Global 100 Ranking: a two-stage research process
1. The Global 400 Sustainability leaders are selected from a universe of 4,000 developed and emerging market stocks, based on their integrated sustainability ratings from the world’s largest sustainability research consortium, The Global Sustainability Research Alliance (GSRA), and on their performance on a financial stress test administered by Legg Mason.
2. The Global 400 Sustainability leaders are then percentile ranked against their industry peers on the 11 KPIs used in Corporate Knights Capital’s research model (data are collected by Corporate Knights Capital and verified with the BLOOMBERG PROFESSIONAL® service). Industry representation in the Global 100 is adjusted to match industry representation in the MSCI All Country World Index (ACWI).
The 11 proven KPIs
Energy Productivity: Revenue per gigajoule of energy consumption.
Carbon Productivity: Revenue per metric tonne of direct/indirect GHG emissions.
Water Productivity: Revenue per cubic meter of water withdrawal.
Waste Productivity: Revenue per metric tonne of produced waste.
Leadership Diversity: Percentage of women and visible minority on board of directors.
Clean Capitalism Pay Link: At least one senior executive’s compensation tied to clean capitalism-themed performance targets.
% Tax Paid: Percentage of reported tax obligation paid in tax.
CEO-Average Worker Pay: How much more CEO gets paid (expressed as a multiple) compared to average worker.
Safety Productivity: Revenue divided by (lost-time incidents * $1K + fatalities * $1M)
Innovation Capacity: Revenue per R&D dollar spent (3-year average)
Employee Turnover: Percentage of employees that voluntarily leave the company
Behind our clean capitalism metrics
Whenever Corporate Knights releases its rankings of corporations, we inevitably receive letters complaining that companies selling “sin” products made the cut. The inclusion of certain mining and petroleum companies draws the ire of some global citizens. And so it should. But it’s important to emphasize that our rankings are intentionally designed to be product- and service-agnostic. This means no subjective indicators or exclusionary screens are used to separate the so-called sinful from the virtuous.
Corporate Knights believes a much more instructive and ultimately impactful approach is to use resource- and social-productivity metrics, increasingly available through corporate disclosure, to rank the world’s clean capitalism leaders. This means a company is measured by how efficiently it uses energy and water, how much waste and greenhouse gas emissions it generates relative to the economic wealth it creates, and whether its leadership structure reflects the diversity of the society and marketplace in which it operates.
We look at employee turnover rates, which are an indication of worker happiness, and we look at what CEOs are getting paid relative to the average worker. Is workplace safety an issue? Are firms paying their taxes and keeping up with their pension fund obligations? Is the compensation of senior officers tied to these metrics?
If such metrics are not disclosed, corporations in our rankings are penalized. Maybe next year they’ll think twice. Corporate Knights believes that even resource-productive and responsible companies should only be rewarded if they choose to be transparent about these metrics in the public realm.
“If you can objectively score companies on meaningful criteria and those scores can be used to influence market forces, it will be possible to divert capital away from inefficient, irresponsible firms and toward more resource-productive and responsible ones,” says Corporate Knights president Toby Heaps.
This approach isn’t perfect. It doesn’t capture contamination of ecosystems, land grabs in Africa, underhanded lobbying tactics, or poor treatment of civilians in foreign countries (not yet, anyway). But we can always shine a light on those behaving badly in different areas. What the approach does is set some objective and transparent ground rules on which to measure progress.
Corporate Knights Notice and Disclaimer
This document and all of the information contained in it, including without limitation all text, data, graphs, charts (collectively, the “Information”) is the property of Corporate Knights Inc. known herein as “Corporate Knights” and is provided for informational purposes only. The Information may not be modified, reverse-engineered, reproduced or redisseminated in whole or in part without prior written permission from Corporate Knights.
The Information may not be used to create indexes, databases, risk models, analytics, software, or in connection with the issuing, offering, sponsoring, managing or marketing of any securities, portfolios, financial products or other investment vehicles utilizing or based on, linked to, tracking or otherwise derived from the Information or any other Corporate Knights data, information, products or services.
The user of the Information assumes the entire risk of any use it may make or permit to be made of the Information. CORPORATE KNIGHTS DOES NOT MAKE ANY EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE INFORMATION (OR THE RESULTS TO BE OBTAINED BY THE USE THEREOF).
Information containing any historical information, data or analysis should not be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Past performance does not guarantee future results.
None of the Information constitutes an offer to sell (or a solicitation of an offer to buy), any security, financial product or other investment vehicle or any trading strategy.
The Information may contain back tested data. Back-tested performance is not actual performance, but is hypothetical. There are frequently material differences between back tested performance results and actual results subsequently achieved by any investment strategy.
Constituents of Corporate Knights equity indexes or stock lists are listed companies, which are included in or excluded from the indexes or lists according to the application of the relevant methodologies. Accordingly, constituents in Corporate Knights equity indexes or lists may include Corporate Knights, clients of Corporate Knights or suppliers to Corporate Knights. Inclusion of a security within a Corporate Knights index or list is not a recommendation by Corporate Knights to buy, sell, or hold such security, nor is it considered to be investment advice.
Corporate Knights receives compensation in connection with licensing its indexes to third parties. Corporate Knights Inc.’s revenue includes fees based on assets in Index Linked Investments.
Any use of or access to products, services or information of Corporate Knights requires a license from Corporate Knights. Corporate Knights brands and product names are the trademarks, service marks, or registered trademarks of Corporate Knights and its subsidiaries in Canada, United States and other jurisdictions.
Click here to go back to the ranking landing page.