LONDON, Jan 18 (Reuters) – As CEOs and billionaires mingle on the snowy streets of Davos, corporate sustainability is the topic of discussion. But which is the most sustainable company in the world?
Surprisingly, research firm Corporate Knights said the answer was Schnitzer Steel Industries ( SCHN.O ), a U.S. steel producer, which pushed wind turbine maker Vestas Wind to the top spot.
Portland, Oregon-based Schnitzer Steel reported improvements in energy, carbon, water and waste in 2021 to lead the 2023 Global 100, a list of companies that Corporate Knights believes are doing the best for people and the planet.
“Schnitzer Steel is the first steel company to make the Global 100,” said Corporate Knights CEO Toby Heaps.
“If one of the world’s dirtiest sectors can produce the world’s most sustainable companies, there is no excuse for companies in any sector not to scale up.”
The company is evaluated on 25 indicators including sustainable income and investment, carbon production, ethnic and gender diversity and must have a sustainable solution within the model businesses and invest in reducing their footprint.
Schnitzer Steel was ranked first with a 74% increase in energy production, 69% in water production and 55% in carbon production by 2021 – with production that means using efficient more so when measured by income. It also reported that 100% of its $2.8 billion revenue and $0.1 billion investment went to long-term projects in 2021, although the report did not specify the project.
Schnitzer Steel did not respond to a request for comment.
Corporate Knights’ Global 100 is used by the likes of Goldman Sachs to build private equity portfolios and as a benchmark for new index funds and exchange-traded funds from Canada’s Mackenzie Investments this year.
Although the index is not profitable, the benchmark has outperformed the MSCI All Country World Index (ACWI) every year for seven of the past 11 years.
In 2022, the Global 100 outperformed the ACWI with an annualized return of 2.8% even though both declined significantly in 2021 with -15.6% and -18.4%. Between 2013 and 2022, the Global 100 returned 145.1% compared to 115.4% for the MSCI ACWI.
“Sustainability success stories are enduring even in an era of high oil prices,” Heaps said.
Advocates of sustainable investing argue that choosing companies with better environmental, social and governance (ESG) scores can lead to higher returns. But the strategy has faced pushback from U.S. policymakers and politicians who say ESG investing runs counter to fiduciary duty.
Lisa Ekstrand, head of sustainability, Lisa Ekstrand, second in line, said the ranking is valuable for comparing companies in different industries with the same level of transparency, which is “notoriously difficult.”
Vestas uses the number to identify areas for improvement, he said.
Reporting by Virginia Furness and Simon Jessop Editing by Tommy Reggiori Wilkes and Josie Kao
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