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

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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.

Please see answers below to the most common questions about the Corporate Knights Global 100 ranking.

Sections:

General Global 100 Questions

Global 100 Methodology and Data Submission Questions

Indicator-Specific Questions

Clean Revenue and Clean Investment Questions

Corporate Knights Data Portal Functionality Questions

General Global 100 Questions 

1.What are the eligibility requirements for the Global 100 ranking?

To be eligible for the Global 100 ranking, a company’s gross revenue for the ranked fiscal year (FY2019 in 2021 ranking, FY2020 in 2022 ranking and so on) must be more than US$1 billion, and the company must be publicly traded.

2. Is participating in the ranking free for companies?

There is no cost associated with participating in the ranking.

3. Our company is private. Is it eligible to be part of the Global 100 universe?

The Global 100 ranks publicly traded companies with more than US$1 billion of gross revenue. While private companies are not part of the Global 100 universe, Corporate Knights has other rankings in which private company data is used, such as the Best 50 ranking. In addition, we provide quarterly ESG updates, using data from private and public companies, to clients and investors who use our ESG information to create ror monitor portfolios.

4. What data sources were used to collect the research?

The fiscal 2019 data (2021 Global 100) was collected by looking through annual reports, sustainability reports and company websites and in some cases was supplemented with data from third-party providers.

5. How are Corporate Knights Industry Groups determined?

The Corporate Knights Industry Groups (CKIGs) is a classification system developed by Corporate Knights that groups companies according to clean revenue characteristics and resource intensity. You can download the full universe of companies with their CKIG classification here. Please email research@corporateknights.com if you feel there is a strong case for your company to have its classification changed.

6. We have data that Corporate Knights is requesting that we have not made public. We are, however, willing to provide it to Corporate Knights. Can that be accepted? 

We prefer data that has been made public at the time of submission or that will be made public in advance of the Global 100 release. If this is not possible, Corporate Knights can accept the data for ratings purposes, provided the company give Corporate Knights permission to make the data public. Please provide as much detail as necessary for our analysts to properly vet the submission.

7. Does receiving a data-verification request mean that my company has been shortlisted for the ranking?

If you have received a data-verification request, it does not mean that you have been shortlisted. It means that your company is considered part of the eligible research universe we analyze to determine the shortlist.

8. How can I get more details on my company’s performance compared to our peers?

Corporate Knights provides complimentary scorecards to companies which participate in the data verification exercise. Contact research@corporateknights.com to obtain a complimentary scorecard for your company.

Global 100 Methodology and Data Submission Questions

1. In cases where we have restated historical values, should we keep the data as it was published in the previous years or the pro-forma/restated figures?

Pro-forma/restated figures.

2. If my company recently completed a merger, what values should we provide for historical results?

Provide the values for the larger company per market capitalization unless consolidated results are available for the fiscal year for which we are collecting data.

3. Our sustainability report, which includes the requested data, will be published after the Corporate Knights ranking comes out. Is there a way for me to provide such data and add that comment?

Yes. Please include a link to the section of your site where the report will be posted and clarify in the notes section when the report will be publicly available.

4. Our company reports in different units than specified on the Corporate Knights portal. How do we convert our metrics into the units specific to the Corporate Knights portal? 

To convert metrics you can either add Google’s conversion extension – https://chrome.google.com/webstore/detail/unit-converter/igjeajmonjofckmiheidpmebpmdbbiam?hl=en – to your Chrome browser.

NOTE: Please do not convert currencies in your submission; use the reporting currency indicated for your company.

5. Is there a way to identify that a particular metric doesn’t apply to our business?

Please look at the weights (to the left of the value box in the data portal). Anything with less than 1% weight is relatively unimportant. You can also see the list of weights per CKIG and per indicator here.

Indicator-Specific Questions

Fines and Sanctions

1. Is there a “size threshold” to consider in our answer? (i.e., should we aggregate all fines/sanctions/settlements, no matter how small, or take into consideration only the most significant?)

Please ensure you include all fines over US$100,000.

2. Should we construe settlements to include amounts paid to settle civil litigation matters?

Yes, unless they have not been paid AND are being appealed.

Greenhouse Gas Emissions

1. Should we be reporting market-based or location-based Scope 2 GHG emissions?

Location-based.

Employee Costs

1. Should the amount reported as employee costs include social contributions as stipulated by law, such as state pension, social insurance, health insurance, etc.?

Yes. Please include all contributions made by the company for employee compensation and benefits.

EBITDA

1. Regarding EBITDA: are you asking for “pure” EBITDA or adjusted EBITDA?

Pure EBITDA.

Board of Directors and Executive Leadership/Diversity

1. Regarding the board of directors: who should be included?

All voting members on the board should be included. Non-voting members should not be included.

2. For the board of directors (and the executive committee), do you use data as of year-end 2019 (e.g. 31/12/2019) or at the time of review?

Time of review.

3. Regarding the racial-diversity indicator for board and executives, local laws do not allow us to monitor individuals based on their race and ethnicity. What should we do?

If it is not possible to provide the aggregate number of racially diverse board or executive members (note: we ask that you do NOT reveal any individual information), please indicate this in the notes section and Corporate Knights will calculate this number independently based on careful consideration of pictures, names and bios.

Total Acquisitions

1. Which figure should be reported here – the cash amount paid for acquired companies or the effect on P&L?

The cash amount.

Clean Revenue and Clean Investment Questions

1. How do we know what qualifies as Clean Revenue or Clean Investment? 

Any revenue segment/CAPEX/R&D/acquisition that corresponds with any of the Clean Taxonomy segments included in the Corporate Knights Clean Taxonomy qualifies (subject to scrutiny and/or change by our analysts).

2. What does Clean Investment mean?

For non-financial companies, Clean Investments (which include Clean CAPEX, Clean R&D, Clean Acquisitions and Other) refer to any investments that align with the Corporate Knights Clean Taxonomy.

For financial sector companies, Clean CAPEX refers to investments that improve operational sustainability such as greening bank branches or buying EVs; Clean R&D refers to R&D into sustainable finance solutions such as new wealth-management platforms to enable values-aligned investing; and Clean Acquisitions and Other refer to any acquisitions of sustainable finance companies.

3. Can you provide more information about the weightings applied to “*” criteria, especially Clean Investment? 

These share the same weight. Clean CAPEX, Clean R&D and Clean Acquisitions and Other are weighted as 7.5% in total as the Clean Investment indicator. The calculation is (Total Clean Capital Expenditures + Total Clean R&D + Total Clean Acquisitions and Other) divided by (Total Capital Expenditures + Total R&D + Total Acquisitions).

4. What is the relationship between the Clean triad (Clean CAPEX/R&D/Acquisitions and Other investments) of the Environment section and the similar triad (CAPEX/R&D/Acquisitions and Other of the Economic section?

The former is the numerator and the latter is the denominator.

5. We are a financial institution and would like to calculate the percentage of our AUM and/or corporate lending to publicly traded companies according to their percentage of clean revenues. Can Corporate Knights provide us with a list of publicly traded companies, showing each of their clean revenue percentages?

Yes. Please email research@corporateknights.com and Corporate Knights will send the clean revenue percentages for all companies with coverage in our database.

6. How do you calculate the Clean Revenue for pharmaceutical companies?

It’s the percentage of revenues earned from equitably priced products for the list of 77 diseases, conditions and pathogens included in the Methodology for the 2018 Access to Medicine Index (p. 27).

Corporate Knights Data Portal Functionality Questions

1.Is it possible for us to create user accounts on the platform for additional colleagues?

Yes. To add users to your company profile, log in to the portal and select “Users,” then select [+] to enter a new user. Be sure to complete by clicking “Send password email” so your new user can create login credentials.

2.. Can I change my company’s data point values?

Yes. Please also provide additional information in the notes by clicking the “i.”

5. I have updated (rewritten) a numeric field and – even after saving – instead of turning light green it changes from blue to a grey background. Is this correct?

After entering new data, please select the green check mark beside the box to confirm that you approve this added data. Once you do so, the box will turn light green.

6. Can I upload images as supporting documentation?

Not at this time. In the future, it will be possible to upload supporting documentation. In the meantime, in exceptional circumstances where the image file cannot be linked to via a text-format URL, you can email the file in question to research@corporateknights.com.

7. We are unable to view the .CSV file of the download. What do we do?

Try the below:

1. Download the .CSV file.
2. Open a new Excel document and navigate to the Data tab.
3. Click on “From Text.”
4. Navigate to the CSV file you wish to open and click on “Import.”
5. From the newly opened window, choose “Delimited,” then click on “Next.”
6. Check the box next to the type of delimiter – in most cases this is either a semicolon or a comma.
7. Click on “Finish.”

If that doesn’t work, email research@corporateknights.com and we will send you a copy by email.

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