Transparency in the Global 100

In January, prominent CSR blogger Elaine Cohen posted Opaque Transparency, where she questioned why the Top 10 companies in the Global 100 did not have the top 10 transparency scores. Toby Heaps, Chief Executive of Corporate Knights, responds below:

Hi Elaine,

Thank you for your thoughtful analysis. We struggled with how to deal with companies that chose not to report certain key metrics. We had three broad choices:

A. Apply a zero score (penalize harshly)
B. Apply a null score (neutral/no penalty)
C. Apply a null score and include a separate score for transparency, which is weighted in inverse proportion to the extent of ESG/CSR disclosure (ie. the less a company reports, the more the transparency score is worth).

We chose C, and it is interesting to note that 9 of the top 10 Global 100 are GRI reporters. We look forward to refining the art of presenting a new balance sheet for corporate social/environmental performance--with input from insightful observers like yourself.

The Global 100 Most Sustainable Corporations in the World open the market at the TSX

The CEOs of the Canadian companies on the Global 100 Most Sustainable Corporations in the World opened the market today at the Toronto Stock Exchange. Joining the group was Toby Heaps, Editor-in-Chief and Chief Executive, Corporate Knights Magazine, Karen Kun, Publisher, Corporate Knights Magazine, Matthew J. Kiernan, Chief Executive of Inflection Point Capital Management, and David Gregoire, Managing Director and Head of Distribution of Legg Mason Canada Inc. The Global 100 Most Sustainable Corporations in the World is an annual project initiated by Corporate Knights, the magazine for clean capitalism.

What does the Global 100 have to do with sustainability?

Karl-Henrik Robèrt, founder of The Natural Step, has articulated that “Un-sustainability is not a stage, but a gradual decline of the potential of the social and ecological systems to sustain civilization with its industry.” The Global 100 indicators cannot provide a definitive answer as to a company’s “sustainability” or “un-sustainability,” but they do provide a basis for more informed discussions, benchmarking, and analysis. In particular, the resource indicators go beyond a snapshot in time, attempting to dynamically reflect the DIRECTION of the respective companies - are they heading the right way and is it enough? We tested each company’s resource productivity for energy, carbon, water and waste metrics from 2006 to 2008 against an objective standard grounded in “Factor Four” literature. Factor Four, an idea first expressed in 1998 in a book of the same name written by L. Hunter Lovins and Amory Lovins of the Rocky Mountain Institute, and Ernst von Weizsäcker, founder of the Wuppertal Institute for Climate, Environment & Energy, suggests in today’s context that, as a crude rule of thumb, our global economy must increase resource productivity by 400% over the next 20 years in order to exist within the carrying capacity of the planet. On the topic of carbon specifically, Lord Nicholas Stern has written “unless the USA, EU/Japan, Indonesia/Brazil and China reduce emissions per unit of output by a factor of four over the next 20 years, it will not be possible to grow at the desired rates and to reach the emission goals that sensible risk management requires.” The McKinsey Global Institute has made a similar point that any successful program of action on climate change must support two objectives—stabilizing atmospheric greenhouse gases (GHGs) and maintaining economic growth. Research by the McKinsey Global Institute and McKinsey's Climate Change Initiative finds that reconciling these two objectives means that "carbon productivity," the amount of GDP produced per unit of carbon equivalents (CO2e) emitted, must increase dramatically. To meet commonly discussed abatement paths, carbon productivity must increase from approximately $740 GDP per ton of CO2e today to $7,300 GDP per ton of CO2e by 2050—a tenfold increase—which is comparable in magnitude to the labor productivity increases of the Industrial Revolution. A crude but objective sustainability standard for companies in this context is that they should sustain year-over-year resource productivity increases of 6% for the period 2006 through to 2026.

While we the majority of company reported resource use data is unaudited, it is notable that 71 per cent of the 2010 Global 100 companies who report such information meet the test (6% per annum resource productivity improvements) of being on a path toward sustainable resource use (fourfold resource productivity increase over next 20 years).

	Energy	CO2	Water	Waste	Composite Resources
Fraction of Global 100 companies who report and are on track for fourfold increase in productivity by 2026	37/53	55/74	42/49	27/41	55/77
% of Global 100 companies who report and are on track for fourfold increase in productivity by 2026	70%	74%	86%	66%	71%

Note: Numbers in chart are from 2006 to 2008 for companies where data was available.

Raw data sources for core indicators include ASSET4, a Thomson Reuters business, and The BLOOMBERG PROFESSIONAL ® service.