Methodology
Eligibility criteria
Equity funds must have at least two-thirds of their holdings by market weight rated in the Corporate Knights Research universe; for balanced/corporate fixed income funds, the minimum threshold is 50% of the holdings by market weight to be rated in the Corporate Knights Research universe‡.
Rating metric
Funds (mutual funds and ETFs) receive a rating based on the weighted sustainability rating* of each of the funds’ underlying holdings (“Weighted Rating”).
Example: XYZ Fund
| Holdings | Weight | Sustainability Rating |
|---|---|---|
| AAA Co Ltd. | 50% | 25% |
| BBB Co Ltd. | 40% | 10% |
| CCC Co Ltd. | 10% | 50% |
| Weighted rating | 21.5% |
Holdings date
Fund ratings are based on most recently available holdings breakdowns as provided by Fundata as of November 8th, 2023.
Fund categories
A fund receives a Weighted Rating provided there are at least 12 funds within its fund category in the starting universe of funds which meet the minimum eligibility criteria stated above. Funds are classified according to the classification system established by the Canadian Investment Funds Standards Committee (CIFSC) at the “Fund Type” level of classification as provided by Fundata.
Fund scoring
Each fund receives a score that is based on the percent rank score of the fund’s Weighted Rating against other funds in the same category (“Final Score”). Scores range from 0% to 100%.
Example: Canadian Equity
Fund Name Weighted Rating Final Score
X Equity Growth 50% 100%
Y Canadian Equity 40% 67%
Z Value Fund 10% 33%
Omega Index Fund 5% 0%
Corporate Knights 2024 Podium Funds: Top Ten Funds in Category Ranking
For fund categories where there are at least 12 RI funds (defined below) that meet the minimum eligibility criteria, the top ten scoring funds in each assessed fund category are allowed to communicate that Corporate Knights has ranked them as being among the Top 10 Responsible Funds in the given category based on this methodology. Four fund categories meet these conditions:
- Canadian Equity
- Global Equity
- International Equity
- U.S. Equity
RI funds are those funds that have an ESG mandate or strategy. These funds consist of the Responsible Investment Association’s funds, the TMX list of sustainable ETFs, and funds identified by Corporate Knights Research as having ESG mandates or strategies, based on their names (includes keywords such as “clean,” “ESG,” “sustainable,” “fossil-free,” “Paris-aligned,” “carbon,” “women,” “diversity,” “SRI”) and confirmed by review of the funds’ disclosures of their investment strategies.
Footnotes:
* The Sustainabilty rating is based on Corporate Knights’ rating methodology as deployed in the 2024 Global 100 Most Sustainable Corporations in the World ranking, which consists of 25 key performance indicators (KPIs) listed below including a bonus indicator of up to 2.5% score – Political Influence. For more details on the KPI calculations, see Appendix II (page 25) of the full methodology of the 2024 Global 100 Most Sustainable Corporations in the World ranking which can be accessed here.
The Global 100 methodology uses a mix of fixed and variable weight ESG and sustainable economy key performance indicators to score companies against their peers. We measure the share of revenues and investments that are included in the Corporate Knights Sustainable Taxonomy and percentrank those ratios against the company’s CKPG. We then give equal weight to the ratios and the percentranks in awarding up to 25 points for sustainable revenue and up to 25 points for sustainable investment, for a total of 50 possible points.
The other 50 points in the Global 100 are allocated to 21 ESG KPI’s. Seven of these KPI’s are allocated 20 points as follows: Gender Diversity on Board of Directors (2.5), Gender Diversity Among Executives (2.5), Racial Diversity Among Executives (2.5), Racial Diversity on Board of Directors (2.5), Sustainability Pay Link (5), Supplier Score (2.5) and Paid Sick Leave (2.5). Each company is awarded points for these indicators based on its performance in comparison to all other companies, regardless of industry.
The remaining 30 points in the Global 100 rating system are allocated to fourteen KPI’s where the weights vary by CKPG according to their relative impact. In addition, a number of KPI’s have penalties applied based on relative performance. The KPI’s include productivities for energy, carbon, waste, water, VOC, NOx, SOx, PM; as well as the injury rate, fatality rate, employee turnover, CEO pay ratio, cash taxes to EBITDA ratio, and the pension quality.
In addition, up to five points are deducted for companies that have been levied fines (measured as a percentage of their revenue in comparison to their peers), and lastly, the Political Influence KPI may earn a company up to 2.5 bonus points.
| Key performance indicator | Data period covered |
| Energy/GHG/Water/Waste/VOC/NOx/SOx/ Particulate Matter Productivity | 2022 and improvement from 2012 |
| Percentage Tax Paid | 2018–2022 |
| Sustainable Revenue, Sustainable Investment | 2022 |
| Board and Executive Racial and Gender Diversity | 2022 |
| CEO–Average Employee Pay | 2022 |
| Injuries, Fatalities, Employee Turnover | 2022 |
| Pension Fund Quality | 2022 |
| Sustainability Pay Link, Paid Sick Leave, Supplier Sustainability Score | 2022 |
| Sanction Deductions | 2022 |
| Political Influence | 2022 |
Note: “2022” equals fiscal year ends between July 1, 2022, to June 30, 2023.
Red flags: Holdings that are red-flagged automatically receive a 0% sustainability rating. Red-flag holdings include companies that are classified in the Corporate Knights database for one or more of the following criteria: access-to-nutrition laggards, access-to-medicine laggards, adult entertainment, companies blocking climate policy, companies blocking climate resolutions, carbon bomb involvement, cement-carbon laggards, civilian firearms, controversial and conventional weapons, deforestation and palm-oil laggards, fossil fuels (energy), fossil fuel financing, farm-animal-welfare laggards, for-profit prisons, gambling, gross corruption violations, monetary sanction, government sanctions, oil-sands laggards, severe environmental damage, severe human rights violations, thermal coal and tobacco. More details and full definitions of the red flags can be found in Appendix III (page 36) of the full methodology of the 2024 Global 100 Most Sustainable Corporations in the World ranking which can be accessed here.
‡ Corporate fixed income instruments are mapped to the ultimate parent company in the Corporate Knights Research universe.
