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January 28, 2013
Corporate Knights Publishes Global 100 List of Leading Sustainable Corporations
    by Robert Kropp

The Belgian metal recycling company Umicore tops the ninth annual list of sustainable large cap corporations, but the list also includes Enbridge, the Canadian operator of pipelines carrying oil from the controversial tar sands.

Corporate Knights, the Canadian media and research company, has published its annual Global 100 list of the most sustainable corporations with market capitalization exceeding $2 billion. This year's top-ranked corporation is Umicore of Belgium, a metal recycling company that is a genuine sustainability success story: it originated as a mining company with operations in Zaire, until its mines there were seized by the government in 1968.

Last year's top-ranked corporation, the Danish pharmaceutical firm Novo Nordisk, fell to fourth place on this year's list. Three US-based companiesóBiogen Idec, Intel, and Cisco Systemsórank among the top 20 this year.

The methodology employed by Corporate Knights, using data provided by Bloomberg as well as direct engagement with the 350 companies that made the shortlist, is laid out exhaustively on the Global 100 website. The initial screening eliminates companies that did not disclose at least 75% of 12 key performance indicators (KPIs), companies that did not meet measurements of financial strength, and companies engaged in the manufacturing or distribution of tobacco products or armaments. Companies that paid out an excessive percentage of revenue in fines, penalties, or settlements were also eliminated.

Companies were then ranked according to their performance in 12 equally weighted KPIs, consisting of environmental, social, and corporate governance (ESG) categories that correspond to codes in the Global Reporting Initiative (GRI) framework.

"The Global 100 are leading a resource productivity revolution, transforming waste into treasure and doing more with less," said Toby Heaps, CEO of Corporate Knights. "They are steering our civilization away from ecological overshoot and back to a place of balance with our planet."

Noting that the Global 100 has consistently outperformed has outperformed the MSCI All Country World Index, Vice President of Research Doug Morrow said, "It is a vastly underutilized source of competitive information on Wall Street and in the asset management community worldwide."

Given the list's rigorous methodology and its alignment with the GRI framework, it is likely that an investment strategy based on the Global 100 represents a superior approach to mainstream investing. But does it sufficiently take into account the threat of climate change, which is the most pressing sustainability crisis of our time?

Ranking among the top sustainable companies this year is Enbridge, a Canadian pipeline company. Ironically, just days after the release of the Global 100, what the Portland Press Herald described as a "huge crowd" gathered to protest the extension of a pipeline operated by Enbridge from Montreal to the Maine city. The pipeline would carry crude oil from the tar sands of Alberta, Canada. Tar sands extraction has been called "the most destructive project on Earth."

Enbridge has also met with significant opposition in its effort to build the Northern Gateway pipeline from the tar sands to British Columbia.

Ranking even higher than Enbridge on the Global 100 is the US-based Clorox, whose primary consumer product is chlorine bleach. Ingredients in bleach are toxic enough for the Nordic Ministers Conference to designate it as a substance harmful to the environment. As the Zen Buddhist monk Thich Nhat Hanh recently told the UK-based Guardian, "We need other kinds of products that help us to be healthier. If there is awakening in the ranks of consumers, then the producer will have to change. We can force him to change by not buying." Effective alternatives to chlorine bleach are currently on the market, including some products manufactured by Clorox.

As are effective alternatives to energy produced by tar sands oil. The problem, of course, is that renewable energy companies fall short of the market cap requirements of lists like the Global 100. Until the global investment environment succeeds in driving private investment toward renewables, the equity space at least is likely to be dominated by companies whose balancing of profits and sustainability remain works in progress.


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