Corporate Knights has released its 14th annual Global 100 list of the most sustainable corporations in the world. Global 100 companies were selected from a pool of 5,994 publicly listed companies representing 22 countries and encompassing all sectors of the economy. Each was evaluated on a set of up to 17 environmental, social and governance indicators relative to their industry peers using publicly available information.
French multinational software company Dassault Systèmes was the top-ranking company for 2018. The company’s digital technologies assist businesses and governments reduce waste, adopt renewables and create smarter cities. Significant female representation on the board (six of 11 current directors), a relatively small pay gap between the CEO and average workers (30:1) and a strong financial contribution to society helped Dassault climb 10 spots from its #11 ranking in 2017.
Following closely behind is Finland’s Neste Oil, a refining and marketing company that has begun directing more than 90 percent of its investments into renewable fuel and bio-based materials, putting it on track to earn over half its revenues from clean sources in the next five years. In third place is another French company, automotive supplier Valeo, which has placed a strong emphasis on helping automakers reduce carbon emissions. Belgian pharmaceutical corporation UCB and Finnish construction and engineering firm Outotec round out the top five.
Sustainable Brands members Cisco Systems (#7), Nestlé (#50), HPE (#79) and Johnson & Johnson (#92) also appeared on the list. Brazil’s Natura Cosmeticos (#14) was the highest ranking personal products company, Chr. Hansen (#66) led the chemicals category and Kering (#47) was the sole textiles, apparel and luxury goods company to make the list.
Global 100 companies paid an average of 27 percent more taxes, had three times as many top female executives and generated six times more clean revenue than their global peers. The selected companies demonstrate the strong linkage between the delivery of superior value for society and strong financial performance. They also have greater longevity. From its inception in February 2005, the Global 100 Index has outperformed its benchmark (the MSCI All Country World Index) by close to a third with a cumulative return on investment of 163 percent to end of year 2017.
As the global 100 ranking is meant to identify those firms best equipped to thrive in the long-term, this year Corporate Knights identified the year of origin for all ranked companies. In an era where the average multinational has been around for less than 40 years, the average age of 2018 Global 100 companies was 85 years. Years of origin ranged from 1654 for Orkla ASA of Norway to 2008 for Amundi SA of France. In all, 36 of the 2018 Global 100 companies have been in existence for at least 100 years.
“The Global 100 companies are built to last, demonstrating that firms which adapt to serve societal needs also do well financially,” said Toby Heaps, CEO of Corporate Knights.
On a country-by-country basis, the United States led the way with 18 Global 100 companies. Cisco Systems (#7), Autodesk (#8) and Merck (#13) were identified as the country’s top performers. France followed with 15, with 10 from the UK and five each from Brazil, Finland and Sweden.
Two major advancements were made to the ranking methodology this year. First, each key performance metric is now weighted to reflect the relative contribution of the industry in question. The tax metric, for example, was more heavily weighted for industries such as banking that generate a large share of overall profits from which taxes are drawn, whereas the carbon metric was more heavily weighted for industries such as electric utilities that emit a large proportion of global emissions. Previously each metric was equally weighted regardless of industry.
The second advancement was to add a clean revenue metric to reflect the beneficial impact of a company’s products and services on the environment. It is calculated using a definition derived from multiple sources applied to a segmented revenue database from FactSet, and confirmed via manual inspection of financial statements.
“Clean revenue exposure is a big driver of both commercial health and contribution to sustainability. It adds an important new dimension to our ranking,” said Michael Yow, Research Director at Corporate Knights.