These 100 Companies Found the Secret to Sustainability
This week, we talk about the WSJ’s new ranking of the world’s most sustainably managed companies.
Welcome to our weekly chat about the environmental and social issues that influence the way we work, spend our money and live our lives. We're your hosts, Maitane Sardon and Dieter Holger. Want to get our newsletter every Wednesday? Hit the subscribe button in the upper right corner and please share with your friends!
Hi, Maitane! After months of work, The Wall Street Journal is out with our first ranking of the world’s 100 most sustainably managed companies. (You can see the full ranking here). So what do we mean by sustainability and what did it take for companies to make this list?
That’s a good question since different people view sustainability differently. This ranking is about how companies adapt to issues around people and the planet and remain economically viable. To figure that out, the Journal research team, with help from artificial intelligence systems, reviewed disclosures by more than 5,500 publicly-traded companies on issues such as climate change, eco-friendly product design and providing services to underserved communities. Positive or negative news stories on these topics also were taken into account. The scores don’t measure firms’ overall impact on people or the planet but focus on important indicators of impact like policies and performance metrics. (If you want more details, please check out this methodology document). Some interesting trends emerged about which companies came out on top.
That’s right. Our No. 1 company was PlayStation maker Sony. It did well on sustainably sourcing materials and data security. Hardware companies like Sony and Cisco, which took the No. 3 spot, were the most represented and claimed 18 of the top 100 slots. These companies tended to score highly on areas like supply-chain transparency and energy efficiency, driving their scores.
Our ranking also looked at how specific sustainability issues are likely to affect the long-term financial performance of companies. We used the framework of the nonprofit Sustainability Accounting Standards Board to determine this. For example, company disclosures on energy and water use were among the metrics weighed most heavily in assessing the performance of heavy goods manufacturers like Japanese glassmaker AGC and French construction-materials maker Compagnie de Saint-Gobain. For banks, access and affordability were given greater weight. The WSJ research team also set minimum thresholds for reporting on key metrics. Every publicly traded company in the world that met those requirements had a shot at being in the top 100.
There were 10 stories in the package. A popular article was on how chief executives say that sustainability can help profits. One of them is Belgian chemical company Solvay’s CEO Ilham Kadri, who says she started work on day one in the role on a 10-year plan that includes phasing out coal and cutting a quarter of freshwater intake. CEOs we interviewed, like Ms. Kadri, German software provider SAP’s Christian Klein and French electric-equipment maker Schneider Electric’s Jean-Pascal Tricoire, have their bonuses tied to green targets.
Voluntarily addressing climate change and gender pay issues may keep a company ahead of government regulations, save costs from employee turnover by retaining talent and even attract investors. Speaking of investors, didn’t you write a piece about that, Maitane?
Yes. I spoke with somesustainability-focused investors and they said that before the pandemic, most of their conversations with companies were on environmental topics. But with the onset of the pandemic and protests calling for social justice, they have pressured businesses to protect their employees and suppliers and to make diversity and inclusion a priority. Climate change and the actions businesses are taking to manage environmental risks continue to be important for them, but these global events have revealed longstanding inequalities so they want to make sure companies are looking after their employees and suppliers and tackling disparities.
We will keep following how current events play into the investing space. Now let’s open it up to our readers: Do you think companies are doing enough to tackle sustainability issues?
Share your thoughts below, email us or catch us on Twitter. Your words could appear in our next edition! Have a great week and remember to wash your hands. 👋
Meet the team:
Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music, skateboarding and yoga (but I’m bad at both). dieter.holger@wsj.com @dieterholger
Maitane Sardon, Reporter: I have a passion for amplifying the voices of those at the center of stories. I love running on Barcelona’s beaches and binging on chocolate ice-cream to compensate (it’s all about balance). maitane.sardon@wsj.com @sardomaitane
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com @CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com @violian.tammy