Assessing Corporate Sustainability
In an era of corporate greenwashing, how can you identify companies with real commitment to environmental sustainability and countering climate change?
The venerable news magazine Time and global data specialist Statista believe they know how, and the result is a list of the World’s 500 Most Sustainable Companies as of 2024.
The purpose of the project, according to Time, is to “recognize and reward” companies that have demonstrated their adherence to sustainability. The list can serve as an example for other businesses to emphasize environmental well-being in their operations, the magazine said. It also sends a message to consumers who want to support sustainable businesses, added Wenke Krützfeldt, team lead for market analysis at the Statista R division of its parent company.
“Statista strives to exclude companies that could be accused of greenwashing,” Krützfeldt told Earth Hero. “However, it is important to acknowledge that greenwashing can be complex and multifaceted, requiring continuous diligence to maintain the integrity of the assessments.”
Picking the Winners
Statista and Time began their project in summer 2023 with a list of 5,225 companies around the world selected based on market capitalization, revenue, and public prominence, Krützfeldt said. They then used four broad metrics, encompassing over 20 data points, to winnow the list down to 500.
This year’s top-ranked business is French energy technology company Schneider Electric; the highest-ranked U.S. company, at No. 5, is genomics firm Illumina; the highest-ranked U.S. company that many consumers un the United States know, at No. 10, is healthcare provider Cigna.
The four steps in arriving at the winners were:
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Eliminating companies in fossil fuel, deforestation, or other clearly non-sustainable sectors, alongside those with troubling operations or histories; for example, a connection to an environmental disaster.
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Analyzing companies using a host of “external sustainability ratings and commitments from reputable organizations.” That encompassed the businesses’ environmental disclosure scores from the nonprofit organization CDP; involvement in the Race to Zero (emissions) campaign from the U.N. Framework Convention on Climate Change (UNFCCC); and inclusion in the S&P Global Sustainability Yearbook.
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Assessing the value of the companies’ sustainability reporting, including: whether the businesses issued environmental, social, and governance (ESG) reports in 2022; that the reports underwent external review; and that they met international reporting standards from organizations including the Sustainability Accounting Standards Board.
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Analyzing important environmental and social metrics from the companies’ corporate social responsibility (CSR) reports, such as emission intensity, emission reduction rates, energy intensity, gender diversity in board and leadership positions, and work safety.
For the companies that remained in consideration after the initial exclusion process, 40% weight for final scoring was given for both commitments and ratings and stewardship, with the remaining 20% for reporting and transparency, Krützfeldt said. The top possible score was 100; Schneider Electric came in well below that, at 88.86.
“We were not surprised that none of the companies scored 100 points,” she said. “The targets set by Statista are ambitious and even for the most dedicated companies there is still room for improvement.”
Value in the Numbers
There is real-world value in highlighting lists like this, Krützfeldt added: “For consumers and the public, the list of CSR ranking can help in making informed decisions/choices, allowing them to support companies that align with their values. It can also help investors to consider CSR performance to make more sustainable long-term investment decisions - (to) guide them towards companies that are socially responsible, and not only profitable.”
In September 2023, Statista surveyed 17,000 U.S. residents about their positions on a business’s CSR policy. Less than a quarter of customers (23,7%) said the issue is not important to them in any way. The remaining expressed some level of support for those policies: 14.1% identified them as “really important to me;” 29.2% said they strive to select socially responsible companies; and 32.9% said when given a choice they lean toward socially responsible companies.
In a corresponding poll of employees, Statista found that 27.1% said the company’s CSR policy was not important to them. An even 58% said it is important that a company operates in a socially responsible manner and 14.9% said they would only work for a company that adheres to CSR measures.
Statista hopes to prepare an annual list of the world’s most sustainable companies and believes a new list will be published in 2025, Krützfeldt said. Time magazine, though, will make the final call, she noted. A representative for Time did not respond to a query.
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