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Vigeo Eiris News - 25/06/2013

World leaders and laggards exposed in 2nd EIRIS Global Sustainability Ratings Report

Leading global brands like Chevron and Exxon Mobil continue to lag behind their peers, with Samsung and JP Morgan downgraded this year.

A disappointing global comparison can be made between North American companies’ sustainability performance and their UK and European counterparts, according to data released today in the EIRIS Global Sustainability Report 2013.

Out of 50 of the largest companies

[1] worldwide, 35% (12/34) of North American companies scored the bottom two ratings of D and E for their management of their sustainability risks, and only 18% (6/34) of North American companies scored the top ratings of A and B[2].

UK and European companies, however, scored uniformly highly with 100% (12/12) of companies scoring an A or a B for managing sustainability risks. The remaining four global companies represent Australasia and score an even split of high, medium and low ratings.

Within these 50 ‘mega cap’ companies there are some notable leaders and laggards and a handful of improvers. Two companies have had their scores downgraded from last year’s ratings.

Samsung Electronics and JP Morgan Chase & Co. have both been downgraded from a C to a D. The report cites ‘a sharp decline in its environmental management score’ for JP Morgan ‘as the company no longer outlines its full environmental management system’. While Samsung Electronics scored badly as a result of allegations in 2012 that underage workers had been found working for one of its suppliers in Guangdong, China.

But conversely five companies have performed better. Qualcomm and the Commonwealth Bank of Australia have improved to a C, Nestle and HSBC Holdings to a B, and Merck & Company has been awarded an A grading, for its setting of ‘quantitative targets and objectives in all key areas’ and for its community involvement. Merck & Company now donates more than 0.5% of its pre-tax profits to charities.

The Report, entitled ‘Risky business – a global spotlight on corporate sustainability’ sheds light on why  some leading global brands continue to under-perform (or perform well) and provides a sector comparison so that investors can easily see how well a company is managing risks, compared to its peers. It singles out water as a growing risk and showcases international companies leading the way in how they manage this crucial issue.

Peter Webster, CEO of EIRIS comments, “We are seeing an increasing number of investors who are interested in making sustainability a larger part of their investment thinking. The EIRIS Global Sustainability Rating was designed with this requirement in mind. As investor expectations rise in this area there will be more investor engagement with laggards and those companies who are already well positioned may hope to benefit by attracting more long-term investors.”
EIRIS Sustainability Ratings provide a complete picture of corporate sustainability performance, expressed on a clear A-E scale. The ratings combine EIRIS’ assessment of a company’s sustainability impacts with an analysis of management response to ESG risks. EIRIS Sustainability Ratings are designed to meet a wide range of sustainable investment objectives and can be easily integrated into investment analysis. A factsheet about the EIRIS sustainability ratings tools can be found here.

For more information about this report, please contact Claire Bassham on 0207 840 5741 or claire.bassham@eiris.org

 

[1] This report publishes the sustainability ratings scores for 50 of the world’s largest (by market capitalisation) and most high profile companies.[2] The remaining 16 North American Companies scored a C.
Download :
icon-download-34x36 Risky business – a global spotlight on corporate sustainability
icon-download-34x36 Factsheet about the EIRIS sustainability ratings tools
Keywords : ESG, Methodology, Rating, United Kingdom