Intro
The 2023 Top 100 ranking reveals the most sustainable companies of 2023 are still flourishing in tumultuous times.
Prominent media and research entity, Corporate Knights, has unveiled its latest selection of the top 100 sustainable companies for 2023. This year’s rankings, featuring the world’s 100 most sustainable companies, have been meticulously compiled through a comprehensive evaluation of over 6,000 public enterprises generating more than US$1 billion in revenue.
In these rankings, companies are assessed in comparison to their industry counterparts, with a significant emphasis on sustainable revenue and investment. These factors collectively make up 50% of the assessment’s importance.
Conflict energy price increase impact
Ralph Torrie, Corporate Knights’ research director, says rising oil prices have stimulated growth in renewables, smart buildings, electric vehicles and other climate solutions, including circular economy measures. Indeed, the top-ranked company, Schnitzer Steel, is a metals recycler. “Global 100 companies are providing the products and services that are needed for the sustainability transition and that will form the basis of the emerging 21st-century economy,” says Torrie. “They’ve outperformed the market through these last few tumultuous years.
Sustainable companies flourish
This year’s Global 100 ranking of the world’s most sustainable companies, now in its 19th year, reveals that the transition is gathering momentum – and that businesses that take sustainability seriously are flourishing financially.
While the Global 100 is light on oil and gas companies, whose profits have soared because of rising energy prices (Finland’s Neste being the only oil company on the ranking), it still managed to outperform its blue-chip benchmark, MSCI ACWI (All Country World Index), and other ESG indices. While both the Global 100 and ACWI fell somewhat in 2022, since its inception on February 1, 2005, the Global 100 Index has generated a total investment return of 270.7% compared to 222.1% for ACWI.
Sustainable revenue now makes up half of gross revenue for the Global 100 compared to just 5% for the wider benchmark, while sustainable investment shows a similar trend. For every tonne of carbon they produce, Global 100 companies earn 33 times more revenue than ACWI firms.
But while improved productivity scores for carbon, energy, water and other environmental performance indicators are often collateral benefits of underlying megatrends, such as increasing electrification, energy efficiency and digitization, the improvement in sustainable revenues and investments is generally the result of much more deliberate corporate investment policies and strategic decisions, Torrie says. “Very often, there is visionary leadership from the CEO, and the company has a clear view of the way the world is headed and how to get ahead of it.”
That doesn’t mean that corporate sustainability leaders don’t have their challenges, though. In the face of Europe’s energy crisis, the Danish government ordered 2020’s top G100 company, wind giant Ørsted, to postpone the shutdown of three of its power station units that use oil and coal as fuel. “We still believe that we, as a society, must phase out the use of gas, oil, and coal as soon as possible, but we’re in the middle of a European energy crisis, and we will, of course, contribute to ensuring the electricity supply to the best of our ability,” Ørsted said in a statement.
Competition increases
All the while, companies outside the Global 100 are starting to catch up. While the average gender diversity of Global 100 boards inched upward slightly to 34%, that figure shot up from 23% to 32% for the broader universe of more than 6,000 companies analyzed for the Global 100.
In racial diversity, there has been little improvement on company boards of directors, but there was a slight improvement in executive teams. The Global 100 and ACWI firms are neck and neck on the ratio of taxes paid, and ACWI firms have a slightly smaller gap between CEO to average worker pay.
Geographic regions
A fifth of Global 100 companies are U.S.-based, making it the leading country for members of the index, followed by Canada with 11%. However, as a region, Europe still leads the way with 44%, while Asia Pacific hosts 22% of the ranking’s companies.
Leading sectors
The leading sectors remain information technology (20%) and financial services (15%). Among the standout results of the rankings, Italian bank Intesa Sanpaolo saw a huge 234% increase in its sustainable revenue ratio thanks to a combination of increased exposure to sustainable social and environmental loans and better disclosure.
New entrants
In the wake of the COVID-19 pandemic, new entrants to the index included a number of pharmaceuticals groups, such as Merck, Pfizer, Novavax and Gilead Sciences. Chinese electric vehicle maker NIO and its compatriot Yadea, which produces electric bicycles, were also notable entrants, along with two companies from Taiwan: bicycle maker Giant and the Taiwan High Speed Rail Corp. Torrie says the addition of these corporations reflects the improved reporting on environmental, social and governance (ESG) factors from companies in the region.
Top 100 changes
As Corporate Knights has added new companies to the index, it has dropped others for a range of reasons. U.S. chipmaker Analog Devices, for example, fell out of the Global 100 because it has shown a steady worsening of its energy, carbon, water and waste productivity, and the disparity between its CEO’s pay and that of the average employee has doubled since 2020.
By contrast, battery and electric vehicle maker BYD fell out of the index even though it improved its overall performance because the car and truck manufacturing sector has become increasingly competitive. In fact, it is harder than ever to make it into the Global 100 because Corporate Knights now has a much bigger data pool to draw from.
Sustainable companies better for people, planet and profit
As ever, the G100 methodology was refined this year in a number of areas, including executive pay. But the narrative of the G100 remains the same as it has been since the index was started in 2005: more sustainable companies are not just better for people and the planet. Even in the most challenging times, they are a better bet financially, too.
Meet the Top 100 2023
Meet the latest Global 100 companies driving the transition to a low-carbon, circular economy. Corporate Knights has provided an excel which you can view here.
Methodology
Corporate Knights’ 2023 ranking of the world’s 100 most sustainable corporations is based on a rigorous assessment of more than 6,000 public companies with revenue over US$1 billion. All companies are scored on applicable metrics relative to their peers, with 50% of the weight assigned to sustainable revenue and sustainable investment. Nine of the indicators have fixed weights; the rest are assigned weights according to each industry’s relative impact in relation to the overall economy. After quantitatively analyzing data for 25 key performance indicators, using the Corporate Knights methodology, this year’s overall scores were converted to letter grades.
Source: Corporate Knights by author Mike Scott, January 2023
