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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 (AA), and 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.

"BP has 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 automotive sector."

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 told SocialFunds.com.

"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.

"Our 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.

 

 
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