Top 10 Sustainable Companies (Hint: Apple is not on it)

Time Magazine recently published the top 500 most sustainable companies. We are going to look at the top ten and the bottom 10.

TIME and data firm Statista have created a rigorous methodology with which to measure the world’s most sustainable companies for 2024. The companies at the top of the list have signed on to some of the most respected climate programs, including the 1.5°C target from the Science Based Targets initiative (SBTi), and receive high scores from CDP (formerly the Carbon Disclosure Project).

The evaluation criteria included 4 factors. This included leaving out companies that were involved in fossil fuels or deforestation and left out companies involved in significant scandals around sustainability.

Now that’s the list I want to see. Green Santa’s bad boy or girl list!

The second step looked at companies with ratings such as Carbon Disclosure Project (CDP) ratings, adherence to the UN Global Compact, alignment with the Science Based Targets initiative, inclusion in the S&P Global Sustainability Yearbook, participation in the UNFCCC Race to Zero, and MSCI ESG & SRI evaluations.

The third step looked at reporting and transparency, such as whether companies published an ESG report for 2022, and if a third party had evaluated them. If you read our last article “Do Companies Want to Be Sustainable?” you will get how little an ESG rating actually means.

Lastly, Time looked at environmental and social stewardship from Corporate Social Responsibility (CSR) reports. This included emission intensity, emission reduction rates, energy intensity, and the proportion of renewable energy used. Social metrics covered aspects like gender diversity on board and in leadership, gender pay gap, work safety, and employee turnover rate. Sadly these reports are often “greenwishing”, with few mandates or third party audits occurring. According to a 2016 study that examined more than 40,000 CSR reports, less than 5% of reporting companies made any mention of the ecological limits constraining economic growth. Even fewer—less than 1%—stated that when developing their products, they integrated environmental goals that align with experts’ understanding of planetary boundaries.

The Top 10 Sustainable Companies

Time notes that many companies that ranked highly are in industries that don’t make many physical products—like banking, tech, and consulting. As you will see below, very few of these companies actually manufacture products and thus can more easily reduce carbon emissions across their supply chains.

Because of that they have limited supply chain issues that would affect sustainability. The longer the supply chain the harder it is to meet these goals.

Imagine you make computers. You have to think about the sustainability of every single part, where the materials were mined, the working conditions at the mine, etc.

Let’s take a look at numero one, Schneider Electric. Their website design is literally the color green, but Time didn’t say that was a factor, so let’s move on.

Schneider’s entire focus is on sustainability: Energy Management, Energy and Sustainability Services, and Smart grid Services. To follow on that, this is not the company’s first award. Just scroll down their awards page, which never seems to end. Successes have included:

• Delivering 800 million tons of saved and avoided CO2 emissions to customers. Providing access to green electricity to 50 million people. These might be greenwashing, as both are already their core business.

• Reducing CO2 emissions from top 1,000 suppliers’ operations by 50%.

• 100% of their primary and secondary packaging is free from single-use plastic and uses recycled cardboard. As noted, most waste is not recycled, so reducing single use plastic is a great step.

• The first company to assess end-to-end biodiversity with Global Biodiversity Score.

The Bottom 10 Companies

Now let’s review the bottom 10 companies. As you can see, many of these companies make widgets or have huge supply chains, like DHL. One surprising one is First Solar. We will take a look at the sustainability of the renewables supply chain later.

The last one on the list is Casio. Oh how you have fallen!

My favorite watch growing up was a Casio, with a great little calculator, timer, and water resistant screen. The precursor of the Apple Watch.

Source: cisnky

A quick look at the home page is nearly the reverse of Schneider Electric. Lots of shiny metal watches and flashy jewelry. An initial look at the Casio web pages left me wondering if they had even heard of sustainability. Then I found their corporate site.

First, their last news article on sustainability was from almost a year ago. Going through their sustainability initiatives made me think back to my original days working on climate change in 2011, small and slow steps towards sustainability. Key successes included:

• Achieved 93.9% recycling rate for entire Casio Group.

• Adopting paper based packaging over plastic. Now this is a good one and something that would help if every company adopted it.

• Increase the use of sustainable paper to 100% by FY2031. Yawn.

A majority of Casio’s CO2 emissions are from the purchase of goods and services, under what are called Scope 3 emissions. Limited progress has been made on addressing these emissions, and for companies that make physical products this might be one of the most important sources of emissions.

For example, this includes the sources of materials for watches, like metals and minerals that are mined. Similarly transportation of materials to Casio is a significant source of carbon emissions that have not been addressed.

Not taking actions towards reducing Scope 3 emissions is often seen as a way to kick the can down the curb, reducing the responsibility of the company to take action.

According to the Carbon Disclosure Project, a company’s Scope 3 emissions can amount to more than 11 times of their direct emissions, thus often representing the largest lever companies possess to reduce their impact on climate change. The Boston Consulting Group found that only 10% of global firms comprehensively measured and reported scope 3 emissions.

According to the MSCI climate database, 45% of the firms reporting their scope 3 emissions receive an ESG rating of AAA or AA, while only 21% of non-reporting firms receive that. At the same time more than half of procurement leaders fear they could be greenwashing “unintentionally” due to a lack of confidence in Scope 3 reporting, which most consider a “best guess” exercise.

Actually Holding Companies Accountable

If you read our last article “Do Companies Want to Be Sustainable?” you will remember that governments are creating policies that will result in real and meaningful fines when companies greenwash.