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February 05, 2008
Yearbook Presents Sustainability Trends and Leaders
    by Anne Moore Odell

SAM and PricewaterhouseCoopers offer insights into the sustainability efforts of cutting-edge companies.


Many global companies are graduating from just thinking about sustainability practices to actually including them in their day-to-day operations reports the 2008 Sustainability Yearbook offered by SAM in partnership with PricewaterhouseCoopers (PwC). Yet the Yearbook also states that if people from emerging markets consumed at the rate of people in developed markets, we would need two extra Earths to meet demand.

The Sustainability Yearbook 2008 was presented at the 2008 in Davos, Switzerland, last month. The Yearbook offers environmental, social and governance (ESG) information on the top global companies in 57 industrial sectors.

Headquartered in Zurich, Switzerland, SAM is an asset manager for sustainability investments with $7.5 billion under management as of the end of 2007. The annual Yearbook for the first time in 2008 awarded companies gold, silver and bronze classifications with one company in each sector named a "sector mover." PwC, a global consulting firm, works with companies to build long-term value by addressing their sustainability needs.

SAM evaluated over 1,000 companies on sector specific sustainability criteria for the Yearbook. Of these companies, only the top 15% were included in the Yearbook. Of the 376 companies in the 2008 Yearbook, 67 companies were placed in the Gold Class, 74 Companies in the Silver Class, and 63 in the Bronze Class.

"Over the past years, we have observed that the topic 'sustainability' is on top of the agenda of CEOs which has a strong impact on the company's strategy," said Kim-My Schefer, Head Corporate Communications for SAM. "Therefore, the demand for an international reference work that highlights the world's leading companies in terms of sustainability is very high. After the publication of the SAM Sustainability Yearbook 2008, some of the awarded companies were informed about their status (leader, gold, etc.) via press release or on their homepage."

The Yearbook also includes research from SAM that puts forward a strong relationship between a company's financial performance and their sustainability efforts. The Yearbook traces investors' movement away from the old-fashioned idea that the only goal of a company is a short-term profit for stockholders to one that takes a longer view that addressing sustainability issues enhances profitability for the long-term. The report also argues that the market is getting better at including extra-financial information such as ESG issues and acknowledges that how companies respond to ESG issues does impact stock prices.

"Corporate sustainability is a business approach that creates long-term shareholder value by embracing opportunities and risks deriving from economic, environmental and social developments," Schefer told Socialfunds.com. "A defined set of criteria and weightings is used to assess the mentioned opportunities and risks for the eligible companies. A major source of information is the SAM questionnaire, which is completed by companies participating in the annual review. Further sources include company and third-party documents as well as personal contact between the analysts and companies."

The criteria applied to a company's sustainability efforts to control risks and take advantage of opportunities differs from sector to sector. However, the general criteria SAM used to examine sustainability efforts were divided into economic, environmental and social factors. The economic criteria includes a company's codes of conduct, corporate governance, and risk and crisis management; the environmental criteria include environmental performance, and environmental reporting; and the social criteria examined include corporate citizenship, labor practice indicators, human capital development, social reporting and talent attraction and retention.

Schefer told Socialfunds.com, "The Swiss companies are the international leaders considering the three corporate sustainability criteria" economic, environmental and social. In Asia, the companies improved quite well, especially in China in the field of renewable energy. US companies have improvement potential in comparison with European companies."

Companies that "think outside the box" and not only reduce waste and consumption are the real leaders, the Yearbook states: "Eco-efficiency is not limited to making incremental efficiency improvements in existing company practices. It should stimulate creativity and innovation in the search for new ways of doing things."

This year's Yearbook focuses on water as a global challenge, with the demand for fresh water growing sharply for both domestic and industrial uses. The growing population, aging water infrastructure, climate change and unsafe drinking water are four water mega trends that the Yearbook notes.

"Water is big business," the Yearbook reads. "The sale of water-related equipment and services now produces an annual turnover of USD $400-500 billion. The price charged to consumers, meanwhile, is often too low to accurately reflect its value. If the price of water rises, this will have dramatic consequences in every aspect of our lives, and affect almost all of society's commercial activities."

SAM's Sustainability Yearbook 2008 offers individual and institutional investors a real tool to compare companies and their sustainability efforts. And like a high school yearbook, the timeliness of the information found within the Sustainability Yearbook 2008 is important. This year's popular sustainable companies will be replaced by next year's sustainability stars. Companies can't rest on their ESG laurels as SAM looks anew at what companies are doing now and for the future.

 

 
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