Resource Effectiveness

Sustainability performance is falling short

Many companies claim that sustainability is a strategic priority for them, and has an impact on their profits, but the actual sustainability performance is falling short. That is the sobering conclusion of a report by Oekom Research, a German rating agency that analyses and evaluates the sustainability performance of a large number of companies, on behalf of institutional investors.

The report, which was published in March 2013, evaluates the performance of 1,600 companies, that together constitute the MSCI World Index. Oekom has reviewed the activities of these companies, using company information such as sustainability reports & internal documents, as well as external reports by environmental organizations and other NGOs. Companies are scored on ~100 criteria for sustainability management.

The result: there is not a single company with ‘excellent’ sustainability performance. Roughly 17% do well, and 31% get an average score. More than half of the 1,600 global companies have done nothing or very little to improve their sustainability performance.

Sustainability Performance

The performance varies strongly by geography and by industry. Companies in Europe tend to do better than their counterparts in the USA and in Asia. Industries with a relatively good rating (but still less than 50% of the maximum score) are paper & forestry, household products and automotive. At the bottom of the list are oil & gas, real estate, retail and construction, all industries with a large impact on the environment.

Oekom has identified a leader in each sector. The companies that perform relatively well, compared other companies in their industry, include Renault, Sony, Henkel, Swiss Re, BT Group, Marks & Spencer and Reed Elsevier.

The report illustrates that there is a lot of room for improvement of the sustainability performance of the world’s largest companies.