Companies were rated based on 11 transparent quantitative indicators, including carbon productivity.
Toby Heaps, editor-in-chief of Corporate Knights, defines clean capitalism as “an economic system in which prices fully incorporate social, economic and ecological costs and benefits, and actors are clearly aware of the consequences of their marketplace actions,” Forbes reported.
Corporate Knights rated companies on a suite of 11 transparent quantitative indicators, including carbon productivity (revenue/carbon emissions), ratio of highest executive to average employee pay, and percent of tax paid in cash.
Companies were ranked relative to their industry peers, and all companies on the S&P 500 regardless of their industry were included in the ranking including, controversially, tobacco and military firms.
Due to the current nascent state of corporate sustainability reporting, the aim of the clean capitalism ranking is not meant to capture a company’s full impact on society, but rather to set some objective and transparent ground rules on which to measure and recognize progress.
“Our theory of change is that if you can objectively score companies on meaningful criteria and those scores can be used to influence market forces, it will be possible to divert capital away from inefficient, irresponsible firms and toward more resource-productive and responsible ones,” Heaps said.
The No. 1 ranked company in the S&P 500 ranking was Hess Corp., an integrated energy company headquartered in New York City. Drivers of Hess Corp’s top positioning in the ranking included top quartile performance in energy productivity ($592 in revenue generated per unit of energy used), water productivity ($3,315 in revenue generated per unit of water consumed) and percent of tax owed at statutory rates paid out in cash (100%). Hess Corp’s performance in the ranking was also strongly influenced by the company’s best-in-class disclosure practices; the company disclosed data on 10 of the 11 key performance indicators used in the Corporate Knights research model, tops in the Energy industry.
The 2012 ranking transparently ranked companies in the S&P 500 based on 11 key performance indicators, with data collected by Corporate Knights and verified with The BLOOMBERG PROFESSIONAL service.
The Corporate Knights Clean Capitalism rating methodology, originally applied to the Global 100 Most Sustainable Corporations in the World Ranking, was recently recognized for its industry leading standard of transparency and objectivity by a meta-study of corporate sustainability rankings (Rate the Raters by the consultancy SustainAbility).