European firms in top third of EIRIS sustainability rankings

HSBC and Nestlé advance in 2013 ratings as JPMorgan and Samsung fall.

European companies continue to outrank their North American counterparts in terms of sustainability performance, according to the EIRIS Global Sustainability Report 2013, which ranks the world’s 50 largest companies.

Only 18 percent of North American members of the ‘macro-cap 50’ achieved an A or B ranking on a scale that runs from A to E, with A being the highest score, while 100 percent of the European members of the macro-cap 50 scored an A or B rating, according to research by the Ethical Investment Research Service (EIRIS).

North America accounts for 34 of the 50 companies in the study while Europe accounts for 12 and the rest are from Asia-Pacific, EIRIS says. Asian and Australian companies are evenly split among the rankings.

Five companies advanced a grade in this year’s ranking, including HSBC, which rose to a B for improving the way it manages its waste and carries out bribery reporting. The Commonwealth Bank of Australia rose to a C for significant improvement in its environmental performance, particularly around the issue of climate change. Nestlé rose to a B, Merck & Company advanced to an A, and Qualcomm scored a C. 

JPMorgan Chase fell to a D because it ‘has seen a sharp decline in its environmental management score as the company no longer outlines its full environmental management system, provides details of non-compliance, fines, prosecutions or accidents, engages in stakeholder dialogue or has external verification of its environmental management system,’ EIRIS says.

Samsung Electronics also dropped to a D amid ‘allegations in 2012 that underage workers have been found working for one of its suppliers in Guangdong in China,’ according to EIRIS. US oil companies Chevron and Exxon are the only firms that received an E rating. 

EIRIS says ESG issues are forming an increasingly important part of analyses by institutional investors and other groups. The research service predicts the lower-ranked companies will face rising pressure to increase their performance in coming years.

‘We are seeing an increasing number of investors who are interested in making sustainability a larger part of their investment thinking,’ Peter Webster, CEO of EIRIS, says in a press release announcing the report. ‘The EIRIS Global Sustainability Rating was designed with this requirement in mind. As investor expectations rise in this area, there will be more investor engagement with laggards, and companies that are already well positioned may hope to benefit by attracting more long-term investors.’

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