February 02, 2005
List of Global 100 Most Sustainable Companies Highlights Alcoa, BP, and Toyota
by William Baue
Canadian corporate social responsibility magazine Corporate Knights sponsored the list, which is
based on sustainability ratings from Innovest Strategic Value Advisors.
Last week at the World Economic Forum (WEF)
in Davos, Switzerland, a list of the "Global 100
Most Sustainable Corporations in the World" was unveiled by Corporate Knights, a Canadian publication
focusing on corporate social responsibility (CSR). The list constitutes the 100 companies with the
highest Intangible Values Assessment (IVA) scores from Innovest Strategic Value Advisors, a socially responsible
investment (SRI) research firm.
"How companies perform on environmental, social,
and strategic governance issues is having a rapidly-growing impact on their competitiveness,
profitability, and share price performance, said Dr. Matthew Kiernan, founder and CEO of Innovest,
which rates the sustainability performance of 2,000 companies from such indexes as the S&P 500,
MCSI World, FTSE 350, and Eurostoxx.
Due to the proprietary nature of Innovest's
sustainability ratings, the list is not ordered according to IVA scores, which assess 80 social,
environmental, and governance indicators. The Global 100 list, which covers five percent of
Innovest's universe and hence draws on the top five percent of sectors rated by Innovest, does
however highlight three companies for farsighted sustainability practice: UK-based BP (ticker: BP), US-based Alcoa
Japan-based Toyota (TM).
"Toyota, BP, and
Alcoa are not rated 1, 2, 3--they were chosen because they represent the best examples of companies
using strategic profit opportunities in the area of sustainability," Michelle McCulloch, Innovest's
director of research operations, told SocialFunds.com. "It's impossible to rate companies like
this from 1 to 100 because one simply cannot compare across sectors--the issues for each sector
Innovest looks at are inherently different."
The Global 100 website details specific
sustainability best practices at each of the three companies highlighted.
demonstrated leadership in resource and energy efficiency, climate change risk abatement, waste
reduction and recycling, and overall environmental impact minimization," according to Global 100.
"Some relevant initiatives include participation in emissions trading, development of a
world-leading solar power business, a shift towards natural gas from oil, a goal of zero impact in
upstream operations, and the provision of clean/low emissions vehicle fuels at retail outlets."
Global 100 applauds Alcoa's ability to meld sustainability and profitability: for example,
the company expects to create environmental and energy saving of $100 million by 2006.
"Importantly, Alcoa's approach to sustainability is firmly rooted in the idea that
sustainability programs can indeed add financial value," states Global 100. "This approach is
perhaps best evidenced by the company's efforts to promote the use of aluminum in transportation
applications, where aluminum--by nature of its excellent strength-to-weight ratio--is making
inroads as a material of choice that allows automakers to build low-weight, fuel efficient vehicles
that produce fewer tailpipe emissions."
Toyota's hybrid technology distinguishes the
company as a sustainability leader, according to Global 100.
"Its Prius [hybrid] model
was the fastest selling car in America in 2004 and the company is doubling production in 2005 due
to strong demand," states Global 100. "Toyota is also licensing some of the technology to Ford
Motor [F] for its
hybrid vehicles, thereby vastly expanding the positive impact this technology has made on the
An April 11, 2005 supplement to the International Herald Tribune focusing on the Global 100 list
will publish the three companies with the top IVA scores in each sector rated by Innovest. The
supplement will also include an article documenting the correlation between corporate
sustainability performance and corporate financial performance, according to Corporate
Knights Editor Toby Heaps. Corporate Knights itself reaches a circulation of 100,000 as
an insert magazine in Canada's national newspaper, The Globe and Mail, making it the only mainstream
magazine devoted to CSR.
The Canadian publisher decided to launch a list publicly
recognizing the top global corporate sustainability performers "because nobody else was," Mr. Heaps
"Canada as a middle power with no colonial baggage to bog it down
has a long history of brokering consensus on thorny global issues, like the Montreal Protocol or
Suez Canal crisis," Mr. Heaps said. "CSR is pretty thorny, so it seemed like a natural fit."
Indeed, the last edition of the UK business
magazine The Economist features a
diatribe against CSR as its cover story, and CSR critics routinely point out instances of poor
social and environmental performance at companies with high sustainability ratings.
current economic system makes it difficult for a large company to be truly sustainable without
going bankrupt," said Mr. Heaps. "Within our flawed system--which early corporate sustainability
leaders should be trying to change--there is still considerable latitude to cut back on
unsustainable behavior, sometimes in ways that are quite profitable."
"The goal of the
Global 100 is to spur and recognize those companies willing to pioneer less damaging ways of doing
business because if nobody knows who is making progress in this area, it is going to be difficult
to maintain the momentum," he concluded.