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Vigeo Eiris News - 01/05/2012

On track for Rio+20? How are global companies responding to sustainability?

UK and continental European companies are outstripping their US and Asian counterparts, according to a EIRIS’ latest report.

The German sportswear manufacturer Puma is named a global leader in EIRIS’ Sustainability Ratings report  with British drugs company GlaxoSmithKline and the Dutch electronics company Philips also scoring highly.

A fifth of UK companies score A (the highest of five grades) based on their sustainability performance, followed by 12 per cent of mainland European ones. But only 2 per cent of US companies and 1 per cent of Asian ones make the top grade in EIRIS’ Global Sustainability Ratings.

“Big differences in corporate sustainability performance exist at the global and regional level. Tighter sustainability legislation in Europe and more public awareness contributes to this difference” said Mark Robertson, report author and Head of Communications at EIRIS. “Given these differences it is vital that investors use their influence as shareholders to drive improvements in sustainability performance” he added.

EIRIS’ report ‘On track for Rio+20? How are global companies responding to sustainability?’ analyses the sustainability performance of 50 of the world’s largest companies (by market cap). The highest-ranked largest companies include Novartis, the Swiss pharmaceutical group, and French group Sanofi. In contrast, some strong consumer brands, most notably Apple and Google, both receive D grades.

Top 10 Global Sustainability Leaders

1: Puma despite operating in a sector at high risk for human-rights abuses, Puma has a strong environment record and demonstrates improvements in supply chain labour standards.
2: FirstGroup derives more than 90 per cent of sales from rail and bus services and the company has made major improvements in reducing its environmental impacts.
3: National Australia Bank Owner of Clydesdale and Yorkshire banks trains staff to understand and identify environmental and social risks when doing business.
4: GlaxoSmithKline scores well across the board, demonstrating particular strengths in providing drugs cheaply to developing countries.
5: Roche, the Swiss pharmaceutical company has a strong equal-opportunities policy and operates an advanced code of ethics with strong anti-bribery rules.
6: Novartis, another Swiss pharmaceutical company, has strong environmental reporting and a good anti-bribery programme.
7: Philips Electronics, the Dutch electronics company, has made significant progress on environmental issues, particularly through increasing the energy-efficiency of its products.
8: Deutsche Börse, the German stock exchange, scores highly for its strong practices in relation to environmental issues, corporate governance and stakeholder engagement.
9: Novo Nordisk, the Danish pharmaceutical company, has reduced its water use and its all-round environmental, social and governance record is strong.
10: Go-Ahead Group, the UK bus and train company, has a strong record on the environment.

… and those with room for improvement

  • Apple, the world’s biggest company, gets a D in EIRIS’ sustainability ratings and lags behind other tech companies. The company needs to do more to address sustainability challenges – particularly those related to supply-chain risks.
  • ExxonMobil, the world’s second biggest company, shows poor performance in the areas of biodiversity, climate change and water management.
  • Toyota, the Japanese car maker, produces greener cars, but lags behind rivals on human-rights and supply-chain-labour standards, earning it a C.
  • Chevron along with other major oil and gas producers, including ConocoPhillips and Occidental Petroleum, is given the lowest ranking.

Carlota Garcia-Manas, Head of Research at EIRIS said: “There are signs that companies are making sustainability a priority and acknowledging its importance, not only in terms of acting as good ‘corporate citizens’ but also in terms of ensuring their own long-term success. However, it’s clear that companies need to do much more if they are to meet the concerns of their stakeholders and investors whilst managing the impacts of their businesses upon society and the environment in a sustainable way, both now and in the future”.

If the UN conference on sustainable development is to be successful in promoting the shift to a greener and fairer economy, both companies and their investors must be fully engaged in the sustainability debate. Rio+20 offers an important opportunity to advance the concerted action needed by financial institutions, business and governments alike to support the transition to a more long-term, sustainable and resilient economy.

Download :
icon-download-34x36 EIRIS’ Sustainability Ratings report
Keywords : ESG, Europe, Report