The disparity between what many political leaders promise and their actions has been particularly stark when it comes to the climate crisis. 

In recent years, this gap has widened. In order to be on track to deliver on their most recent climate pledges, G7 and BRICS countries needed to reduce their carbon emissions by 822 million tonnes in 2019, the most recent year for which countries have reported. Instead, reported emissions from these nations increased by 256 million tonnes.

In the absence of concrete action by governments, many corporations have stepped up to show that they can lead by example in the race to net-zero. These corporations top Corporate Knights’ 2022 Global 100 list of the world’s most sustainable corporations, which launched this week. 

Following through on ambitious science-based targets has been central to these companies’ success. Executives from 10 companies leading on sustainability convened online to mark the release of the 18th annual Global 100 and offered advice for how business and political leaders can follow their lead.

“Stop ‘green-wishing,’” Minna Aila, a senior vice-president of sustainability and corporate affairs at Neste Oyj, told the online panel of executives. “Setting ambitious goals is important, but companies and countries alike must shift the focus from ambitions to actions; from plans to progress; [and] from dreams to details.”

Here are five ways companies can deliver on the pledges they’ve made: 

1. Think short-term

Most targets laid out by governments and corporations involve reaching net-zero by a date decades in the future. India has said it won’t reach net-zero until 2070. Arçelik AS, a Turkey-based appliance manufacturer which placed 57th on the Global 100, thinks more short-term. Hakan Bulgurlu, the company’s CEO, said Arçelik has started measuring its decarbonization progress on a weekly basis. “The abstract term of a date – 2030 or 2040 – puts too much distance between us and what needs to be done,” he said. There are only 415 weeks until 2030. Chop chop. 

2. Decarbonize your supply chain

An important part of any serious decarbonization plan is tackling the emissions in a company’s supply chain that aren’t a direct result of its operations or energy use. Vestas, the world’s most sustainable company on the Global 100 this year, has been working with its suppliers to achieve this goal. The company’s CEO, Henrik Andersen, said this has involved teaming up with partners and suppliers in research and development. “It’s a no-brainer to us,” he said. 

Ørsted – a Danish energy company that ranked number one overall in 2020 and was seventh on the Global 100 this year – has published a guide for governments and businesses on how to reach net-zero, which highlights the importance of creating a roadmap for supply chain decarbonization. 

3. Keep your team accountable

Many companies are tying compensation for executives to climate targets. From 2019 to 2020, the number of corporations linking bonuses and pay to sustainability goals doubled, according to the Financial Times. This approach dangles a nice incentive in front of senior management to have the planet top of mind when making decisions.

4. Invest in climate solutions

Companies need to put climate solutions at the heart of their economic growth strategies. This means investing in climate solutions that in the long run will also make companies more profitable, panellists said. “At the end of the day, it’s a good business story. There are higher returns if you’re more sustainable,” said Christophe Beck, the CEO of Ecolab.

5. Don’t be scared of regulation

Bulgurlu says business leaders need to encourage regulation all around the world to make sure emissions shrink everywhere. “This fear of regulation, which is kind of engrained in the capitalistic system that regulation is bad, is wrong in this case,” he said.

While many corporations are pouring resources into climate solutions, some are failing to match their lofty commitments with action. It will be up to both business and political leaders to ensure that this “say–do gap” is eliminated so that we can all arrive at a greener and more prosperous tomorrow.

***

According to the UN Environment Programme, “if every company and country can reduce their emissions by 7.6% every year between 2020 and 2030, we can limit global warming to 1.5°C.” While countries’ total emissions are rising, the 10 companies that joined the Global 100 panel have reduced their emissions by 9% over the past year, in line with a 1.5°C trajectory.

The post Five ways corporations can close the ‘say–do’ gap on sustainability appeared first on Corporate Knights.

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.

Download the complete 2022 Global 100 Excel scorecard:

2022 Global 100 Full Results

Read Mike Scott’s feature story on how

Global 100 companies prove sustainability is good for business.

Read our top company profile:

Wind giant Vestas sweeps into top spot on Global 100 list of the most sustainable corporations in the world

Methodology

All companies are scored on applicable metrics relative to their peers, with 50% of the weight assigned to Clean Revenue and Clean 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 23 key performance indicators, using the Corporate Knights methodology, this year’s overall scores were converted to letter grades.

Country: Country in which company is headquartered
Peer Group: Peer group against which company was rated (based on the Corporate Knights Peer Groups)
Peer Group Rank: Company’s ranking in peer group
Carbon Productivity Score: Based on company’s revenue to Scope 1+2 CO2e ratio
% Taxes Paid: Based on company’s cash taxes paid to profit ratio over past five years
CEO–Average Worker Pay Ratio: Ratio of CEO compensation to average worker’s compensation
% Non-Male Board Directors: % of board of directors who are not male
% Clean Revenue: % of revenue earned from products and services that are categorized as “clean” under the Corporate Knights Clean Taxonomy
% Clean Investment: % of capital expenditures, R&D and acquisitions that are categorized as “clean” under the Corporate Knights Clean Taxonomy
Overall Score: The weighted average percentile rank scores across up to 23 metrics

A+ Awarded to the top company
A Above 75%
A- 70–75%
B+ 65–70%
B 60–65%
B- 55–60%
C+ 50–55%
C 45–50%
C- 40–45%
D+ 35–40%
D 30–35%
D- 25–30%

Complete methodology can be viewed here.

The post The 100 most sustainable corporations of 2022 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.

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.

Toronto, Canada, January 19, 2022 – Corporate Knights’ 18th annual ranking of the world’s 100 most sustainable corporations shows a continued correlation between higher investor returns and strong performance on key environmental, social and governance (ESG) metrics. It also sheds light on the evolution of ESG priorities and outcomes, and on the extent of the gap between leading sustainability performers and their global corporate peers.

The ranking is based on a rigorous assessment of 6,914 companies with more than US$1 billion in revenues, out of which Vestas Wind Systems of Denmark emerged as the world’s most sustainable corporation. 

Vestas has evolved from hydraulic crane production into the largest of all wind turbine manufacturers, responsible for nearly one-fifth of global installed wind power capacity. In December it began work on a North Sea turbine that will be Europe’s most powerful and Scotland’s largest renewable energy project. The company’s current focus is on lowering the carbon footprint associated with its turbines.

“Through our solutions, Vestas supports the global energy system with avoiding millions of tonnes of carbon emissions every year,” says CEO Henrik Andersen. “To build a truly sustainable future, however, we must do more,” he adds.

According to analysis by S&P Capital IQ, the Corporate Knights Global 100 Index is the best performing global sustainability equity index since its inception in 2005and is also ahead of its blue-chip benchmark.  A dollar invested in an index composed of Global 100 companies on February 1, 2005, would have generated a return nearly one-fifth larger than the same investment in the MSCI All Country World Index, or ACWI (total return of 331% compared to 279%), with the performance gap widening in favour of the Global 100 markedly after the onset of COVID as large green recovery programs were adopted.  

The 2022 Global 100 companies derive 47% of their earnings from products or services categorized as “clean” under the Corporate Knights Clean Taxonomy, and they direct 48% of their capital expenditures, R&D and acquisitions to clean investments. 

Compared to the average ACWI firm, Global 100 members generate more than four times as much revenue per tonne of carbon emitted and almost eight times more output per unit of energy consumed.

“Strong performance on these metrics is foundational to achieving a clean and carbon-neutral economy in the necessary time frame,” says Corporate Knights CEO Toby Heaps, “and the sustained momentum is encouraging.”

While Global 100 companies made progress boosting their share of clean revenues and investments, non-male representation among directors stalled this year at 32%. And there was middling performance on percent of taxes paid, with cash taxes paid being 13% of profit ratio over the past five years, in contrast to average global statutory rates that are double that. This suggests that room remains for leading performers to emerge on some of these more recent ESG focal points.

Other noteworthy findings and outcomes of this year’s analysis:

• Circularity is a heightened focal point for many Global 100 companies, such as newly ranked Schnitzer Steel Industries of the United States, which specializes in steel and auto recycling.
• 65 of the Global 100 companies have signed up to the Science Based Targets initiative, aligning their emissions reductions with the requirements of the Paris Agreement, up from 60 in 2021. 
• Some companies dropped off the Global 100 in light of performance that no longer aligns with stricter criteria for what qualifies as “clean.” For example, cars must be fully electric now to qualify, whereas in prior years, hybrids were counted as clean. This had a negative impact on Valeo SA of France, whose products largely go into hybrid rather than battery electric vehicles.
• Some high-profile brands were excluded because of specific red-flagged activities. This includes climate-policy blocking on the part of Ford Motor Company, Daimler AG, Chevron and Air France, based on research from the non-profit Influence Map. 
• Sectoral representation is dominated by various tech segments, including telecoms, chipmakers, computer makers and business service providers, while 10 banks make up the largest single sector.
• The U.S. has the largest number of Global 100 companies at 23, with Canada punching above its weight with 13. Another three come from South America, 41 from Europe/U.K., and 20 from the Asia-Pacific Region.

Normally announced at an event concurrent with the World Economic Forum in Davos, this year’s Global 100 launch includes a leaders’ roundtable discussion held virtually, focusing on the imperative for businesses and governments to close the “say–do” gap on climate. This event takes place today from 4 to 5pm Central European Time with opening remarks from Johan Rockström, a Swedish professor and joint director of the Potsdam Institute for Climate Impact Research, and the involvement of:

• Henrik Andersen, CEO, Vestas Wind Systems A/S
• Jean-Pascal Tricoire, CEO, Schneider Electric SE
• Mads Nipper, CEO, Ørsted A/S
• Esther An, Chief Sustainability Officer, City Developments Limited
• Hakan Bulgurlu, CEO, Arçelik AS
• Lawrence Kurzius, CEO, McCormick & Company Inc. 
• Roberto Guidetti, CEO, Vitasoy International Holdings Ltd.

Free registration is available at https://tinyurl.com/G1002022. 

A digital version of the ranking, select national scorecards, and further contextual and methodological information is available at corporateknights.com/global100.

What is the Global 100? Corporate Knights’ 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. The Corporate Knights Global 100 methodology strives to measure what matters and our methodology is transparent and verifiable. We’ve been conducting rigorous research on environmental, social and governance (ESG) factors for two decades. Our ESG indicators are radically transparent, enabling a clear understanding of our ratings.

Our analysis illuminates the “say–do” gap. Thousands of companies have made net-zero commitments, but only a small percentage have credible, science-based plans to decarbonize their operations and supply chains. By researching companies’ capital expenditures, income earned from clearly defined sustainable activities, research and development/implementation of innovative low-carbon technologies, and mergers and acquisitions, we’re able to determine if they are aligning their money with their public relations. Only those companies making sustainable solutions a core part of their business offerings and allocating meaningful investments to reduce their carbon footprints make the grade.

The Global 100 is the top-performing global sustainability index. The index has consistently outperformed the MSCI ACWI since its inception, and the gap has widened significantly since we’ve allocated 50% of our grade to how companies make and invest their money, with particular emphasis on those closing the say–do gap on decarbonization. Our methodology measures what matters:  sustainability. 

Global 100 Methodology: All companies are scored on applicable metrics relative to their peers, with 50% of the weight assigned to Clean Revenue and Clean Investment. Nine of the indicators have fixed weights; the rest are assigned weights according to each industry’s relative and total impact in relation to the overall economy. After quantitatively analyzing data for 23 key performance indicators, this year’s overall scores were converted to letter grades.

About Corporate Knights: Corporate Knights Inc. includes the sustainable-business magazine Corporate Knights and a research division that produces rankings and financial product ratings based on corporate sustainability performance. 

Contact information:

Toby Heaps, CEO, Corporate Knights

Phone: +1 (416) 274.1432 Email: toby@corporateknights.com

Appendix I: Net returns of the MSCI ACWI and the Corporate Knights Global 100 Index in USD as calculated respectively by Solactive and S&P Capital IQ (from February 1, 2005, to December 31, 2021). 

Appendix II: 2022 Global 100 Most Sustainable Corporations in the World

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

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