Sustainable businesses – Global 100

I googled “sustainable companies” the other day and found two articles from forbes.com: “Ranking The World’s Most Sustainable Companies” and “The World’s Most Sustainable Companies” published on 27th of January 2010 and 23rd of January 2013 respectively.

Both of the articles referred to Corporate Knights’ yearly ranking of the world’s most sustainable companies. The top-10 companies for 2010 and 2013 are shown below.

2010: S1

2013:

S2

Some remarks:

  • 2010: 8 out of the top ten from Europe, rest from the US
  • 2013: 7 out of the top ten from Europe – number 2 from Brazil
  • none of the companies from 2010 have made it to the top ten in 2013
  • Nokia and Neste Oil have both made it to the top 5
  • the lists contain companies from industries which usually are not closely linked to sustainability such as energy, clothing and transportation

For the 2010 ranking the companies on the list were initially chosen from 3000 publicly traded companies which were first narrowed down to 300 according to their financial performance among other things. Next these 300 companies were ranked based on their scores from 11 environmental, social, governance, and transparency metrics. The metrics included for instance CEO-to-average-worker pay ratio, energy productivity, and waste productivity.

By 2013 the amount of companies had increased; 350 companies were picked out of 4000 publicly traded companies again according to their financial performance as well as their sustainability disclosure practices. The final ranking was based on similar metrics as mentioned in 2010 and the companies were evaluated relative to other companies operating in the same industry.

I think it is good that this kind of rankings exist, yet it is a little bit questionable for instance to name H&M world’s 4th most sustainable company (in 2010)  when the company’s business idea is based on cheap, fast fashion which in my opinion does not meet the requirements for sustainability in the long run. This year’s number one Umicore, however, seems to have earned its first place as the company operates in a sustainable manner and additionally sells products that help other companies to improve their sustainability.

 

Sources:

http://www.forbes.com/2010/01/26/most-sustainable-companies-leadership-citizenship-100.html

http://www.forbes.com/sites/jacquelynsmith/2013/01/23/the-worlds-most-sustainable-companies/

http://www.global100.org/methodology.html

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2 comments
  1. Thanks, Lotta, for you post! I have seen this ranking before, but I haven’t actually had a look at it for quite some time. You already pointed out that it is strange to find H&M in the list, as well as e.g. energy companies, which was also what puzzled me most about this ranking. In the article that goes with the ranking, Forbes quotes the editor-in-chief of the agency who created the ranking, saying “In business, sustainability is when what is good for a company is also good for the planet, and vice-versa”.

    So how can a company based on buy-use-waste (H&M), fossil fuels (Neste, Statoil) or defense (Dassault Systèmes SA; I don’t know if they are directly producing or providing services to the defense industry, but belonging to the Dassault group, I suppose they do) be good for the company? To find out more about this paradox, I looked into how this ranking was created.
    12 criteria are being used (see link below), including four productivity indicators (turnover per unit of energy, carbon, water & waste), social indicators (new: employee turnover), diversity (in management) and anti-corruption. This seems sound and reminded me of the 10 Global Compact Principles. Each company is then compared to the competition within its own industry, thus eliminating the influence of criteria which have a stronger impact for specific industries, such as safety performance.

    This methodology has at least two weaknesses: first, different industries are intentionally put together to be able to publish one big list instead of many small ones. This makes it probably easier to get attention, as one list is easier to report in the media. However, it also implies that Statoil, a company extracting oil to sell it for combustion (and pollution) is more sustainable than Novo Nordisk (a pharmaceutical company famous for its sustainability efforts) or even Westpac Banking, a service provider. This can simply not be true, due to the different nature of these businesses. It may not be the message intended by the authors, but it certainly will be the message communicated by the media quoting the ranking.
    Second, there is a strong focus on figures. Biodiversity, often one of the important criteria when assessing a company’s sustainability performance, is left out. Also, only impacts directly created by the company itself are being considered (at least as far as I can tell), but no impacts upstream in the supply chain or downstream in the usage phase. And for many companies these are the crucial steps in the value chain where impact is generated.

    Drawing to a close, I appreciate the importance of having a sustainability ranking and I am sure many of the companies on that list have earned their space there. I am also not saying that Statoil is not better than its competition. But it is misleading to compare different industries with each other. So when quoting the study, it is a safer bet to rely on the rankings for each individual industry.

    http://www.global100.org/methodology/selection-criteria.html

  2. angelinakt said:

    Very good points about sustainability rankings. Often they are ambivalent, and it seems that their best use is for the media. In addition to what you both noted, it provides a biased outlook because only big companies get to be assessed in this ranking. So, one gets the idea that to be truly sustainable the company needs to make it big!

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