Corporate Knights, the Toronto-based media and investment advisory company, released the 2014 iteration of its Global 100 Most Sustainable Corporations in the World (Global 100) index today at the World Economic Forum in Davos.
In its tenth year, the Global 100 index has come to be a widely followed analysis of corporate sustainability; companies named to the Global 100 are the top overall sustainability performers in their respective industrial sectors.
Inclusion in the Global 100 index is determined using 12 quantitative sustainability indicators, including the amount of revenue companies generate per unit of energy consumption, the ratio of CEO to average worker salary and lost time injury rate.
“The Global 100 follows a rules-based index construction methodology,” said Doug Morrow, Managing Director at Corporate Knights. “We unpackage ‘sustainability’ into its component parts and build the index from the ground up using clearly defined ratios and performance indicators.”
Corporate Knights says the Global 100 index can be used as a benchmark or as a basis for financial production construction, including exchange-traded funds and structured products. Beginning February 1, 2014, the index will be calculated by Solactive, the German index provider.
The top-ranked company in this year’s Global 100 index was Westpac Banking Corporation. Headquartered in Sydney, Australia, Westpac is one of the largest financial service providers in Australasia, with annual revenues of US$38 billion and over 36,000 employees. The bank has a long history of leadership and innovation in corporate sustainability: It was the first bank to join the Australian government's Greenhouse Challenge Plus and the first financial institution in Australia to create a matching donation program.
This year, the top five were rounded out by U.S.-based biotech firm Biogen Idec; Outotec Oyj, a Finnish mining technology and capital goods company; Norwegian oil giant Statoil; and Dassault Systèmes, a French company that specializes in the production of 3D design software.
Of note in this year’s ranking is the strong performance of U.S. firms, capturing 18 of 100 spots on the Global 100 index. Canada followed with 13 spots, and the UK and France tied for third with eight spots each.
Emerging markets accounted for three positions on the index, consisting of two firms from Brazil and one from China. The Financials sector took 22 spots on the index, followed by the Consumer Discretionary and IT sectors, each with 12.
According to Toby Heaps, CEO of Corporate Knights, the Global 100’s outperformance of 3.21 percent over traditional stocks this period speaks to the investment benefits of sustainability.
“The results speak for themselves. Topping a well-diversified benchmark is not easy, but the Global 100 has managed to squeak out marginal out-performance across a turbulent period in the history of the capital markets. We attribute this excess return to the growing investment relevance of core sustainability themes, including water scarcity, rising energy prices and growing competition for human capital, all of which are captured in the Global 100 methodology.”
Some notable movement since last year’s list include Adidas, which rose from #17 to #8, and BASF, which rose 23 spots to #12. But more notable are the number of companies that fell on the list, including last year’s #2 company, Natura (now at #23), Unilever (sank from #82 to #93) and last year’s #1 company, Umicore — now at #7.
L’Oréal, which last week added a zero-deforestation pledge to its “Sharing Beauty with All” sustainability commitment, landed at #45 on the 2014 Global 100 index — the cosmetics giant was dropped from the list last year for the first time since 2008.
For full rankings and methodology details, please visit: Global100.org.