Responsible funds methodology

Methodology

Eligibility criteria

Equity funds must have at least two-thirds of their holdings by market weight rated in the Corporate Knights Research universe; for balanced/corporate fixed income funds, the minimum threshold is 50% of the holdings by market weight to be rated in the Corporate Knights Research universe.‡ 

Rating metric

Funds (mutual funds and ETFs) receive a rating based on the weighted sustainability rating* of each of the funds’ underlying holdings (“Weighted Rating”).  

Example: XYZ Fund

Holdings date

Fund ratings are based on most recently available holdings breakdowns as provided by Fundata as of September 9, 2024. 

Fund categories

Funds are classified according to the classification system established by the Canadian Investment Funds Standards Committee (CIFSC) at the “Fund Type” level of classification as provided by Fundata. 

Fund scoring

Each fund receives a score that is based on the percent rank score of the fund’s Weighted Rating against other funds in the same category (“Final Score”). Scores range from 0% to 100%. 

Example: Canadian equity

Corporate Knights 2025 podium funds: Top 10 funds in category ranking

For fund categories where there are at least 12 RI funds (defined below) and at least 50 funds that meet the minimum eligibility criteria, the top 10 scoring funds in each assessed fund category are allowed to communicate that Corporate Knights has ranked them as being among the top 10 responsible funds in the given category based on this methodology. Four fund categories meet these conditions: 

• Canadian equity 
• global equity 
• international equity 
• U.S. equity 

RI funds are those funds that:

A. Have an ESG mandate or objective as identified from:

• The CIFSC list of qualifying funds,
• The Responsible Investment Association’s funds, and
• The TMX list of sustainable ETFs

and/or:

B. Are ESG-Related Funds* which are funds where the consideration of ESG factors plays a role in their investment process and confirmed by Corporate Knights Research review of the funds’ disclosures of their investment strategies in their prospectuses and due diligence with the fund manager/s.

* Based on the CSA Staff Notice 81-334 (Revised) ESG-Related Investment Fund Disclosure

Footnotes: 

*The sustainability rating is based on Corporate Knights’ rating methodology as deployed in the 2025 Global 100 Most Sustainable Corporations in the World ranking, which consists of 25 key performance indicators (KPIs) listed below including a bonus indicator of up to 2.5% score – political influence. For more details on the KPI calculations, see Appendix II (page 25) of the full methodology of the 2025 Global 100 Most Sustainable Corporations in the World ranking, which can be accessed here.

The Global 100 methodology uses a mix of fixed and variable weight ESG and sustainable-economy KPIs to score companies against their peers. We measure the share of revenues and investments that are included in the Corporate Knights Sustainable Taxonomy and percent rank those ratios against the company’s CKPG. We then give equal weight to the ratios and the percent ranks in awarding up to 25 points for sustainable revenue and up to 25 points for sustainable investment, for a total of 50 possible points.

The other 50 points in the Global 100 are allocated to 22 ESG KPIs. Eleven of these KPIs are allocated either 33 or 46 points (depending on which CKPG group the company is in) as follows: CKPG Group A* – Cash Taxes Paid (3.25), CEO Pay Ratio (3.25), Pension Fund Quality (3.25), Employee Turnover (3.25), Gender Diversity on Board of Directors (2.5), Gender Diversity among Executives (2.5), Racial Diversity among Executives (2.5), Racial Diversity on Board of Directors (2.5), Sustainability Pay Link (5), Supplier Score (2.5 or 5.0 depending on CKPG classification) and Paid Sick Leave (2.5). CKPG Group B* – Cash Taxes Paid (6.5), CEO Pay Ratio (6.5), Pension Fund Quality (6.5), Employee Turnover (6.5), Gender Diversity on Board of Directors (2.5), Gender Diversity among Executives (2.5), Racial Diversity among Executives (2.5), Racial Diversity on Board of Directors (2.5), Sustainability Pay Link (5), Supplier Score (2.5) and Paid Sick Leave (2.5).

The remaining points (17 for CKPG Group A and 4 for CKPG Group B) are allocated to five KPIs where the weights vary by CKPG. The KPIs weighted this way include productivities for energy, carbon, waste, water and Injury Rate.

The other 50 points in the Global 100 are allocated to 21 ESG KPIs. Seven of these KPIs are allocated 20 points as follows: Gender Diversity on Board of Directors (2.5), Gender Diversity among Executives (2.5), Racial Diversity among Executives (2.5), Racial Diversity on Board of Directors (2.5), Sustainability Pay Link (5), Supplier Score (2.5) and Paid Sick Leave (2.5). Each company is awarded points for these indicators based on its performance in comparison to all other companies, regardless of industry. 

The remaining 30 points in the Global 100 rating system are allocated to 14 KPIs where the weights vary by CKPG according to their relative impact. In addition, a number of KPIs have penalties applied based on relative performance. The KPIs include productivities for energy, carbon, waste, water, VOC, NOx, SOx, PM; as well as the injury rate, fatality rate, employee turnover, CEO pay ratio, cash taxes to EBITDA ratio, and the pension quality.  

In addition, up to five points are deducted for companies that have been levied fines (measured as a percentage of their revenue in comparison to their peers), and lastly, the Political Influence KPI may earn a company up to 2.5 bonus points. 

Note: “2023” equals fiscal year ends between July 1, 2023, to June 30, 2024.