Mixed results for Asia Pacific firms in 2018 sustainability ranking

The number of firms from Asia Pacific on the Global 100 ranking remains unchanged from last year. But many have dropped to significantly lower positions on the index, with the exception of Samsung, which came in 10th this year.

samsung phone
A Samsung mobile phone. The Korean electronics giant came in 10th on Corporate Knights' 2018 Global 100 Most Sustainable Corporations in the World index. Image: Pixabay

Asia Pacific companies put up a mixed performance in the annual Global 100 ranking of the most sustainable corporations in the world, with some firms falling more than 70 spots, and others featuring in the top 10 of the index for the first time.

Korean electronics giant Samsung SDI clinched the 10th spot in the ranking, which is put together by Canadian media and research firm Corporate Knights. Having not featured at all on the index last year Samsung SDI was the only Asian firm in the top 10 this year. 

French software firm Dassault Systems topped the index after having come in 11th last year, with Corporate Knights attributing its strong performance to strong female representation on its board, a small pay gap between top management and workers, and a good tax record.

China’s Lenovo Group rose from 98 to 72nd place, and Japan’s Takeda Pharmaceutical also saw a 23-point improvement in its performance. 

Regional firms which saw a notable drop in performance included Singaporean real estate developer City Developments Limited, which fell from 30 to 100th place, and Australian finance institution National Australia Bank, which dropped from 50th to 80th place.

The two other Singapore firms to make it onto the index were property developer CapitaLand at 98th place, and telecommunications giant Singtel at the 63rd spot.

Overall, the number of Asian firms on the index remained unchanged from last year, with 12 companies featured. Australia, too, only had two of its banks featured on the list this year, as well as in 2017; though both dropped in the ranking this year. 

With 18 firms, the United States had the highest number of companies on the index, followed by France with 15 companies, and 10 from the United Kingdom, and five each from Brazil, Finland and Sweden. 

Michael Yow, research director, Corporate Knights, explained that the fluctuations in performance could be because of significant changes to the study’s methodology this year. 

“Due in part to methodology changes, there has been a high turnover in this year’s ranking,” he said.

Toby Heaps, chief executive officer, Corporate Knights, told Eco-Business that it was also important to remember that regardless of their ranking on the Global 100, the featured companies still represented the top 1.6 per cent most sustainable listed companies in the world.

Typically, the index assesses a pool of about 6,000 publicly listed companies against 17 indicators, including the ratio of revenue to energy and water use, greenhouse gas emissions, the rate of taxes paid, and the percentage of women on boards as well as in executive positions. 

While each indicator has been given equal weightage for all companies in the past, Corporate Knights decided to adjust the weightage of each metric depending on the relative contribution of the industry in question. For example, tax payment was a bigger concerns for banks, while electric utilities, which are largely responsible for greenhouse gas emissions, were more closely assessed on their carbon output. 

Corporate Knights also introduced a new “clean revenue” indicator this year, which reflects the impact of a company’s products and services on the environment. 

“Clean revenue exposure is a big driver of both commercial health and contribution to sustainability. It adds an important new dimension to our ranking,” said Yow. 

The Global 100 companies are built to last, demonstrating that firms which adapt to serve societal needs also do well financially.

Toby Heaps, chief executive officer, Corporate Knights

Sustainability equals prosperity 

Corporate Knights noted that the Global 100 companies on average paid 27 per cent more taxes, had thrice as many top female executives, and generated six times more clean revenue than their global peers.  

The companies also tended to have better long-term survival prospects, Corporate Knights pointed out. While the average multinational has been around for about 40 years, companies on the Global 100 list had an average age of 85 years, with 36 of them at least a century old. 

Heaps observed: “The Global 100 companies are built to last, demonstrating that firms which adapt to serve societal needs also do well financially.” 

But rankings don’t equal sustainability 

Though the Global 100 list ostensibly represents the world’s most sustainable corporations, it also features controversial companies such as Korean conglomerate Posco, which in 2016 was dropped by the Norwegian Government Pension Fund—the world’s largest sovereign wealth fund—because of its role in causing deforestation in Indonesia.

Samsung, too, has been accused of “medieval” practices such as denying justice to the families of former employees who died from cancers allegedly linked to unsafe workplaces, and dodging taxes as recently as last year. 

In a 2016 interview with Eco-Business, Heaps acknowledged the fact that just because a company features in the rankings, it isn’t “automatically green”. The index is just a “decent starting point” for investors and consumers to identify a shorter list of sustainable companies and then apply their own values to assess them, he said. 

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