British businesses leads global eco pack
January 27, 2006
The companies pitched as the world's 100 most sustainable were revealed in Davos today.
Analysts from environmental investors Innovest chose the World Economic Forum to announce the results of their Global 100 Most Sustainable Corporations study.
Those that make the list have demonstrated to the analysts that they have developed their ability to manage their social and environmental risks as well as spotting the opportunities which might be available to them within the sector.
Results are based on how well a company performs relative to its peers, rather than using a standard yardstick to measure them against.
This results in a number of companies making the list that may not normally be considered environmental paragons, such as Coca Cola and British Airways.
"We do this because Innovest does not believe that it is particularly insightful or methodologically feasible to compare companies in different industries to the same sustainability benchmark and/or set of targets," analyst Charles Morand told edie.
An oil and gas company and finance house, for example, face a vastly different set of social and environmental concerns that a direct comparison would be irrelevant, he said.
"Key social and environmental factors for an integrated oil and gas firm would include, for instance, climate change, employee H&S at company facilities, community and stakeholder relations in emerging markets and human rights considerations," he said.
"For the diversified financials company, such factors would include governance, proper controls in place to avoid problems such as product mis-selling, good training programs for the workforce because of the materiality of knowledge to the industry, evidence that the firm addresses social and environmental risks in asset management."
Of the 100 companies in the list almost a third (30) are British, 17 from the USA, 10 from Japan and, despite a population of just nine million, eight are Swedish.
Taken as a group the 100 companies outperformed the MSCI World Index by 7.11% between 1999 and 2005.
Whether this means that an ethical corporation is a profitable one, or that already-successful businesses recognise the importance of getting it right on social and environmental issues is open to interpretation.
There seems little doubt, however, that more and more businesses are waking up to the value of a solid CSR policy, however.
"The Innovest approach rests on the assumption that, increasingly, environmental, social and governance (ESG) factors can materially affect company performance and thus shareholder/investor value," Mr Morand told edie.
"The value to shareholders and potential investors is that companies on the list have been identified as having the best developed ability, relative to industry peers, their competitors, to manage their socially and environmentally-driven risks and to capitalise on opportunities.
"These companies have demonstrated that they were aware of the key ESG value drivers in their industries, and that they were willing to manage such drivers proactively.
"Innovest believes that, overall, this is a good proxy for overall strong management capacity, and investors are always better off with a well-managed company than with a poorly managed one."
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