Transparency Is Key to Running a Sustainable Business

Who are the world’s most sustainably managed companies? The Wall Street Journal recently shared a ranking that aspires to provide a definitive answer.

The Wall Street Journal’s list of the 100 most sustainably managed companies in the world focuses on companies’ ability to create long-term shareholder value.  Accordingly, the ranking’s methodology takes a broad view of sustainability — assessing a company’s leadership and governance practices for their ability to create value for shareholders over the long term. The focus on shareholder value underscores the relationship between sustainability and business success.

The Top 10 are:

1. Sony

2. Phillips

3. Cisco Systems

4. Merck KGaA

5. Iberdrola

6. LG Electronics

7. Melia Hotels International

8. HP

9. Georg Fischer

10. Sekisui Chemical

How the Companies Were Ranked

According to The Wall Street Journal, the ranking was based on a review of more than 5,500 publicly traded companies around the world that met disclosure standards for data showing what programs, policies, and performance metrics they have in place for several key sustainability dimensions, including environment, human capital (internal employee and workplace issues), social capital (external social and product issues), and business model/innovation. 

Each company was scored by combining up to 165 company-reported data items with an analysis of media coverage by more than 8,800 sources available via Factiva, a database information service owned by Wall Street Journal publisher Dow Jones & Co. The scores were created using a hybrid approach that combined artificial intelligence with human validation by the Journal’s environment, social, and governance (ESG) research team.

The scores take a broad view of sustainability that assesses a company’s ability to create value over the long term, using criteria considered most financially relevant as defined by the Sustainability Accounting Standards Board (SASB), a nonprofit organization that works with companies and investors to create a framework for reporting on sustainability. To qualify for the ranking, companies needed to have publicly disclosed a minimum of 20 material data inputs with at least two inputs per financially material category in their public disclosures reported since 2018.

What the Rankings Say

The rankings reveal a lot about the current state of sustainability:

• Sustainability is a global issue. By country, U.S. companies took 23 percent of the slots, followed by Japan at 16 percent, and France at 9 percent. By region, Asian and European companies each got 36 percent, North American 26 percent, and African, 2 percent.

• Transparency is essential. Per The Wall Street Journal, “For all of the companies, transparency was key. Scores reflect the amount of publicly available information about each company’s policies, initiatives and performance metrics—all of which can be important indicators of a company’s long-term financial performance and the effects it could have on the planet and people.”

• Investors make a difference. “Investor pressure is a big reason European companies do better on environmental management,” notes the WSJ. And “[c]ompanies based in Asia have increased disclosure and ESG policies, mostly in response to demands from regional and global investors.”

Investis Digital Examines Sustainability Narratives

Investis Digital recently analyzed and ranked how well companies share their sustainability practices on their websites. Our ranking was part of a broader Connect.IQ ranking report that evaluates the most successful global websites. At Investis Digital, we help a number of businesses articulate their sustainability practices at a time when an increasing number of investors are using sustainability/ESG factors to guide their investment decisions. So understanding how well businesses discuss sustainability/ESG is important to our business.

We found that businesses still have a lot of work to do sharing their sustainability practices. Of the 100 companies we examined from the New York Stock Exchange 100, only 10 companies provide any quantification of their sustainability ambitions. Only 44 percent have a dedicated climate change or carbon reduction page. Only 17 percent of companies provide an assessment of the major non-financial risks to their business, with only half of these companies quantifying the extent or impact of those risks. Meanwhile, only 15 percent of the NASDAQ 100 explain their sustainability strategy online,

It’s critical for companies to connect the dots between sustainable business and sustaining business, but many companies fail to do so. And as The Wall Street Journal ranking shows, being transparent is also essential to running your business effectively, period.

Learn More

To learn more about our own work in sustainability/ESG, check out our website. In addition, Investis Digital published a white paper on why ESG is shaping the corporate agenda, The New ESG Agenda. The white paper is based on our own extensive helping companies find a clear, authentic, and inspiring voice to engage with their audiences on ESG issues, driving advocacy, and engagement. I urge you to download a copy to learn more.