The burgeoning “carbon neutral” and “fair trade” policies espoused by companies are more than just marketing, according to Heidi Welsh. The analyst at RiskMetrics says that the consultancy’s clients, especially institutional investors, increasingly include information about companies’ “sustainability” programmes into their investment analysis.
With that in mind, RiskMetrics recently assessed how well 1,700 large, global companies govern risk when it comes to the environment, ethics, and labour and human rights. Firms were judged according to 200 policy and performance indicators, drawing on information from 2006 and 2007 corporate reports, securities filings and websites. Companies with the greatest disclosure and most aggressive goals received the highest scores.
Clear geographic differences emerged, with companies included in the largely European EAFE index leading the way on environmental issues. American firms, as measured by the S&P 500, scored highest on both ethics and labour and human rights. Canadian companies on the TSX 300 lagged their peers in most areas, though ranked higher than Europeans on ethics.