In Latest ‘Most Sustainably Managed Companies,’ Where’s Wall Street?
With an ever-growing focus on sustainable investing and governance, it was welcome news to see The Wall Street Journal recently publish its first ranking of the “100 Most Sustainably Managed Companies in the World” earlier this month. The more attention placed on this topic, the more likely that the corporate world will work to make Earth a greener planet and more equitable society.
A little surprising, however, was that only three financial institutions, of the more than 5,500 publicly traded businesses analyzed, made the list of the top 100 companies. The analysis was based, according to The Journal, on sustainability metrics in such areas as business models, innovation, external social and product issues, employee and workplace issues and the environment.
Hardware, chemical and semiconductor makers (Sony Corp. was ranked No. 1) were the most common categories of businesses to make the list. From financial services, only Bank of Montreal (No. 15), Investec (No. 55) and Citigroup (No. 72) represented the group.
Lists and analysis aside, the rise in sustainable investments suggests the need for ongoing discussions, or even more comparisons and reviews, on how firms measure up. This year is on track to set another record for investment in sustainable-focused funds. Inflows for the first half of 2020 are at a record $20.9 billion, compared with $21.4 billion for all of 2019 (Morningstar), which shows that interest exists, because investment dollars exist. A recent survey from PwC predicted that the ESG framework will account for nearly 60 percent of all mutual funds in Europe by 2025, and if history is an indicator, the U.S. won’t be far behind.
As we continue to question what metrics, methodology and reporting standards are best to measure sustainability management, what’s clear is that Wall Street’s general omission from the “most” list is a call to action for financial institutions, no matter size or geography, to raise the bar on their efforts. The goal for financial institutions isn’t to check the box and be included on rankings, but to define metrics, set industry standards and show improvement over time. And for lists, maybe even more are needed, such as a pure peer analysis of just financial services to determine best in class for investors and consumers alike.