Submitted by ISS-oekom
ISS-oekom’s Corporate Responsibility Review 2018, the annual report on sustainability in corporate management published today, affirms the continued upward trend in improved corporate sustainability observed in recent years. According to the report, the share of companies in industrialized countries with “good” and “very good” ratings stands at 17.2 percent - slightly higher compared with the previous year. Moreover, and for the first time since launch of the Corporate Responsibility Review in 2009, the group of companies with a “medium” assessment, at 43.6 percent, is larger than the share of companies assessed to have an “inadequate” sustainability performance. The latter group now stands at 39.2 percent, which is the lowest level to date. A comparable trend, but at a lower level, can be observed for companies in emerging markets.
The widely regarded annual report by ISS-oekom, one of the world's leading ESG research and rating agencies, is now in its 10th year and is based on the results of the oekom Corporate Rating. Its publication also marks the 25th anniversary of the company, which was founded in 1993 as oekom research and which joined the Institutional Shareholder Services (ISS) group of companies in March of this year.
Tops and Bottoms by Industries
The best rated sector in the industrialized countries is the Household & Consumer Goods sector, with an average rating of the included companies of 43.07 points (on a scale of 0 to 100), closely followed by Health Care Facilities & Services with a 41.18 point average. Taking third place is the Semiconductors sector with 40.51 points. At the other end of the scale, the Retail industry (24.53 points) and, as in the previous year, the Real Estate industry (23.48 points) had the lowest average points. The clearest drop in the average rating was in the Automotive and Food & Beverages sectors which dropped 6.35 points and 1.79 points, respectively, over the previous year.
Country Distribution and the Top Rated
The countries with the highest number of locally-headquartered companies ranked in the top three positions within their respective sectors were Germany and France (12 companies each). They are followed by the U.K. with 10 companies and Switzerland and the U.S., each with nine companies in the top three positions.
German companies that occupy first place in their respective industries are Evonik Industries, Drägerwerk, Henkel, SAP and Deutsche Bahn. French companies in first place are Valeo, Peugeot, Schneider Electric, Amundi, CNP Assurances and Sanofi. U.K. companies that have received the highest ratings in their industry are Berkeley Group Holdings, Coca-Cola European Partners, Relx and British Land Company.
Opportunities and Risks: Product Evaluation and Climate Management
In addition to the evaluation of the Corporate Ratings, the CR Review 2018 also contains evaluations from ISS-oekom’s Sustainability Solutions Assessments and Carbon Risk Ratings.
The Sustainability Solutions Assessment assesses information and data on the extent to which a company’s product and service portfolio contribute to achieving the UN Sustainable Development Goals (SDGs). Of the more than 2,300 companies covered, nearly 36 percent have been assessed as actively contributing to achieving the SDGs with their products and services, while the products and services of 22 percent of the companies do not address the goals.
In contrast to these generally positive trends, the assessment of the climate-related performance of companies as reflected in the Carbon Risk Ratings shows a different result: at the end of 2017, the average oekom Carbon Risk Rating (oCRR) score for all companies in the corporate rating universe was just 25.7 points on a scale of 0 (worst) to 100 (best). Only 5.6% were considered to be "climate performers" while only 2.8% were judged to be climate leaders".
25 Years as a Leading Monitor of Sustainability
Overall, the results of the ISS-oekom CR Review show that the general, upward trend towards implementing corporate sustainability practices and policies continues. The concept of sustainable development now has a completely different status than it had when ISS-oekom was founded 25 years ago - not only among companies but also among investors and the public. This development can be credited to the many actors who, over a generation, have emphasized the need and benefits of this approach from a variety of perspectives.
“There is growing consensus today with regard to the understanding that ecological and social issues can be material for the long-term success of a company and thus represent central starting points for investors in order to optimally adjust the risk-return ratio,” said Robert Haßler, co-founder and Head of ISS-oekom. ”We believe our work has contributed to the fundamental improvements evidenced today and compared with the early 1990s.”
The CR Review 2018 can be downloaded here.
About the oekom Corporate Responsibility Review
As an annual report on global corporate responsibility, the oekom Corporate Responsibility Review has been documenting the key developments in integrating sustainability criteria into corporate management since 2009. The analyses of the overall ESG performance and evaluation of controversies are based on approximately 1,600 major international companies based in the industrialized countries and around 800 companies in the emerging markets. Also, the assessment within the oekom Sustainability Solutions Assessment refers to a group of more than 2,300 companies. Wherever possible, individual evaluations refer to the entire oekom universe.
Since March 2018, ISS-oekom has been a member of the ISS family, providing high quality solutions for sustainable and responsible investment and corporate governance. Originally founded in 1993 and formerly known as oekom research, the company is one of the world’s leading ESG research and rating agencies for sustainable investments with an unsurpassed rating methodology and quality recognition. ISS-oekom analyzes businesses and countries with respect to their environmental social and governance performance. As an experienced partner of institutional investors and financial service providers, we analyse the level of responsibility exercised by equity and bond issuers towards society and the environment. Under the new ownership, ISS-oekom completes the ESG research and RI services offerings of ISS, making it a worldwide pure-player in the area of RI Research & Solutions. ISS-oekom is headed by Robert Haßler, former CEO and co-founder of oekom-research.
Dieter Niewierra, Media & Communications Lead
Since March 2018, ISS-oekom has been a member of the ISS family of high quality solution providers for sustainable and responsible investment and corporate governance. Originally founded in 1993 and formerly known as oekom research, the company is one of the world’s leading ESG research and rating agencies for sustainable investments with an unsurpassed rating methodology and quality recognition. ISS-oekom analyses businesses and countries with respect to their environmental social and governance performance. As an experienced partner of institutional investors and financial service providers, we identify those equity and bond issuers whose businesses exercise a high level of responsibility towards society and the environment. Under the new ownership, ISS-oekom completes the ESG research and RI services offerings of ISS, making it a worldwide pure-player in the area of RI Research & Solutions. ISS-oekom is headed by Robert HaéŸler, former CEO and co-founder of oekom-research. More information: www.oekom-research.com and www.issgovernance.com.
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