of business sustainability in the current socio-economic context. The following KPIs are used for the scoring:
1) Resource management KPIs such as the company’s revenue relative to its renewable energy use, GHG emissions, water use and non-recyclable or non-reusable waste generated.
2) Financial Management KPIs such as R&D expense percentage of revenue, percentage tax payment, CEO compensation relative to average employee salaries and health of its pension funds
3) Employee management KPIs such as safety performance, employee turnover, gender diversity in top management and clean capitalism pay link.
4) There are some additional KPIs such as Innovation capacity, supplier score and clean air productivity that is its revenue relative to its harmful emissions potential.
Hence it’s quite a comprehensive scoring method that looks at all the three pillars of sustainability, namely environment, economic and social.
Now, let’s look at the Top-10 most sustainable corporations based on this ranking.
Enagás is Spain’s leading natural gas transmission company and Technical Manager of the Spanish gas system with a $7.1 Billion market cap in 2016. Enagas slid down from its score of Number-6 last year to Nomber-10 this year. It scores very well on its clean air productivity score and employee management KPIs, with a decent water and waste productivity score.
DSM is a Dutch multinational active in the fields of health, nutrition and materials with more than 20,000 employees. DSM rises up to number-9 this year from its 23rd place last year. It has the highest waste productivity score in the Top-10 list due to its exemplary waste management policies and practices. It also has a very high score on its leadership diversity and decent score on its innovation, safety and supplier score performance.
8. Johnson & Johnson
Johnson & Johnson is an American multinational medical devices, pharmaceutical and consumer packaged goods manufacturer that employees more than 127 thousand people worldwide. Johnson & Johnson's brands include numerous household names of medications and first aid supplies. The company came up sharply from its last years sustainability ranking of 59 to be number-8 this year. It scores highest in its safety performance score amongst the Top-10 and has an above average score on leadership diversity and clean air productivity score.
Philips is a Dutch technology company headquartered in Amsterdam with primary divisions focused in the areas of electronics, healthcare and lighting. It is one of the largest electronics companies in the world and employs around 105,000 people across more than 60 countries. The company sustainability ranking rose from Number-22 last year to Number-7 this year. Philips had the highest carbon and water productivity score in the Top-10 list and also the highest innovation capacity score with about 8% of its revenue devoted to Research & Development. It however scores poorly on its employee turnover.
6. Commonwealth Bank of Australia
The Commonwealth Bank of Australia is an Australian multinational bank with businesses across New Zealand, Fiji, Asia, USA and the United Kingdom. It has more than 45,000 employees worldwide. It slid down from Number-4 last year to Number-6 this year. It scores very high in its tax percentage score and leadership diversity with a number of female top executives. It also has an above average energy productivity score.
5. ING Group
ING group is a Dutch multinational banking and financial services corporation headquartered in Amsterdam with about 85,000 employees worldwide. Its primary businesses are retail banking, direct banking, commercial banking, investment banking, asset management, and insurance services. The bank came up to number-5 this year from the 45th place last year and also has a strong Dow Jones Sustainability index ranking. ING has the highest carbon productivity score amongst the Top-10 and it has a commitment to 100% renewable energy powered buildings by 2020. It scores poorly on leadership diversity score.
4. Danske Bank
Danske Bank is a Danish bank and a major retail bank in the northern European region with over 5 million retail customers. It has the highest percentage tax paid score and also the highest pension funds management score amongst the Top-10 sustainable corporations. It scores poorly in its leadership diversity score, but does well in its carbon and water productivity score.
Cisco is an American multinational technology conglomerate that develops, manufactures, and sells networking hardware, telecommunications equipment, and other high-technology services and products. It has around 72,000 employees worldwide. Cisco rose sharply in its sustainability ranking from number-57 last year to number-3 this year. It has the highest and a perfect 100% energy productivity score. 100% of its electricity usage in the United States and 77% of its global electricity consumption is powered by green energy, mainly solar and wind. It also has a very high score on its leadership diversity and supplier score. 38% of Cisco’s senior executives are women. It scores poorly on its CEO-Average Worker Pay Score compared to its peers.
Storebrand is a financial services company in Norway. By volume, the company's main activities are related to life insurance and pension savings. In 2008, Storebrand became Norway’s first completely climate neutral financial group. Its sustainability ranking rose from number-24 last year to number-2 this year. It has the highest CEO-Average Worker Pay Score and also very high leadership diversity and employee turnover score. Storebrand’s CEO gets paid just 12 times more than the average Storebrand employee. The Storebrand Group is making a concerted effort to channel funds towards environmentally friendly solutions and exclude companies based on their poor environmental record.
Siemens is a German conglomerate company and the largest manufacturing and electronics company in Europe with branch offices abroad. The principal divisions of the company are Industry, Energy, Healthcare, and Infrastructure & Cities, which represent the main activities of the company. It has more than 350,000 employees worldwide. Siemens rose from number-42 to the top spot in this sustainability ranking this year. It was the most energy-efficient firm in its sector, producing more revenue per kilowatt-hour used than any other industrial corporation. Siemens scored highly on nearly every metric in the ranking, such as having a low carbon footprint and low employee turnover. The conglomerate is also dedicating a growing portion of its business to creating environmentally friendly infrastructure, with products like green heating and air conditioning systems.
The surprising part about this sustainability ranking was that many of the Top-10 ranked companies of last year fell below the Top-10 this year. Notable, BMW who was the Number-1 last year fell to Number-16 and companies such as Adidas and Outotec fell down considerably in the ranking. Two companies from Singapore, namely City Development Limited and Starhub were also in the Top-10 spots last year, but fell down to number-30 and number-69 respectively this year. This goes to show that sustainability is not a once-off thing and companies should strive hard to maintain their sustainability leadership position in times of growing climate adversities and lack of political will to prioritize climate change related issues in large economies such as the United States.