Is “sustainable oil company” an oxymoron?
Not in a new ranking of the world’s 100 most sustainable corporations by Corporate Knights, a Toronto-based media and investment research company, which features two oil companies in the top 10.
Here’s the top 10:
- Umicore (Belgium)
- Natura Cosmeticos (Brazil)
- Statoil (Norway)
- Neste Oil (Finland)
- Novo Nordisk (Denmark)
- Storebrand (Norway)
- Koninklijke Philips Electronics (Netherlands)
- Biogen Idec Inc (United States)
- Dassault Systemes (France)
- Westpac Banking Corp (Australia)
Despite the heavy concentration of European countries, especially from Scandinavia, in the top 10, the United States and Canada tied with the most corporations on the list with 10 each.
To come up with the annual “Global 100” list, researchers began with about 4,000 companies with a market capitalization greater than $2 billion as of October 1, 2012. From there they screened companies based on four criteria: sustainability disclosure practices, financial health, product category, and financial sanctions. With a shortlist of 350, they further dwindled the list down to 100 based on 12 sustainability measures, including energy productivity, innovation capacity, and a clean capitalism pay link (read more about the methodology here). The companies that scored the highest on those measures formed this year’s Global 100.
Not only is the ranking an indicator of companies with good sustainability practices, but collectively the index has also turned out to be a good investment, according to Corporate Knights.
“The Global 100 is one of the few equity indexes that we are aware of that has outperformed the MSCI All Country World Index (ACWI)—the Global 100’s benchmark—by over 900 bps over the last 8 years,” Doug Morrow, the VP Research at Corporate Knights. “It turns out that our methodology for stock selection in the Global 100 is a strong proxy for corporate operational efficiency, which has been an increasingly important driver of stock returns in recent years.”
“We feel that the sustainability data that flows into our Global 100 research model, once properly cleansed, can contain hidden and statistically robust signals about companies’ future financial performance,” said Morrow. “It is a vastly underutilized source of competitive information on Wall Street and in the asset management community worldwide.”
See the complete Global 100 list here.
