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.

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

The post 2022 Global 100 Press Release appeared first on Corporate Knights.

Download the complete 2021 Global 100 Excel scorecard:

2021 Global 100 Free Results

The post 2021 Global 100 ranking appeared first on Corporate Knights.