2023 Global 100/Winter 2023

100 most sustainable companies of 2023 still flourishing in tumultuous times

Meet the latest Global 100 companies driving the transition to a low-carbon, circular economy

 

View top company profile

view previous rankings »

Skip to ranking

• BY Mike Scott

• January 18, 2023

With Russia’s war in Ukraine driving energy prices up to record levels and the world experiencing unprecedented climate disasters, it has never been more important for companies to cut their emissions and double down on sustainability.

This year’s Global 100 ranking of the world’s most sustainable companies, now in its 19th year, reveals that the transition is gathering momentum – and that businesses that take sustainability seriously are flourishing financially.

While the Global 100 is light on oil and gas companies, whose profits have soared because of rising energy prices (Finland’s Neste being the only oil company on the ranking), it still managed to outperform its blue-chip benchmark, MSCI ACWI (All Country World Index), and other ESG indices. While both the Global 100 and ACWI fell somewhat in 2022, since its inception on February 1, 2005, the Global 100 Index has generated a total investment return of 270.7% compared to 222.1% for ACWI.

Ralph Torrie, Corporate Knights’ research director, says rising oil prices have stimulated growth in renewables, smart buildings, electric vehicles and other climate solutions, including circular economy measures. Indeed, the top-ranked company, Schnitzer Steel, is a metals recycler. “Global 100 companies are providing the products and services that are needed for the sustainability transition and that will form the basis of the emerging 21st-century economy,” says Torrie. “They’ve outperformed the market through these last few tumultuous years.

• CONTINUE READING

2023 Global 100 ranking table

2023 G100 Rank	2022 G100 Rank	Company	HQ Location	Carbon Productivity	% Non-Male Board Directors	% Sustainable Revenue	% Sustainable Investment	Final Grade	Climate Commitments
1	15	Schnitzer Steel Industries Inc	Portland, U.S.	$15,928	50%	100%	100%	A+
2	1	Vestas Wind Systems A/S	Aarhus, Denmark	$222,113	42%	100%	100%	A	1.5°C, SBTi
3	10	Brambles Ltd	Sydney, Australia	$156,386	40%	100%	100%	A	1.5°C, SBTi
4		Brookfield Renewable Partners LP	Hamilton, Bermuda	$21,806	33%	99%	100%	A
5	3	Autodesk Inc	San Francisco, U.S.	$456,489	45%	93%	43%	A	1.5°C, SBTi
6	19	Evoqua Water Technologies Corp	Pittsburgh, U.S.	$25,868	33%	100%	100%	A	SBTi
7*	17	Stantec Inc	Edmonton, Canada	$95,950	33%	53%	94%	A-	1.5°C, SBTi
7*	4	Schneider Electric SE	Rueil-Malmaison, France	$142,877	50%	71%	68%	A-
8		Siemens Gamesa Renewable Energy SA	Zamudio, Spain	$514,578	30%	100%	100%	A-	1.5°C, SBTi
9		Taiwan High Speed Rail Corp	Taipei, Taiwan	$7,051	23%	100%	100%	A-
10	9	Dassault Systèmes SE	Vélizy-Villacoublay, France	$498,736	50%	68%	40%	A-	1.5°C, SBTi
12	42	Xinyi Solar Holdings Ltd	Wuhu, China	$843	11%	100%	100%	A-
13	7	Ørsted A/S	Fredericia, Denmark	$5,301	50%	66%	99%	A-	1.5°C, SBTi
14	11	Sims Ltd	Mascot, Australia	$45,238	50%	100%	100%	A-
15	21	Banco do Brasil SA	Brasília, Brazil	$623,504	38%	24%		A-	1.5°C, SBTi
16		Rockwool A/S	Hedehusene, Denmark	$2,350	50%	85%	70%	A-	SBTi
17	12	Johnson Controls International PLC	Cork, Ireland	$35,632	27%	54%	61%	A-	1.5°C, SBTi
18	2	Chr Hansen Holding A/S	Hørsholm, Denmark	$43,041	50%	20%	97%	B+	1.5°C, SBTi
19		Kone Oyj	Espoo, Finland	$734,717	38%	67%	7%	B+	SBTi
20	18	Cascades Inc	Kingsey Falls, Canada	$4,198	50%	92%	80%	B+	SBTi
21	8	Atlantica Sustainable Infrastructure PLC	Brentford, U.K.	$596	25%	84%	91%	B+	SBTi
22	14	McCormick & Company Inc	Hunt Valley, U.S.	$65,393	36%	49%	7%	B+	1.5°C, SBTi
23	35	Novozymes A/S	Bagsvaerd, Denmark	$8,853	27%	53%	11%	B+	1.5°C, SBTi
24	25	Iberdrola SA	Bilbao, Spain	$3,712	43%	72%	85%	B+	1.5°C, SBTi
25	84	BT Group PLC	London, U.K.	$41,583	42%	57%	38%	B+	1.5°C, SBTi
26	36	Alphabet Inc	Mountain View, U.S.	$38,910	27%	89%	6%	B+	SBTi
27	45	Vitasoy International Holdings Ltd	Hong Kong, China	$8,863	18%	91%	100%	B+
28	5	City Developments Ltd	Singapore, Singapore	$19,968	22%	73%	76%	B+	1.5°C, SBTi
29	24	Neste Oyj	Espoo, Finland	$9,381	33%	39%	71%	B+
30	33	Ecolab Inc	Saint Paul, U.S.	$30,832	42%	71%	53%	B+	1.5°C, SBTi
31	12	Kering SA	Paris, France	$978,971	57%	39%	25%	B	1.5°C, SBTi, FCCA
32	20	Beijing Enterprises Water Group Ltd	Hong Kong, China	$4,526	7%	74%	100%	B
33		ASM International NV	Almere, Netherlands	$98,187	33%	98%	63%	B	1.5°C, SBTi
34	72	StarHub Ltd	Singapore, Singapore	$41,945	23%	47%	0%	B
35	39	SunPower Corp	Richmond, U.S.		22%	100%	100%	B	SBTi
36	26	Xerox Holdings Corp	Norwalk, U.S.	$51,747	25%	75%	3%	B	1.5°C, SBTi
37	49	Telus Corp	Vancouver, Canada	$54,239	40%	62%	12%	B	1.5°C, SBTi
38	78	Unilever PLC	London, U.K.	$107,250	42%	30%	6%	B	1.5°C, SBTi
39	50	HP Inc	Palo Alto, U.S.	$398,038	46%	61%	29%	B	1.5°C, SBTi
40		VMware Inc	Palo Alto, U.S.	$184,723	30%	75%	0%	B	SBTi
41	55	SAP SE	Walldorf, Germany	$194,558	50%	25%	0%	B	1.5°C, SBTi
42		BCE Inc	Verdun, Canada	$68,365	38%	48%	96%	B	1.5°C, SBTi
43	83	Coloplast A/S	Humlebaek, Denmark	$55,646	33%	46%	3%	B	1.5°C, SBTi
44	13	Koninklijke KPN NV	Rotterdam, Netherlands	$38,857	43%	55%	100%	B	1.5°C, SBTi
45	81	Cogeco Communications Inc	Montreal, Canada	$95,151	56%	47%	39%	B	1.5°C, SBTi
46		First Solar Inc	Tempe, U.S.	$5,218	33%	100%	100%	B-	1.5°C, SBTi
47	77	Puma SE	Herzogenaurach, Germany	$270,328	33%	29%	0%	B-	SBTi, FCCA
48	28	Cisco Systems Inc	San Jose, U.S.	$82,189	36%	58%	0%	B-	1.5°C, SBTi
49	51	Atea ASA	Oslo, Norway	$652,546	38%	67%	3%	B-	SBTi
50	53	Konica Minolta Inc	Chiyoda-ku, Japan	$28,739	11%	52%	1%	B-	SBTi
51		Giant Manufacturing Co Ltd	Taichung, Taiwan		9%	100%	100%	B-
52		Essity AB	Stockholm, Sweden	$5,115	42%	48%	39%	B-	1.5°C, SBTi
53	32	Eisai Co Ltd	Bunkyo-ku, Japan	$103,312	9%	33%	24%	B-	1.5°C, SBTi
54		ERG SpA	Genoa, Italy	$1,941	42%	64%	96%	B-	1.5°C, SBTi
55	43	Sprouts Farmers Market Inc	Phoenix, U.S.		25%	28%	14%	B-	SBTi
56	75	CapitaLand Investment Ltd	Singapore, Singapore	$10,348	27%	38%	41%	B-	SBTi
57		Sino Land Co Ltd	Hong Kong, China	$13,753	0%	49%	1%	B-	1.5°C, SBTi
58		Severn Trent PLC	Coventry, U.K.	$5,357	56%	39%	72%	B-	1.5°C, SBTi
59	90	Intesa Sanpaolo SpA	Turin, Italy	$375,162	37%	12%		B-	1.5°C, SBTi, NZBA
60	79	Gildan Activewear Inc	Montreal, Canada	$7,843	30%	39%	1%	B-	SBTi
61	67	Sanofi SA	Paris, France	$86,211	38%	20%	13%	B-	1.5°C, SBTi
62		Swatch Group AG	Biel, Switzerland	$66,638	33%	50%	49%	B-
63	46	Samsung SDI Co Ltd	Yongin, South Korea	$10,422	14%	81%	57%	C+
64		Yadea Group Holdings Ltd	Wuxi, China	$282,774	13%	100%	100%	C+
65	95	Telefonaktiebolaget LM Ericsson	Stockholm, Sweden	$151,002	23%	34%	100%	C+	1.5°C, SBTi
66	82	Adidas AG	Herzogenaurach, Germany	$257,999	38%	35%	0%	C+	SBTi, FCCA
67	54	Hewlett Packard Enterprise Co	Spring, U.S.	$170,695	36%	50%	20%	C+	1.5°C, SBTi
68		KB Financial Group Inc	Seoul, South Korea	$132,305	22%	5%		C+	SBTi, NZBA
69		Maxeon Solar Technologies Ltd	Singapore, Singapore	$5,227	11%	100%	100%	C+
70		Orkla ASA	Oslo, Norway	$42,247	36%	22%	0%	C+	1.5°C, SBTi
71	76	BNP Paribas SA	Paris, France	$267,081	47%	21%		C+	SBTi, NZAM, NZAO, NZBA
72		Svenska Handelsbanken AB	Stockholm, Sweden	$1,448,025	54%	2%		C+	NZBA, SBTi
73	48	Apple Inc	Cupertino, U.S.	$6,309,148	33%	71%	0%	C+	1.5°C, SBTi
74	69	Kesko Oyj	Helsinki, Finland	$174,412	29%	3%	11%	C+	1.5°C, SBTi
75	62	Quadient SA	Bagneux, France	$156,273	33%	23%	0%	C+
76		Investec Ltd	Sandton, South Africa	$125,606	36%	5%		C+	NZBA
77	55	Sun Life Financial Inc	Toronto, Canada	$622,072	56%	4%		C+	NZAM
78	74	Teck Resources Ltd	Vancouver, Canada	$3,689	29%	7%	23%	C+
79		NIO Inc	Shanghai, China	$160,817	17%	96%	100%	C+
80		Ricoh Co Ltd	Ota-ku, Japan	$70,664	10%	21%	42%	C+	1.5°C, SBTi
81	63	Henkel AG & Co KgaA	Düsseldorf, Germany	$61,401	44%	20%	1%	C+	1.5°C, SBTi, NZAM
82	55	Storebrand ASA	Lysaker, Norway	$89,785,901	50%	5%		C+	1.5°C, SBTi, NZAM, NZAO
83		Gilead Sciences Inc	Foster City, U.S.		33%	44%	0%	C+	SBTi
84	22	Sekisui Chemical Co Ltd	Osaka, Japan	$16,577	24%	10%	41%	C+	1.5°C, SBTi
85	60	Commerzbank AG	Frankfurt, Germany	$353,063	45%	6%		C+	SBTi, NZAM, NZBA
86	52	Tesla Inc	Austin, U.S.	$91,536	25%	100%	100%	C	1.5°C, SBTi
87		Beazley PLC	London, U.K.	$3,601,492	45%	14%		C	NZIA
88	80	Bank of Montreal	Toronto, Canada	$224,613	50%	4%		C	NZAM, NZAO
89	57	Arçelik AS	Istanbul, Turkey	$226,657	17%	5%	3%	C	1.5°C, SBTi
90	98	Canadian Tire Corporation Ltd	Toronto, Canada	$169,655	19%	2%	1%	C
91	71	National Australia Bank Ltd	Melbourne, Australia	$130,528	33%	5%		C	NZBA
92	41	IGM Financial Inc	Winnipeg, Canada	$68,785,497	33%	7%		C
93		Pfizer Inc	New York City, U.S.	$69,800	33%	17%	0%	C	1.5°C, SBTi
94	70	Nordea Bank Abp	Helsinki, Finland	$3,537,626	40%	3%		C	NZAM, NZAO, NZBA
95		Merck KGaA	Darmstadt, Germany		43%	32%	20%	C-	SBTi
96		Société Générale SA	Paris, France	$276,944	40%	3%		C-	NZBA, SBTi
97	91	AstraZeneca PLC	Cambridge, U.K.	$140,130	38%	8%	0%	C-	1.5°C, SBTi
98	56	Koninklijke Philips NV	Eindhoven, Netherlands	$122,236	40%	16%	0%	C-	SBTi
99		Danaher Corp	Washington, D.C., U.S.	$79,075	29%	16%	0%	D+
100		Novavax Inc	Gaithersburg, U.S.		29%	12%	87%	D+

*Indicates a tie as a result of a data correction

download full results

methodology press release previous rankings

back to top

Sustainable revenue now makes up half of gross revenue for the Global 100 compared to just 5% for the wider benchmark, while sustainable investment shows a similar trend. For every tonne of carbon they produce, Global 100 companies earn 33 times more revenue than ACWI firms.

But while improved productivity scores for carbon, energy, water and other environmental performance indicators are often collateral benefits of underlying megatrends, such as increasing electrification, energy efficiency and digitization, the improvement in sustainable revenues and investments is generally the result of much more deliberate corporate investment policies and strategic decisions, Torrie says. “Very often, there is visionary leadership from the CEO, and the company has a clear view of the way the world is headed and how to get ahead of it.”

That doesn’t mean that corporate sustainability leaders don’t have their challenges, though. In the face of Europe’s energy crisis, the Danish government ordered 2020’s top G100 company, wind giant Ørsted, to postpone the shutdown of three of its power station units that use oil and coal as fuel. “We still believe that we, as a society, must phase out the use of gas, oil, and coal as soon as possible, but we’re in the middle of a European energy crisis, and we will, of course, contribute to ensuring the electricity supply to the best of our ability,” Ørsted said in a statement.

All the while, companies outside the Global 100 are starting to catch up. While the average gender diversity of Global 100 boards inched upward slightly to 34%, that figure shot up from 23% to 32% for the broader universe of more than 6,000 companies analyzed for the Global 100. In racial diversity, there has been little improvement on company boards of directors, but there was a slight improvement in executive teams. The Global 100 and ACWI firms are neck and neck on the ratio of taxes paid, and ACWI firms have a slightly smaller gap between CEO to average worker pay.

A fifth of Global 100 companies are U.S.-based, making it the leading country for members of the index, followed by Canada with 11%. However, as a region, Europe still leads the way with 44%, while Asia Pacific hosts 22% of the ranking’s companies.

The leading sectors remain information technology (20%) and financial services (15%). Among the standout results of the rankings, Italian bank Intesa Sanpaolo saw a huge 234% increase in its sustainable revenue ratio thanks to a combination of increased exposure to sustainable social and environmental loans and better disclosure.

In the wake of the COVID-19 pandemic, new entrants to the index included a number of pharmaceuticals groups, such as Merck, Pfizer, Novavax and Gilead Sciences. Chinese electric vehicle maker NIO and its compatriot Yadea, which produces electric bicycles, were also notable entrants, along with two companies from Taiwan: bicycle maker Giant and the Taiwan High Speed Rail Corp. Torrie says the addition of these corporations reflects the improved reporting on environmental, social and governance (ESG) factors from companies in the region.

As Corporate Knights has added new companies to the index, it has dropped others for a range of reasons. U.S. chipmaker Analog Devices, for example, fell out of the Global 100 because it has shown a steady worsening of its energy, carbon, water and waste productivity, and the disparity between its CEO’s pay and that of the average employee has doubled since 2020.

 

 

By contrast, battery and electric vehicle maker BYD fell out of the index even though it improved its overall performance because the car and truck manufacturing sector has become increasingly competitive. In fact, it is harder than ever to make it into the Global 100 because Corporate Knights now has a much bigger data pool to draw from.

 

As ever, the G100 methodology was refined this year in a number of areas, including executive pay. But the narrative of the G100 remains the same as it has been since the index was started in 2005: more sustainable companies are not just better for people and the planet. Even in the most challenging times, they are a better bet financially, too.

 

CLIMATE COMMITMENTS	1.5˚C Business Ambition for 1.5˚C	SBTi Science Based Targets Initiative	FCCA Fashion Charter for Climate Action	NZAM Net-Zero Asset Managers Initiative	NZAO Net-Zero Asset Owners Alliance	NZBA Net-Zero Banking Alliance

DOWNLOAD FULL RESULTS

Get the complete Excel scorecard for the Global 100 most sustainable companies of 2023

Methodology

Corporate Knights’ 2023 ranking of the world’s 100 most sustainable corporations is based on a rigorous assessment of more than 6,000 public companies with revenue over US$1 billion. All companies are scored on applicable metrics relative to their peers, with 50% of the weight assigned to sustainable revenue and sustainable investment. Nine of the indicators have fixed weights; the rest are assigned weights according to each industry’s relative impact in relation to the overall economy. After quantitatively analyzing data for 25 key performance indicators, using the Corporate Knights methodology, this year’s overall scores were converted to letter grades.

Awarded to the top company​

Above 75%

70% - 75%

65% - 70%

60% - 65%

55% - 60%

50% - 55%

45% - 50%

40% - 45%

35% - 40%

30% - 35%

25% - 30%

2022 GLOBAL 100

2021 GLOBAL 100

2020 GLOBAL 100

2019 GLOBAL 100

View All

The post The 100 most sustainable companies are still outperforming in tumultuous times appeared first on Corporate Knights.

Steel is one of the world’s most carbon-intensive products (accounting for roughly 7% of human-produced CO2 emissions, the International Energy Agency’s Iron and Steel Technology Roadmap says), so having a corporation that makes steel products top Corporate Knights’ Global 100 ranking of the world’s most sustainable companies may seem surprising.

However, during its long history, Schnitzer Steel has developed into a global leader in the collection, processing and sale of the world’s most recycled product: steel. The company generates most of its revenues from recycling steel and other metals. And about a third comes from forging recycled scrap steel into finished products in electric arc furnaces that are powered by hydropower, making the metal extremely low carbon.

It’s only the second recycling company and the first steelmaking company to earn the top spot in the Global 100 since its inception in 2005, highlighting the growing importance of both the circular economy and low-carbon metals in creating a more sustainable future.

The company’s rise to the top of the ranking has been rapid. Last year was the first time it appeared in the index, when it placed 15th. While Schnitzer’s business model leaves it well placed to embrace sustainability, the spark for its current performance came almost a decade ago when the company launched what it called a sustainability framework.

“We’ve been recycling for about a century,” says Tamara Lundgren, Schnitzer’s CEO, chair and president. “But how do we incorporate that into a framework that our employees, suppliers, investors and communities can identify with? Weaving the bigger picture together with the specific targets into everything we do is what has allowed us to garner this honour.”

In 2019, the company set about bolstering its framework by adopting specific goals and metrics to track progress. These included reducing Scope 1 and 2 greenhouse gas emissions from recycling operations by 25% from 2019 levels by 2025, and reaching net-zero GHG emissions for all operations (steel manufacturing, metals recycling and auto dismantling) by 2050.

“For an ‘old economy’ company to be recognized as a sustainability leader is a great example of how sustainability principles can be successfully applied to an industrial company.”

—Tamara Lundgren, CEO, Schnitzer Steel

Schnitzer has not set specific Scope 3 emissions targets yet because it’s working through how best to account for and verify the emissions inventory data of the various external operations in its supply chain, Lundgren explains. “Once we have our arms around that information, we can confidently set and publish science-based Scope 3 targets. In the meantime, we are still pursuing Scope 3 emissions-reduction initiatives that provide low- and net-zero-carbon solutions for our customers. Our GRN Steel product offering is a good example of such an initiative.”

This year, Schnitzer’s emissions were 24% lower than in 2019, its baseline year when it started tracking its GHGs. This reduction has come from the introduction of measures such as investments in best-available-technology emission control systems that, at the company’s Oakland, California, facility, reduce its Scope 1 emissions by around 3,500 metric tons of carbon dioxide equivalent a year. Other measures include improved energy efficiency, the use of alternative fuels and resource-conservation projects.

For all its sustainability credentials, the company’s operations aren’t without environmental impact. Recycling metals, while essential to the circular economy, can be a hazardous business. Its Pick-n-Pull car recycling subsidiary paid US$2.5 million in 2022 to settle allegations from 14 district attorneys in California that the company had illegally disposed of toxic materials and had stormwater pollution issues. “When contacted by prosecutors, Pick-n-Pull promptly implemented improved procedures and practices relating to their hazardous waste disposal,” said Contra Costa County District Attorney Diana Becton.

A few years ago, Schnitzer Steel was also involved in a legal dispute with the Oakland Athletics baseball team over the presence of a metals shredding plant near the team’s proposed new ballpark on the waterfront. An appeals court ultimately sided with the company.

Reduce, reuse, recycle

Schnitzer’s approach to sustainability has ultimately paid off, with the company returning a top-quartile performance on a range of Global 100 indicators. It saw a 74% increase in energy productivity over last year and made significant improvements in water (69%) and carbon (55%) productivity. It also scored well for its proportion of non-male board members (five out of nine are women) and racially diverse executives, while it also saw a significant drop in its worker injury rate. The company’s ranking also received a boost by its linking of its CEO’s pay to the achievement of sustainability targets (11% of variable compensation is tied to reaching these goals) and its policy of offering paid sick leave.

As for the profit side of things, last year was the second-best year in the company’s history. “Our people and planet goals are clearly not coming at the expense of profit,” Lundgren says.

“For a company that is 116 years old and that many consider to be ‘old economy’ to be recognized as a leading force in sustainability is a great example of how sustainability principles can be successfully applied to an industrial company.”

Schnitzer’s ascension to the top of the Global 100 is also quite timely, given the recent focus on how to decarbonize hard-to-abate industries, including steelmaking, and the importance of metals in the energy transition. Lundgren points out that technologies of the future like electric vehicles, wind turbines and battery storage are more metals-intensive than their fossil-fuel-powered predecessors.

Yet there is still a widespread ignorance of the importance of recycling steel, copper, aluminum and nickel – all of which Schnitzer recycles using its advanced metal recovery systems – in the energy transition, Lundgren adds.

“There has been underinvestment in metals and mining for years, and there are shortages of some critical ferrous and non-ferrous metals, which we recover and recycle,” she says.

“We can’t eliminate these shortages, but we can alleviate them. Metals recycling is one of the foundational pillars for global decarbonization.”

The post How a one-man scrap metal recycler became the world’s most sustainable corporation appeared first on Corporate Knights.

The U.K. has a new prime minister, and, even though she once served as environment minister, questions are swirling about how committed Liz Truss and her government are to tackling climate change. 

Since taking office September 6, she has pledged to expand oil and gas production from the North Sea and ended a ban on fracking, while during her campaign, she said she would change rules so that farmers could not put solar panels on their fields. 

Meanwhile, some of her ministerial appointments have also sparked alarm. This included making Jacob Rees-Mogg, who looks like a top-hat wearing Victorian factory owner and has many of the same attitudes, secretary of state for business, energy and industrial strategy, and therefore responsible for energy policy. He has cast doubt on the urgency of the climate crisis in the past and is an enthusiastic advocate of both fracking and more North Sea development. 

Tom Burke, co-founder of the environmental think tank E3G, told The Guardian that Rees-Mogg “has showed no sign of understanding the complexity or opportunity of net zero.” Burke added that “the single most important thing to do in energy policy now is to bring demand down. I have no confidence that he will take this forward.” 

Rebecca Newsom, head of politics at Greenpeace U.K., added that “Rees-Mogg is the last person who should be in charge of the energy brief, at the worst possible moment.” She blamed him for pushing former prime minister David Cameron to cut funding for energy-efficiency programs, wind and solar, a move that has added £150 to every energy bill as gas prices have soared. 

During the Tory leadership campaign, both Kemi Badenoch, the new trade secretary, and Suella Braverman, home secretary, said that the U.K.’s net-zero target – which is legally binding – should be suspended. 

There are some encouraging signs, though: the new Chancellor of the Exchequer, Kwasi Kwarteng, a former energy minister and then business secretary, was heavily involved in the rollout of the U.K.’s Net Zero Strategy and has frequently been a strong advocate for the strategic importance of the energy transition. He has spoken out recently against fracking in the U.K., arguing that it “won’t materially affect the wholesale market price.” 

He was also an advocate for the previous government to invest more in energy efficiency and to end the ban on onshore wind, clashing with other members of the Cabinet and the Treasury in the process. He runs the Treasury now, so that could herald big changes on energy efficiency, at least. In addition, he is in a position to limit the damage Rees-Mogg can do because he holds the purse strings. 

Rees-Mogg is the last person who should be in charge of the energy brief, at the worst possible moment.

-Rebecca Newsom, head of politics at Greenpeace U.K.

While there was no mention of energy efficiency in new measures to tackle one of Europe’s most serious energy-price crises that Truss announced in Parliament on Thursday, the government’s Climate Change Committee and National Infrastructure Commission jointly wrote to the PM, calling on her to “develop credible policies for energy efficiency in buildings. Investing in efficiency now will provide meaningful reductions in the amount of energy wasted over the long-term and support the necessary transition to low-carbon heat.”  

Simon Clarke, the new “levelling up” secretary, is also a strong advocate for net-zero, while Graham Stuart, who has long supported bolder climate action, will be climate minister and is expected to provide a strong counterpoint to his boss, Rees-Mogg.  

There is no doubt that the new Cabinet is divided on the urgency of tackling climate change, but there are powerful voices in favour of action. And the Conservative leadership campaign – during which climate advocates were able to get all the candidates to commit to the U.K.’s net-zero target – showed that the climate action lobby is now a significant political force within the Tory party. If necessary, it can join forces with opposition MPs to thwart poor policies.  

Perhaps that’s why Truss asked Chris Skidmore, former energy and climate minister and one of the biggest Tory supporters of climate action, to conduct a review into meeting the U.K.’s net-zero commitments in the most economically efficient way.  

Given the simple economic and political fundamentals – gas in Europe is nine times more expensive than renewable energy at the moment, and renewable projects can be developed in months (if the permitting process is sorted out), while fracking and the North Sea will take years to come online – this report, to be completed before Christmas, could help build support for climate action in the party. 

Fracking has just 17% support in the U.K. compared to 76% for renewable energy projects, and any proposals would be subject to widespread protests. 

Most importantly, Truss does not command the overwhelming support of her party in Parliament. A majority of her MPs wanted someone else as leader, raising questions about the extent to which she will be able to get any policies through Parliament, including anti-climate ones.  

Her party is a long way behind in the polls. Her ability to command a majority for contentious anti-climate policies is unproven at best. And don’t underestimate the impact of the new king: Charles III’s views on climate change are well-known and harder now than ever to ignore, even if he is now limited in what he can say in public. In the end, her ability to impose climate-unfriendly actions may be severely constrained. And in the absence of a global event on home turf such as last year’s COP26 climate conference in Glasgow, it seems unlikely she will be as forceful an advocate for climate action globally as her predecessor was.  

The post Will Britain’s new PM Liz Truss derail climate action? appeared first on Corporate Knights.

It also helps greatly that the country’s climate policies are underpinned by the world’s first climate change law, introduced in 2008, and a Climate Change Committee (CCC) that holds the government to account on its targets and progress in reducing greenhouse gas emissions.

The U.K. aims to cut its emissions by 68% below 2013 levels by 2030, and currently it is 43% of the way toward achieving that target. To reach the 2030 goal, it needs to cut around 18,000 kilotonnes a year. In 2019, emissions fell by 13,566 kilotonnes, giving the country a 75% Earth Index score, according to new Corporate Knights report. Though the pace of cuts has accelerated.

The heavy lifting has come to date from the power sector, which has an Earth Index score of 330%. “The U.K. has made a concerted effort over the past decade to retire its coal capacity and replace it with low carbon power generation – principally wind (onshore and increasingly offshore),” says the CCC.

The pace of reductions in the power sector will inevitably slow, as coal has been almost completely removed from the energy mix, although the grid will continue to decarbonize as more renewables come onto the network – particularly offshore wind, where the U.K. is one of the leading markets globally and where costs have come down considerably in recent years.

Policy inconsistencies have meant that other sectors have been notably less successful to date in cutting emissions. The reversal of policies to encourage carbon capture and storage and more efficient buildings were particularly damaging for fossil fuels (which scores 26% in the index) and buildings (36%). The worst-performing sectors were waste, with a score of just 14%, and agriculture, with a score of –13%. Deep reductions in agriculture will happen only if the U.K. introduces “actions to change farming practices and consumer behaviour to release agricultural land for uses that reduce emissions and sequester carbon,” the CCC says via email.

With emission reductions well under way in the power sector, other sectors will have to play a bigger role in future, particularly industry, buildings and transport.

The U.K.’s net-zero strategy should provide a framework for whole-economy decarbonization, but it needs to be backed up by credible plans, according to the House of Lords. The U.K. carbon market will help to hasten the switch from fossil fuels to low-carbon sources, but in the short-term, the biggest contribution is set to come from transport, where emissions in 2019 fell at less than half the rate required (46%).

Progress is expected to accelerate after the government brought forward its plans to phase out the sale of petrol and diesel cars to 2030, from its original target of 2040, and although EV sales are rising fast, much still needs to be done to install new charging infrastructure.

The U.K. has made significant progress in decarbonizing its power sector, mainly by moving away from coal power to renewable sources. It now needs to do the same in other parts of the economy.

There is still a huge amount of work to do. The dangers of falling behind are illustrated by Prime Minister Boris Johnson reportedly calling for a temporary “climate change pass” for the gas industry in March, to allow the West to wean itself off Russian gas supplies. Others are calling for the U.K. to increase its offshore wind ambitions to bolster its energy security.

Mike Scott writes about business, finance, clean energy and sustainability.

DOWNLOAD EARTH INDEX REPORT

The post EVs are leading U.K.’s race to net-zero, but will England stay off the gas? appeared first on Corporate Knights.

Although the Danish company has roots going back more than a century, the Vestas brand is a mere 75 years old. The firm was once a global leader in hydraulic cranes, but it is now the world’s largest wind turbine manufacturer, responsible for almost a fifth of global installed wind power capacity.

“Through our solutions, Vestas supports the global energy system with avoiding millions of tonnes of carbon emissions every year,” says CEO Henrik Andersen.

The multinational has tentacles around the globe. In the U.S. and Canada alone, Vestas has 40,000 megawatts (MW) installed and employs more than 7,000 people in the manufacturing, installation and servicing of onshore and offshore wind turbines. In December, the Danish firm secured another 235 MW order in Illinois and began installing Europe’s most powerful offshore turbine yet, in the North Sea off the Scottish coast. Once completed it will be Scotland’s largest renewable energy project, generating around 5,000 gigawatt hours (GWh) of renewable energy annually.

“To build a truly sustainable future, however, we must do more,” says Andersen. Since 2020, the company has taken a step further, with a new, more holistic global sustainability strategy, which it calls Sustainability in Everything We Do. The strategy has four pillars: reducing its carbon footprint, circularity, people, and the energy transition.

Some of the company’s emissions will be more challenging to tackle than others: it has committed to reducing its Scope 3 emissions (those beyond its direct energy use and operations) by 45% by 2030. More than half the firm’s emissions in its supply chain come from its use of steel, principally for turbine towers. Steel is one of the most carbon-intensive materials to produce, and Vestas is in “active and intensive dialogue with its steel suppliers to address this,” says Lisa Ekstrand, head of sustainability at Vestas.

“We’re talking to them to explore how we can work together to accelerate the decarbonization of steel. Many steelmakers have targets, but they are too long-term. We need things to happen faster if we are to meet our own carbon reduction targets. One answer may be for us to be part of the solution by providing them with green hydrogen produced using our turbines.”

When it comes to circularity, however, steel is almost the perfect material, being easily and infinitely recyclable. About 85 to 90% of a wind turbine is recyclable. The real challenge is the remaining 10 to 15%, comprising the blades, which can be longer than the wing of a Boeing 747. The wind industry has been criticized for failing to recycle old turbine blades. “These are challenging because they are made of composite materials, so we have a number of projects looking at how we can recycle them, and how we can develop blades designed to be circular from the start,” says Ekstrand.

One three-year development project is looking at how to separate the blades’ ingredients into carbon fibre and epoxy resin. Once you do that, you can use chemical recycling to break the resin down into its constituent chemicals. “It’s an exciting project because no one has managed to do it yet,” Ekstrand explains.

The focus is not just on recycling, though. Vestas also plans to increase the efficiency of its materials efficiency and cut waste in half by 2030. “We need both carbon reduction and a strong circular ambition to address the entire value chain,” Ekstrand stresses.

The company aims to be producing zero-waste turbines by 2040 and to become carbon neutral in its own operations by 2030, without using carbon offsets. It plans to decarbonize its service vehicle fleet by requiring all new vans to be electric or use renewable fuels by 2025. It’s also slashing emissions at its factories by phasing out natural gas heating systems.

Given its business, it is no surprise that Vestas was in the top quartile for clean revenue, clean investment, energy and greenhouse gas productivity, and water productivity.

On diversity and inclusion, it also scored well in terms of non-male representation in the boardroom and the C-suite. “Diversity and inclusion is a broad topic, and currently our focus is on increasing the number of women in leadership positions,” says Ekstrand, adding that just 14% of Vestas’s employee base is female. The company hopes to have women in 25% of its leadership positions by 2025, 30% by 2030.

But at the heart of the company’s sustainability efforts are the wind turbines it is famous for, and Vestas wants them not just to deliver zero-carbon power but to be low-carbon products themselves.

“We have talked to our customers about how much they value this, and how much they are willing to pay for it, because being frontrunners comes at a premium,” says Ekstrand. “There has been a big shift. I see a lot more demand from customers for lower-carbon products, more waste reduction and circularity. It is one of the reasons we have focused on this.”

The company, already a giant in the world of clean energy, has even bigger plans for the years to come, including next year installing and testing the world’s tallest and most powerful wind turbine, a prototype 15 MW offshore device that will reach 280 metres into the air and be capable of producing 80 GWh of power a year, enough to power approximately 20,000 European homes.

The post Wind giant sweeps into top spot of Global 100 appeared first on Corporate Knights.

The global pandemic continued to highlight society’s inequalities in 2021, while heat waves, wildfires and floods reminded us of the urgency of the climate crisis. It was a year when environmental, social and governance (ESG) issues took centre stage in business, government and all walks of life. Approximately 90% of countries are now covered by some kind of net-zero target, as are hundreds of the largest publicly traded companies. At November’s UN climate summit, US$130 trillion of assets were committed to this goal.

Again this year, the Corporate Knights Global 100 most sustainable corporations are progressing faster than their peers. Members of the MSCI All Country World Index (ACWI), a global equity index, derive just 30% of their earnings from products or services aligned with the Corporate Knights Clean Taxonomy, while 47% of the Global 100 do so (up from 41% last year). Crucially, Global 100 companies are also investing more aggressively in clean technologies and services, with 48% of their capital expenditures, R&D and acquisitions going to clean investments, versus 34% for ACWI.

This is reflected in their performance. Since the market bottomed in the spring of 2020, the Global 100 has made gains of 22% against the ACWI, reflecting investors’ focus on a green recovery. Since its inception on February 1, 2005, the Global 100 Index has generated a total investment return of 331% compared to 279% for ACWI.

As the “decade of action” on decarbonizing the economy kicks off in earnest, the most sustainable companies are more productive in terms of both carbon and energy. Compared to the average ACWI firm, Global 100 members generate more than four times the output per tonne of carbon emitted and almost eight times more output per unit of energy consumed.

In 2021, 60 of the Global 100 companies signed up to the Science Based Targets initiative, aligning their emissions reductions with the requirements of the Paris Agreement. This year, that figure inched ahead to 65. And while non-Global 100 companies increased their clean investments from 22% in the 2021 ranking to 34% this year, the Global 100 poured, on average, 48% of their investments into clean activities, up from a third a year ago.

47%

% of earnings that Global 100 firms derive from clean products and services, compared to 30% for benchmark.

Global 100 companies also outperform on other parameters, including sick pay: 82% of constituents offer at least 10 days of paid sick leave, compared to 74% of the ACWI. The ratio of CEO pay to that of the average worker is also lower in Global 100 firms, at 111:1, while at other companies, the pay gap has grown from 124:1 to 140:1, extending the gulf between executives and workers. And while 87% of Global 100 companies link executive compensation to meeting sustainability targets, up from 80% last year, the proportion of companies in the benchmark index may have more than doubled, but that is from just 14% last year to 34% this year.

On diversity, the differences are less clear-cut. In Global 100 companies, on average, 32% of directors are non-male, the same as last year, while for the ACWI the proportion has improved from 24% to 30%. When it comes to diversity of leadership, 13% of Global 100 company board members and 12% of executives are racially diverse.

One area where Global 100 firms do not outperform the benchmark is in paying tax: both the Global 100 and the ACWI pay 13% tax.

Corporate Knights introduced a letter grade system this year that gives Global 100 companies marks ranging from A+ to D–. These grades were converted from companies’ overall scores, based on Corporate Knights’ 23 key indicators. Every company that makes the Global 100 has sustainability practices well above average: the letter grades reflect companies’ standings relative to other high-performance companies.

While banks comprise a 10th of this year’s index, it is tech groups of all varieties that dominate, including telecoms, chipmakers, computer makers and business service providers. There are 17 new members of the Global 100, including U.S.-listed Evoqua Water Technologies and Beijing Enterprises Water Group, highlighting the growing importance of water issues around the world. The latter was one of a number of Chinese companies joining the index, including Xinyi Solar Holdings and LONGi Green Energy, perhaps indicating that sustainability is starting to take hold in the world’s largest carbon emitter. Another interesting addition is Schnitzer Steel Industries, a specialist in steel and auto recycling. The circular economy will be an increasing focus for many sectors in years to come.

331%

Since its inception on February 1, 2005, the Global 100 Index has generated a total investment return of 331% compared to 279% for ACWI.

The longest-running company on the Global 100 is Finnish retailer Kesko, which has been on the Global 100 since 2005. The index was dominated by companies from Europe (41) and the Americas (39), with 20 constituents from the Asia Pacific region.

Meanwhile, the companies that dropped off the list illustrate how sustainability requirements are always increasing and changing. Valeo no longer makes the cut because it saw a significant drop in its clean revenue and investment, as most of its products go into hybrids, which no longer count as clean under the new taxonomy, rather than battery electric vehicles.

A number of high-profile names were excluded from the Global 100 because of specific red-flagged activities, such as weapons production (including Airbus, Rolls-Royce Holdings and Boeing) and climate policy blocking (Ford Motor Company, Daimler AG, Chevron and Air France).

It was also a year that put the complexities of the sustainability agenda into sharper focus; some members of this year’s list performed well in certain areas but showed clear shortcomings elsewhere. Tech giants Apple and Google, for example, were both hit with significant antitrust fines in Europe, but Apple scored well on energy, carbon, clean revenue and diversity, while Google performed strongly on clean revenue and racial diversity. Canadian mining firm Teck Resources agreed to pay the highest pollution fines ever given out by Fisheries and Oceans Canada in 2021 as a settlement for selenium releases at its metallurgical coal operations; nonetheless, the company sits in 74th spot because of its top-quartile performance on clean revenue and investment in clean economy minerals such as copper and zinc, as well as pension fund quality and boardroom racial diversity.

Banco do Brasil is heavily invested in Brazil’s carbon-intensive beef and timber industries, but as a sustainable finance leader, it screens those investments for responsible practices. It scores well in areas such as energy productivity, taxes paid, clean revenue and CEO pay ratio.

The last 12 months have shown that sustainability is a constantly evolving concept, and even the most diligent companies must evolve with it.

Mike Scott writes about business, finance, clean energy and sustainability.

Corporate Knights’ 2022 ranking of the world’s 100 most sustainable corporations is based on a rigorous assessment of nearly 7,000 public companies with revenue over US$1 billion.

2022 G100 Rank	2021 G100 Rank	Company	Headquarters City	Climate commitments	Overall Score
1	21	Vestas Wind Systems A/S	Aarhus	1.5°C, SBTi	A+
2	24	Chr Hansen Holding A/S	Horsholm	1.5°C, SBTi	A
3	43	Autodesk Inc	San Rafael	SBTi	A
4	1	Schneider Electric SE	Rueil-Malmaison	1.5°C, SBTi	A
5	40	City Developments Ltd	Singapore	1.5°C, SBTi	A
6	9	American Water Works Company Inc	Camden (U.S.)		A
7	2	Orsted A/S	Fredericia	1.5°C, SBTi	A-
8	12	Atlantica Sustainable Infrastructure PLC	Brentford (U.K.)	SBTi	A-
9	55	Dassault Systemes SE	Vélizy-Villacoublay	1.5°C, SBTi	A-
10	18	Brambles Ltd	Sydney	1.5°C, SBTi	A-
11	57	Sims Ltd	Mascot		A-
12	38	Johnson Controls International PLC	Cork	1.5°C, SBTi	B+
12*	7	Kering SA	Paris	SBTi, FCCA	B+
13	93	Koninklijke KPN NV	Rotterdam	1.5°C, SBTi	B+
14	6	McCormick & Company Inc	Hunt Valley	SBTi	B+
15		Schnitzer Steel Industries Inc	Portland		B+
16	45	Transcontinental Inc	Montreal		B+
17	5	Stantec Inc	Edmonton	1.5°C, SBTi	B+
18	17	Cascades Inc	Kingsey Falls	SBTi	B+
19		Evoqua Water Technologies Corp	Pittsburgh	SBTi	B+
20		Beijing Enterprises Water Group Ltd	Wan Chai		B+
21	3	Banco do Brasil SA	Brasília	1.5°C, SBTi	B+
22	51	Sekisui Chemical Co Ltd	Osaka	1.5°C, SBTi	B+
23		Engie Brasil Energia SA	Florianópolis		B+
24	4	Neste Oyj	Espoo		B+
25	19	Iberdrola SA	Bilbao	1.5°C, SBTi	B+
26	70	Xerox Holdings Corp	Norwalk	SBTi	B
27		Salesforce.Com Inc	San Francisco	1.5°C, SBTi	B
28	13	Cisco Systems Inc	San Jose	1.5°C, SBTi	B
29	39	Alstom SA	St Ouen	SBTi	B
31†		Legrand SA	Limoges	1.5°C, SBTi	B
32	16	Eisai Co Ltd	Tokyo	1.5°C, SBTi	B
33		Ecolab Inc	Saint Paul	1.5°C, SBTi	B
34		Canadian Pacific Railway Ltd	Calgary	SBTi	B
35	36	Novozymes A/S	Bagsvaerd	1.5°C, SBTi	B
36	90	Alphabet Inc	Mountain View		B-
37	27	Verbund AG	Vienna		B-
38	95	Workday Inc	Pleasanton	1.5°C, SBTi	B-
39		SunPower Corp	San Jose		B-
40	8	Metso Outotec Corp	Helsinki	SBTi	B-
41	29	IGM Financial Inc	Winnipeg	NZAM	B-
42		Xinyi Solar Holdings Ltd	Wuhu		B-
43		Sprouts Farmers Market Inc	Phoenix		B-
44	20	TSMC	Hsinchu City		B-
45	62	Vitasoy International Holdings Ltd	Hong Kong SAR		B-
46	60	Samsung SDI Co Ltd	Yongin-Si		B-
47		LONGi Green Energy Technology Co Ltd	Xi'an	1.5°C, SBTi	B-
48		Apple Inc	Cupertino	1.5°C, SBTi	B-
49	54	Telus Corp	Vancouver	1.5°C, SBTi	B-
50	50	HP Inc	Palo Alto	1.5°C, SBTi	B-
51		Atea ASA	Oslo	SBTi	B-
52	97	Tesla Inc	Austin	1.5°C, SBTi	B-
53	41	Konica Minolta Inc	Tokyo	SBTi	B-
54	30	Hewlett Packard Enterprise Co	Houston	1.5°C, SBTi	C+
55	84	SAP SE	Walldorf	1.5°C, SBTi	C+
55*	14	Storebrand ASA	Lysaker	1.5°C, SBTi, NZAM, NZAO	C+
55*	69	Sun Life Financial Inc	Toronto	NZAM	C+
56		Koninklijke Philips NV	Amsterdam	1.5°C, SBTi	C+
57	34	Arcelik AS	Istanbul	1.5°C, SBTi	C+
58		Citrix Systems Inc	Fort Lauderdale	SBTi	C+
59		UniCredit SpA	Milan	NZBA	C+
60	67	Commerzbank AG	Frankfurt am Main	SBTi, NZAM, NZBA	C+
61	37	ING Groep NV	Amsterdam	NZAM	C+
62		Quadient SA	Bagneux		C+
63	88	Henkel AG & Co KgaA	Düsseldorf	1.5°C, SBTi, NZAM	C+
64	59	Intel Corp	Santa Clara		C+
66†	77	Prologis Inc	San Francisco	SBTi	C+
67	65	Sanofi SA	Paris	1.5°C, SBTi	C+
68	74	Analog Devices Inc	Wilmington	1.5°C, SBTi	C+
69	87	Kesko Oyj	Helsinki	1.5°C, SBTi	C+
70	86	Nordea Bank Abp	Helsinki	NZAM, NZAO, NZBA	C+
71	44	National Australia Bank Ltd	Melbourne		C+
72	80	StarHub Ltd	Singapore		C+
73	92	Industria de Diseno Textil SA	Corunna	SBTi, FCCA	C+
74	91	Teck Resources Ltd	Vancouver		C
75	58	CapitaLand Investment Ltd	Singapore	SBTi	C
76	46	BNP Paribas SA	Paris	SBTi, NZAM, NZAO, NZBA	C
77		Puma SE	Herzogenaurach	SBTi, FCCA	C
78	79	Unilever PLC	London (U.K.)	1.5°C, SBTi	C
79		Gildan Activewear Inc	Montreal		C
80	47	Bank of Montreal	Montreal	NZAM, NZAO	C
81	68	Cogeco Communications Inc	Montreal	1.5°C, SBTi	C
82	76	Adidas AG	Herzogenaurach	SBTi, FCCA	C
83		Coloplast A/S	Humlebæk	1.5°C, SBTi	C
84	35	BT Group PLC	London (U.K.)	1.5°C, SBTi	C-
86†	73	Agnico Eagle Mines Ltd	Toronto		C-
87	78	Lenovo Group Ltd	Quarry Bay	SBTi	C-
88	42	Natura & Co Holding SA	São Paulo	1.5°C, SBTi	C-
89		Campbell Soup Co	Camden (U.S.)	SBTi	C-
90	56	Intesa Sanpaolo SpA	Turin	NZAM, NZAO, NZBA	C-
91	82	AstraZeneca PLC	Cambridge (U.K.)	1.5°C, SBTi	C-
92		KBC Groep NV	Brussels		C-
93	49	Allianz SE	Munich	SBTi, NZAM, NZAO	C-
94		Aster DM Healthcare Ltd	Dubai		D+
95	89	Telefonaktiebolaget LM Ericsson	Stockholm	1.5°C, SBTi	D+
96	75	Pearson PLC	London (U.K.)	1.5°C, SBTi	D+
97		Biogen Inc	Cambridge (U.S.)	1.5°C, SBTi	D+
98	99	Canadian Tire Corporation Ltd	Toronto		D
99		LG Electronics Inc	Seoul	1.5°C, SBTi	D
100	94	Byd Co Ltd	Shenzhen		D-

* Tie
† Rank 30 and 85 updated due to data correction

Download the complete 2022 Global 100 Excel scorecard:

2022 Global 100 Full Results

The post Global 100 companies prove sustainability is good for business appeared first on Corporate Knights.

It is fitting, then, that 2021’s most sustainable company on the Global 100 index is Schneider Electric. The French firm is at the heart of a megatrend that will define the global economy for decades to come, although it has never produced electricity itself.

Over the last 20 years, Schneider Electric has moved away from high-voltage electrical distribution to focus on data centres, decentralized electrical distribution (including off-grid solar storage) and smart solutions to make the world more electric, energy efficient, renewable and digital.

It has been a long journey, driven by two inspirational CEOs, Henri Lachmann and then Jean-Pascal Tricoire, who has run the company since 2006.

“It started with former UN secretary general Kofi Annan launching the Global Compact principles on sustainability,” says Gilles Vermot Desroches, senior vice-president for sustainable development and strategy. “We were one of the first companies to endorse them and to ask our suppliers to be more sustainable.”

“There are two sides to the sustainability coin,” he adds. “We aim to lead by example within our own operations and ecosystem, and we work to be part of the solution for our customers. Sustainability improves performance, innovation and our attractiveness as a place to work. It creates value.”

Besides curbing its own emissions by 250,000 metric tons of CO2 in 24 months by shifting to renewable energy, the company says its suite of energy-efficient technologies and services should save 120 million metric tons of CO2 on their customers’ behalf by the end of 2020.

Schneider Electric earned the top spot in the Corporate Knights ranking because of its strong performance across a range of sustainability criteria. The company earned 70% of its revenue from sustainable solutions, while 73% of its investments are directed toward sustainable solutions. It also performed strongly in areas including racial and gender diversity and resource productivity and safety.

The company is, despite roots that go back more than 180 years, in many ways a product of the digital age. “At the start of the internet, the big effort was to connect seven billion people. Today, 300 new assets connect to the internet every second. There are now more than 60 billion assets that can talk to people and to each other to make things run more efficiently,” Vermot Desroches points out. Simple but effective examples of this are controls that ensure that “if you’re not in the room, the light is not left on. If you’re not in the building, the heating is turned down.”

Although Schneider’s business focus is on the clean energy transition, its approach has a significant social aspect to it as well, which has been heightened by the pandemic. “We learned a lot about our impact as a company during COVID. This crisis would have been very different in 2010 without all the benefits that digital has brought, from ensuring hospitals have secure access to energy, to being able to manage business and personal relationships online.”

At the heart of the company’s efforts has been a shift from shareholder value to emphasizing stakeholder value, says Vermot Desroches. “If we want to continue to lead, we have to work with our stakeholders, including our suppliers. We’re asking all our tier-one suppliers to cut their emissions by 50%. We’re asking them to respect human rights.”

A key move, in 2017, was to “build a bridge between our KPIs and the [UN] Sustainable Development Goals,” he adds. These key performance indicators include growing green revenues to 80%, giving 50 million people access to green energy and training one million underprivileged people in energy management.

“The average age in Africa is 19, and 70% of the population [is] under 30. One in six under-30s who had a job in January lost them this year. It is impossible to solve problems for only part of the population. And we need these young people to provide innovation. We must involve them to harness the power of a generation of digital natives.”

“We’re a very technical company, but when it comes down to it, we empower people,” Vermot Desroches concludes. “We believe that access to energy and digital is a basic human right.”

Mike Scott writes about business, finance, clean energy and sustainability.

Find out how this year’s Global 100 companies ranked:

The 2021 Global 100 Ranking

Return to Global 100 homepage

Be sure to attend today’s 17th Annual Global 100 Launch 

8AM Eastern Standard Time

2PM Central European Time

The post Top company profile: Schneider Electric leads decarbonizing megatrend appeared first on Corporate Knights.

But in fact, as Gilles Vermot Desroches, senior vice-president for sustainable development and strategy at this year’s most sustainable corporation, Schneider Electric, says, “the opposite is true.” Rather than abandon sustainability pledges, governments around the world have seized on the opportunity presented by the need to kick-start their economies to inject trillions of dollars of green investments into their stimulus plans.

The European Union, for example, has committed almost €550 billion to green projects over the next seven years, almost a third of its recovery package, while President Joe Biden has pledged to spend US$2 trillion on tackling climate change. There have also been notable commitments from China, Japan and South Korea to become net-zero economies, offering a clear sign of increased ambition in Asia that should transform the investment landscape in the region.

It’s not just national governments taking action; the number of companies and municipalities signing on to net-zero has more than doubled since last year. This year has also seen the launch of a $5-trillion Net Zero Asset Owner Alliance and a $9-trillion Net Zero Asset Managers initiative, whose members have committed to decarbonizing their portfolios in line with global efforts to limit warming to 1.5°C.

This shift in attitudes has come about in part because of the astonishing fall in the costs of renewable energy, which is now the cheapest source of new power in many parts of the world. From 2009 to 2019, the cost of solar fell 89%, as did batteries, while onshore wind is 70% cheaper.

With increasing evidence of the harm that climate change can cause, from devastating wildfires in Australia and California to heat waves in the Arctic, another driver is the growing concern from consumers and voters, epitomized by the school strikes for climate, inspired by Greta Thunberg, and the Extinction Rebellion movement.

At the same time, the Corporate Knights Global 100 index continues to demonstrate that sustainability is good business and enables companies to outperform their peers.

From its inception on February 1, 2005, to December 31, 2020, the Global 100 index has generated a total return of 263% versus the 220% increase of its benchmark, the MSCI ACWI (All Country World Index). For the calendar year 2020, the Global 100 was up 26% compared with a rise of 16% for the MSCI ACWI.

Members of the Global 100 earn 41% of their revenues from products or services aligned with the UN Sustainable Development Goals, according to the Corporate Knights Clean Taxonomy, compared to just 8% for MSCI ACWI companies on a weighted basis.

Global 100 companies are also more gender-diverse than their peers, with almost a third of board directors (32%) being non-male against 24% for MSCI ACWI companies.

Rising from 29th spot last year, Schneider Electric was one of several top 10 companies in this year’s index that jumped significantly from 2020. Last year’s winner, Ørsted, dropped one spot to No. 2, followed by Banco do Brasil (No. 9 last year); Finnish oil refiner Neste also dropped one place, to No. 4. American food company McCormick jumped from 22 to No. 6, while Canadian National Railway moved up to No. 10 from 54.

Highlighting the speed at which fortunes can change, 26 companies left the index, including Toyota, which was weighed down by its dependence on internal-combustion-engine vehicles, and chemicals giant BASF, flagged by U.K.-based InfluenceMap for lobbying against measures to combat climate change.

In a year dominated by the global pandemic, pharmaceutical group AstraZeneca, whose low-cost, easy-to-store COVID-19 vaccine could provide a real boost to efforts to conquer the virus, is a notable presence on the index.

There is also a growing number of Global 100 companies in the green building and real estate space, such as Owens Corning, Trane Technologies, Prologis and Singapore’s CapitaLand and City Developments. They complement the usual suspects in green infrastructure: along with Schneider, also represented are Siemens, Johnson Controls, Rexel, American Water Works and ABB.

Companies such as Ørsted, Iberdrola and Verbund demonstrate that green energy majors are becoming increasingly established in mainstream energy markets, particularly in Europe.

The presence of companies such as Quebec-based Cascades and Transcontinental and U.S.-headquartered Ball Corporation show that packaging is one of the first areas where the circular economy is gaining traction.

The Global 100 list continues to be dominated by companies from North America and Europe, but there are new entrants from India (Tech Mahindra) and Turkey (appliances and homeware group Arcelik, that country’s first representative). On an individual country basis, the U.S., with 20 companies, and Canada, with 13, are the best represented, but regionally, Europe continues to dominate the Global 100 with almost half the companies (46) to North America’s 33. The Asia Pacific region hosts 17 of the index’s members, while Latin America (two), Africa (one) and the Middle East (one) continue to lag.

The Global 100 illustrates just how much sustainability is a field independent of economic might, where Denmark and Finland (both five members each) rank higher than China, which has just two companies on the index.

This year, we introduced several new key performance indicators (KPIs) when selecting the index’s constituents, reflecting not just the ongoing importance of tackling the climate crisis but also some of the social concerns that the pandemic and Black Lives Matter highlighted during 2020. These include paid sick leave, executive and board racial diversity, and clean investments (including clean capital expenditures, R&D and acquisitions). Corporate Knights found that the average clean investment for Global 100 companies was 33%, compared to 22% for the 8,080 companies analyzed for the ranking. As well, 86% of Global 100 firms offer at least 10 days of paid sick leave, compared to just 41% of the 8,080 assessed.

Sustainable firms also have longer lifespans: analysis by Corporate Knights with Thomson Reuters Datastream shows that the average age of a Global 100 company is 74 years, versus 53 for companies in the MSCI All Country World Index.

Notably, 60 of the Global 100 companies have signed on to the Science Based Targets Initiative to reduce their emissions in line with a 1.5°C future.

Sustainability is now central to doing business, as the Global 100’s continuing superior performance shows, but the introduction of our new KPIs highlights that it is always evolving – and companies must evolve with it.

Mike Scott writes on business, finance, clean energy and sustainability.

Find out how this year’s Global 100 companies ranked:

The 2021 Global 100 Ranking

Return to Global 100 home page

Be sure to attend today’s 17th Annual Global 100 Launch 

8AM Eastern Standard Time

2PM Central European Time

The post The 2021 Global 100: How the world’s most sustainable companies outperform appeared first on Corporate Knights.

This past year saw the publication of two startling reports from the Intergovernmental Panel on Climate Change (IPCC), warning of the worsening impacts of climate change threatening food supplies, infrastructure and already fragile global water supplies. At the same time, the United Nations reported that the “emissions gap” – the gap between the greenhouse-gas (GHG) emissions that will limit temperature increases to the 1.5C that climate scientists say is safe and the GHGs that we are actually emitting – is growing.

With nations failing to make progress at the COP25 climate talks in Madrid in December, corporate action on the climate has never been more important.

If the 2010s were the decade when business started to realize the dangers of climate change and the impact it could have on their operations, the 2020s must be the decade when they act to dramatically reduce the emissions that cause it.

The shift is reflected in the growing influence of initiatives such as the Task Force on Climate-Related Financial Disclosures (TCFD), which calls on companies to disclose their climate risks and how they intend to tackle them. The physical risks are becoming more obvious, in the form of stronger hurricanes, weeks-long wildfires in locations from California to Australia, record temperatures from the Arctic to Africa, and rising sea levels. TCFD also asks that companies quantify the financial and non-financial impacts of the low-carbon transition (on reputation, policy, technology, etc.).

The COP25 talks in Madrid highlighted the challenges that businesses will face from an uneven and divergent pace of change – countries such as the U.S., Australia and Brazil resisted introducing stricter measures, while the European Union, the world’s largest trading bloc, announced that it planned to become “climate neutral” by 2050, meaning that some 40% of global GDP is now covered by net-zero commitments.

The science tells us that bigger emissions cuts are needed as the impacts of the climate crisis become ever more apparent and alarming. According to KPMG, “Governments that are seen as lagging at the moment may be forced to implement more stringent policies more rapidly in the future.”

The past year has also seen a wave of grassroots protests around the world against climate inaction, including by Extinction Rebellion activists and hundreds of thousands of students inspired by Swedish teenager Greta Thunberg’s “striking for climate.” The world’s future consumers and voters are increasingly intolerant of failure to tackle climate-change and social-justice issues. Business and investors are starting to take notice and come to grips with what the crisis could mean for their future prospects.

It is no accident that the biggest grouping in the Global 100 is financial services companies – investors, insurers and lenders are often ahead of the game when it comes to acknowledging where the risks of failing to deal with sustainability issues lie.

Business and investors are starting to take notice and come to grips with what the crisis could mean for their future prospects.

 

That is why they encourage companies to disclose their emissions and their climate strategies through bodies such as TCFD and CDP (formerly the Carbon Disclosure Project). It’s also why, aided by technology in the form of big data and artificial intelligence, they are increasingly focused in their engagements with companies – for example through the Climate Action 100+ initiative that targets the world’s biggest emitters and those “with significant opportunity to drive the clean energy transition.”

The leader of this year’s Global 100, Ørsted, is a perfect example of a company that has identified the way the world is changing, spotted an opportunity to gain a competitive advantage and reshaped its business strategy accordingly.

Many other businesses are reacting by signing up to initiatives such as Science Based Targets, which calls for companies to set targets in line with the scale of reductions needed to keep average temperature rises below 2C, and RE100, whereby corporations commit to procure all their electricity from renewable sources.

Renewable energy and associated technologies such as batteries and electric vehicles are becoming cheaper and more competitive every day, making it easier for companies to make the sustainable choice.
While relatively few companies have committed to these initiatives, those that have are among the biggest corporations in the world, and their efforts to meet their own targets will encourage their suppliers to become more sustainable in turn.

The drivers for companies to become more sustainable are coming from everywhere – the science, initiatives from governments and regulators, increased consumer pressure and demands from investors. The best-prepared businesses see opportunities as well as risks and are preparing accordingly.

Who made this year’s list? The 2020 Global 100 ranking

Return to Global 100 landing page

The post The Global 100 progress report appeared first on Corporate Knights.

This consensus is starting to crumble as the evidence mounts that considering sustainability issues is not a drain on earnings – and, in fact, improves performance. “The impression among business leaders is that ESG just hasn’t gone mainstream in the investment community,” said the Harvard Business Review last year. “That perception is outdated.”

Investors are increasingly aware of the importance of the climate crisis, water shortages, health and safety in the supply chain, modern slavery, and corruption to their bottom lines. Volkswagen’s Dieselgate and Boeing’s 737 Max scandal are just two incidents that reveal that ESG issues are not only material to a company’s financial performance – they can have a huge effect on it.

Indeed, armed with increasing amounts of high-quality data, investors are becoming ever more assertive in calling for companies to deal with ESG issues. Even the U.S. Business Roundtable, which did much to champion the supremacy of shareholder rights, has changed its position to declare that the purpose of a corporation is not just to serve shareholders but “to create value for all our stakeholders,” including customers, employees and local communities.

The performance of this year’s Global 100 (G100) companies bears out this analysis; since its inception in 2005, up to Dec. 31, 2019, the “index” has outperformed the MSCI ACWI (All Country World Index), returning 7.3% on an annualized basis against the ACWI’s 7.0%.

At the same time, the G100 outperforms on a number of ESG criteria, including average CEO pay ratio (76:1 against 302:1), the number of women on their boards (30% vs 24%) and female executives (20% vs 17%), as well as whether they link executive compensation to targets related to the UN Sustainable Development Goals (SDGs).

Another key area in the list where sustainability and financial performance collide is the carbon-productivity measure of revenue per tonne of CO2 emitted. Carbon productivity is becoming increasingly important as a business issue, and here the G100 members have a clear advantage, earning $384,077/tonne against the ACWI’s $173,600 on a weighted basis. It is also notable that the proportion of the G100’s revenues that derive from “clean” sources has risen to 37%, from 26% last year.

The ultimate measure of sustainability is the ability to endure and thrive in the long term, and here it is striking that the average age of G100 companies – at 83 years – is almost double that of the 49 years for companies in the ACWI.

The ranking was topped by Danish renewable energy provider Ørsted, followed by its compatriot – and last year’s top-ranked company – Chr. Hansen, a biosciences company. In fact, the Danes occupy three of the top six places, rounded out by biotechnology firm Novozymes, in sixth spot (its enzymes enable higher crop yields, renewable fuels and more). You’ve got to wonder what’s in the water in Denmark.
Third was another Nordic company, Finland’s Neste, an oil refiner that is switching from refining crude oil to using cooking waste and other materials as a feedstock. Fourth was U.S. technology conglomerate Cisco, which rose 10 places from 14th, thanks to more than $25 billion in clean revenues from products with environmental core attributes. American software group Autodesk, which came fifth, rose 43 places from its 2019 ranking, now that it uses 99% renewable energy to run its cloud platforms – platforms that help build green buildings, reduce materials in manufacturing life cycles and support better designs for the circular economy.

These were among the European companies that make up almost half (49) of this year’s G100. The U.S. and Canada accounted for 29, while 18 companies in the ranking are from Asia. Latin America boasts just three members of the list, all from Brazil, and South Africa’s Standard Bank was the only representative of the African continent.

The companies included in the G100 represent a wide range of sectors, from aerospace and apparel to wireless telecoms groups and wholesale power companies. The largest sector was financial services, with 18 representatives, including 12 banks, suggesting that investors and lenders are more advanced in their understanding of how taking sustainability issues into account can help their business performance.

The list includes 28 companies that were not on the Global 100 last year; Canada boasted nine of those entrants, suggesting that the business community here is starting to take the issue more seriously. As well, BYD – China’s biggest electric car maker – is a new entrant, along with Hong Kong’s Vitasoy, evidence that while the world’s largest economy lags behind European and North American nations on key sustainability metrics, ESG issues are starting to gain traction where it will matter most.

Who made this year’s list? The 2020 Global 100 ranking

Return to Global 100 landing page

The post The Global 100 difference appeared first on Corporate Knights.