Mapped: The Countries With the Most Sustainable Corporate Giants
From plastic-filled oceans to unequal pay, sustainability is a hot topic these days. Many people are wondering how we’ll move the needle on these important issues, and the business world is being pressured to take action.
Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.
— Larry Fink, CEO of BlackRock, the world’s largest asset manager
Which of the world’s largest companies are stepping up to the plate on these issues?
The Global 100 Index
Today’s visualization pulls data from Corporate Knight’s 2019 Global 100 report, which ranks the most sustainable corporations in the world.
Any public company with revenue of at least $1B USD is screened for various factors such as sufficient sustainability reporting. The resulting corporations are scored on an industry-specific mix of performance metrics in the following areas:
- Resource Management
- Employee Management
- Financial Management
- Clean Revenue
- Supplier Performance
The final ranking represents the top companies from each sector, with the number from each sector based on the relative size of its market capitalization.
Sustainable Corporations by Country
Here’s all the countries that had companies on the list:
|Country||Number of Companies on the Global 100|
The U.S. tops the list with 22 companies – far more than any other country. European countries also dominate the list and have 51 companies on the G100 overall. Notably, the populous countries of India and China have no representation on the list.
The Top 10 Companies
So, which individual companies made the list? Here’s a snapshot of the star players:
|1||Chr. Hansen Holding A/S||Denmark||Food or other Chemical Agents||82.99%|
|2||Kering SA||France||Apparel and Accessories||81.55%|
|3||Neste Corporation||Finland||Petroleum Refineries||80.92%|
|5||GlaxoSmithKline plc||United Kingdom||Biopharmaceuticals||79.41%|
|6||Prologis, Inc.||United States||Real Estate Investment Trusts||79.12%|
|7||Umicore||Belgium||Primary Metals Products||79.05%|
|8||Banco do Brasil S.A.||Brazil||Banks||78.15%|
|9||Shinhan Financial Group Co.||South Korea||Banks||77.75%|
|10||Taiwan Semiconductor||Taiwan||Semiconductor Equipment||77.71%|
Chr. Hansen Holding A/S leapt from #66 in 2018 to the top spot this year. According to CEO Mauricio Graber, the company develops “cultures, enzymes, probiotics and natural colors for a rich variety of foods, confectionery, beverages, dietary supplements and even animal feed.”
A staggering 82% of Chr. Hansen’s revenue contributes to the United Nations’ Sustainability Goals. The company is using good bacteria to reduce antibiotic use, crop pesticides, and food waste. Over the last three years, the company has reduced yogurt waste by 400,000 tonnes.
What’s in it for Companies?
While societal pressure is certainly one motivating factor, Harvard Business Review notes that corporate sustainability has many benefits:
- Drives competitive advantage through stakeholder engagement
- Improves risk management
- Fosters innovation
- Improves financial performance
- Builds customer loyalty
- Attracts and engages employees
It’s clear that sustainability is a strong differentiator in the business community. The world’s largest – and smartest – companies are leading the charge towards a greener, more equitable future.
Visualizing the Climate Targets of Fortune 500 Companies
A growing number of companies are taking climate action, but when will they meet their goals? This timeline provides a holistic overview.
Visualized: The Climate Targets of Fortune 500 Companies
View the high-resolution version of this infographic by clicking here
The Fortune Global 500 is a ranking of the world’s 500 largest companies by revenue. In 2019, this influential group employed 70 million people and generated revenues of over $33 trillion.
Given their size and influence, many of these companies are taking climate action quite seriously. For example, 30% of the group have either achieved a climate goal or are publicly committed to doing so by 2030—a significant increase from just 6% in 2016.
In this infographic, we’ve used data from Natural Capital Partners to provide a holistic view of when Fortune Global 500 companies plan to meet their stated climate goals.
Climate Action Takes Several Forms
When taking climate action, businesses have a variety of targets they can pursue. Three of the most common ones include carbon neutrality, RE100, and science based targets (SBT).
|Climate target type||Description|
|Carbon neutral||Achieved when a company completely offsets its greenhouse gas (GHG) emissions.|
|RE100||Achieved when a company relies on 100% renewable energy.|
|Science based targets (SBT)||Emissions are reduced in line with the need to keep global warming below 2ºC.|
After choosing a target, businesses can also set a date for when they intend to achieve it. As the above graphic shows, many companies are targeting 2030, a year that is frequently touted as a deadline for meeting the goals of the Paris Agreement.
A fourth target known as “net zero emissions” is also used, though its exact definition tends to vary. For the purposes of this infographic, we’ve considered a commitment to net zero emissions to be the same as achieving carbon neutrality.
A Complete Overview
The following table summarizes the climate actions of Fortune Global 500 companies. Firms that made commitments without a target date have been noted in the table with a “C”.
|Company Name||Headquarters||Carbon Neutral (target date)||RE100 (target date)||SBT (target date)|
|Commonwealth Bank of Australia||🇦🇺Australia||2030|
|Banco do Brasil||🇧🇷Brazil||2019|
|Caixa Econômica Federal||🇧🇷Brazil||2018|
|Bank of Montreal||🇨🇦Canada||2010|
|Royal Bank of Canada||🇨🇦Canada||2017|
|Xiamen ITG Holding Group||🇨🇳China||C|
|Electricité de France||🇫🇷France||2050|
|Deutsche Post DHL Group||🇩🇪Germany||2050|
|Munich Re Group||🇩🇪Germany||2015|
|State Bank of India||🇮🇳India||2030|
|Johnson Controls International||🇮🇪Ireland||C|
|Dai-ichi Life Holdings||🇯🇵Japan||2050|
|Daiwa House Industry||🇯🇵Japan||2040||2030|
|Sumitomo Electric Industries||🇯🇵Japan||2050|
|Tokio Marine Holdings||🇯🇵Japan||2011|
|Anglo American||🇿🇦South Africa||2040|
|Hyundai Motor||🇰🇷South Korea||2050|
|LG Electronics||🇰🇷South Korea||2030|
|Banco Bilbao Vizcaya Argentaria||🇪🇸Spain||2020||2030|
|Naturgy Energy Group||🇪🇸Spain||C|
|Credit Suisse Group||🇨🇭Switzerland||2010||2025|
|Zurich Insurance Group||🇨🇭Switzerland||2014||2022|
|Fubon Financial Holding||🇹🇼Taiwan||C|
|British American Tobacco||🇬🇧UK||2030||2028|
|Phoenix Group Holdings||🇬🇧UK||2030|
|Bank of America||🇺🇸USA||2020||2020|
|Capital One Financial||🇺🇸USA||2018||2019|
|Delta Air Lines||🇺🇸USA||2020|
|Goldman Sachs Group||🇺🇸USA||2015||2020|
|Hewlett Packard Enterprise||🇺🇸USA||2025|
|Johnson & Johnson||🇺🇸USA||2050|
|Philip Morris International||🇺🇸USA||2050||2030|
|Procter & Gamble||🇺🇸USA||2030||2030||2030|
Note: This data was aggregated from various sources throughout 2020, and as a result, may not include the latest climate commitments announced by companies within the Fortune Global 500.
As of October 2020, 163 companies from the Fortune Global 500 have publicly committed to achieving at least one of these climate targets. That represents 32.6% of the total group.
The most common target is carbon neutrality, which has 91 companies on board. In second place is science based targets (SBT), which has 74 companies committed—of those, 16 have not declared a target date. RE100 was the least common, with 56 companies committed. Because some companies are committed to multiple targets, these figures add to more than 163.
Climate Action is on the Rise
Private-sector awareness around climate change and other sustainability issues has gained strong momentum in recent years.
Since 2011, the number of S&P 500 companies publishing sustainability reports increased from 20% in 2011, to 90% in 2019. This was likely due to investor demand and a broader acceptance of environmental, social, and governance (ESG) criteria.
Governments around the world are also taking a more proactive approach to climate action. The Biden administration, for example, seeks to make a $2 trillion investment to help a variety of U.S. industries become more sustainable.
“We have the opportunity to build a more resilient, sustainable economy – one that will put the United States on an irreversible path to achieve net-zero emissions…by no later than 2050.”
– Biden-Harris campaign
America’s goal of reaching net-zero emissions by 2050 is shared with a handful of other advanced economies, including Japan and the EU. The UK has taken these pledges one step further, becoming the first G7 country to pass a law that requires itself to bring emissions to net zero by 2050.
Visualized: The Top 5 Questions on Sustainable Investing for Advisers
In the not so distant future, sustainable investing could structurally change economies. What are the big questions advisers need answered?
Visualized: The Top Five Questions on Sustainable Investing
Today, the surge in green investing has been compared to the dot-com boom of the 2000s.
Back then, the internet was anticipated to radically reshape economies. Many companies fell to the wayside, and now 20 years later, tech stocks currently make up roughly 40% of the S&P 500 by market capitalization. Like the dot-com era, green firms are projected to structurally change the way businesses function.
Given the rising interest in green assets, this infographic from MSCI answers the most important questions advisers need answered on sustainable investing.
1. Which type of sustainable investing is right for my client?
First, let’s start with the basics—understanding the terms used to describe sustainable investing:
- Sustainable investing: An umbrella term that typically refers to all types of sustainable, impact, and environmental, social, and governance (ESG) integration approaches
- Impact investing: A type of investing approach that generates measurable social or environmental benefits
- Socially responsible investing (SRI): An investing approach that aligns with an investor’s ethical, religious, or personal values, while actively reducing negative environmental or social consequences
- ESG integration: Considers material environmental, social, and governance factors to enhance long-term risk adjusted returns through its investment approach
- Climate investing: Looks to reduce exposure to climate risk, identify low-carbon investment opportunities, or align portfolios with “net-zero” climate targets
Knowing the key terms of the sustainable landscape allows advisers to more accurately address client objectives, goals, and beliefs.
2. How can I start a conversation with clients about ESG?
Begin by asking what motivates clients. Typically, motivations fall into one of three core objectives:
- Can ESG factors improve my risk-adjusted returns?
- Can I have a positive impact on society through my investments?
- Are my investments consistent with my ethical, political, or religious beliefs?
Client priorities could include financial returns, impact, values, or a combination. Once these have been established, investors can choose from a universe of funds and investment vehicles that more strongly align with their goals.
3. What is ESG data and why is it important?
At the heart of ESG-focused strategies is data. In some cases, ESG analysis of companies is based on over 2,000 data points from a wide cross-section of sources. For MSCI ESG Research, they fall within these three categories:
- Mandatory company disclosures: 20%
- Voluntary company ESG disclosure: 35%
- Alternative data: 45%
Alternative data commonly makes up 45% of the total ESG dataset—constituting far beyond what a company publicly discloses. Still, ESG data can seem vague or elusive. But this doesn’t have to be the case. Rather, ESG data can be broken down and obtained from the following five sources:
- Company filings: Shareholder results, voluntary ESG disclosures
- Non-governmental organizations (NGOs): Global Reporting Initiative (GRI), Task Force on Climate-related Financial Disclosures (TCFD), UN Sustainable Development Goals
- Government: U.S. Environmental Protection Agency (EPA), European Central Bank (ECB)
- Media sources: Major headlines
- Alternative data: Geo mapping, water scarcity data, flood risk analysis
Importantly, after ESG analysts identify the risks and opportunities most relevant to a company, multiple data points coalesce to inform a company’s ESG profile.
4. Why are environmental risks becoming more important?
Rising global temperatures and ecological disruptions pose imminent risks to humanity.
Along with this, other future risks could include: eroding shareholder value, blocked project proposals, regulation compliance costs, and higher borrowing costs. In response, national, corporate, and investor commitments to achieving net-zero emissions in alignment with the Paris Agreement have proliferated.
How does this affect the risk-return profile of investments?
According to research, climate change could erase $7.75 million in value over five years from a hypothetical $100 million portfolio that shared similar returns and volatility over a five-year period to the median global developed market fund as of December, 2019.
5. Will the consideration of ESG in a portfolio lead to underperformance?
Let’s turn our attention to performance, one of the most pressing questions surrounding ESG.
Companies with strong ESG profiles have an MSCI ESG rating of AAA or AA, meaning they lead their industry in managing the most significant ESG risks and opportunities. Studies show that companies with better ESG ratings have illustrated stronger performance, higher dividend payouts, and stronger earnings stability historically, on average.
They have also illustrated the following attributes:
- Lower cost of capital
- Less exposure to systemic risk
- Lower volatility
- Higher profitability
In addition, companies with strong MSCI ESG ratings may possess greater resilience. Stocks with high MSCI ESG ratings have had lower financial drawdowns during crises compared to their market-capitalization-weighted parent index.
Sustainable Investing: Shaping the Dialogue
Companies with higher environmental risks—including heavy carbon polluters, waste emitters, and poor water management—are facing greater scrutiny. At the same time, client demand is shifting to ESG, and the conversation is changing.
These questions can serve as a launching point for advisers to help clients seize new opportunities and mitigate investment risks.
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