Making sustainable concepts part of day-to-day business is no easy feat. Yet the latest ranking of the most sustainable corporations around the globe shows that sustainable companies not only last longer, they also contribute more to society and the environment. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading semiconductor foundry, became the first Taiwanese company to make it into the Top Ten in the sustainability rankings.

Which globally known transnational company is best at running its business sustainably? Do sustainable companies have a longer lifespan than the industry average?

Denmark-based global bioscience company Chr. Hansen was ranked as the world’s most sustainable corporation by Corporate Knights, a Canadian market research firm, in its 2019 Global 100 Sustainable Corporations in the World Index, followed by Paris-based luxury brand group Kering SA and petrochemical company Neste Corporation from Finland.

Aside from the 10th -ranked TSMC, only one other Taiwanese company made it into the Top 100 — Computer hardware maker Advantech Co. Ltd. secured rank 86. No other Taiwanese companies have ever reached the Top 100 in the ranking’s 13-year history.

The ranking covered companies with gross revenue of at least US$1 billion in fiscal year 2017. The methodology uses 21 key performance indicators such as financial management, employee management, and clean revenue. The average age of all companies in the MSCI ACWI Indexes stands at 63, according to data from Thomson Reuters.

Surprisingly, the world’s 100 most sustainable enterprises reach an average age of 87, which indicates that sustainable enterprises are able to survive much longer in the market.

TSMC in Top 10, Advantech Scores with Gender Equality, Good Governance

TSMC made it into the Top 100 for the third time this year, grabbing rank ten with an overall score of 77.71 percent, the highest score within the semiconductor industry. The company barely made it into the ranking in 2010, garnering rank 98, but failed to secure a Top 100 spot in the following years.

Last year, it made a comeback, moving up to rank 74 in the lower half of the list. This makes this year’s meteoric rise into the Top 10 all the more stunning. Among the KPI used for the ranking, TSMC stands out for an exceptionally low employee turnover rate of 4.2 percent, which translates into a full score for that indicator.

Moreover, TSMC includes microeconomic and macroeconomic aspects in its corporate social responsibility (CSR) goals, and involves upstream and downstream vendors in its efforts to make production more sustainable and realize a circular economy. The company is, for instance, recycling chemical waste such as copper sulfate on-site and returns the regenerated materials into its processes.

Similarly, waste sulfuric acid is recycled and reused inhouse to generate usable ammonium sulfate from ammonia nitrogen wastewater. Creating a first for the semiconductor industry, the company has set a goal of using 20 percent of green electricity from renewable sources for its planned 3-nanometer manufacturing plant, the construction of which is slated to start in 2020 in the Tainan Science Park.

TSMC requires the entire supply chain to take concrete action to manage resources more sustainably by reducing CO2 emissions, reducing material usage, recycling waste and reusing recycled products. In 2017, at least 86.5 percent of its suppliers had signed a relevant “code of conduct.” As a result, TSMC also won second place in the large enterprise category in the 2018 Corporate Citizen (CSR) Awards by CommonWealth Magazine.

Advantech, for its part, grabbed rank 86 in its first-ever entry into the Top 100, thanks to a strong focus on good corporate governance that balances the needs of the company, employees and shareholders. Advantech stood out with a 42.9 ratio of women in senior management, which translated into a 96.2 percent gender equality score.

The company also strengthened supervision with the introduction of an independent board of directors in 2017. Advantech’s “Beautiful Live Club” for employee activities, established in 2014, has meanwhile reached a participation ratio of 45 percent. In the 2018 Corporate Citizen (CSR) Awards Advantech won rank 30 in the large enterprise category.

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Sustainable Corporations Achieve Higher Investment Returns, Pay More Taxes

When companies make sustainability part of their strategy, they perform better than their industry peers and have a more positive impact on society. Toby Heaps, CEO and co-founder of Corporate Knights, points out: “From inception (February 1, 2005) to December 31, 2018, the Global 100 made a net investment return of 127.35%, compared to 118.27% for the MSCI ACWI.”

With a 76:1 CEO-to-employee pay ratio, Global 100 firms have a markedly lower inhouse income inequality than ACWI companies, whose ratio stands at 140:1. In times of growing concern over the rising wealth gap around the world, this might reflect positively on these companies.

They also pay more taxes, with an average 18 percent of EBITDA (earnings before interest, tax, depreciation and amortization) compared to an average of 16 percent EBITDA for the ACWI, which indicates that they are less likely to avoid paying their fair share of taxes.

The Global 100 are also “greener” as they derive 26 percent of their revenues from positive green or social impact goods and services [compared to 9 percent for the ACWI]. Among the companies who stood out this year is Banco do Brasil (rank 8) whose US$50 billion “green financing” accounts for one third of its total loan book. This was the highest percentage for any company in the financial sector and compares to a 9 percent green revenue share for the ACWI.

China Absent from Global 100

In terms of geographic distribution, 22 Global 100 are based in the United States, making the U.S. the largest single country represented. Europe accounts for 52 companies in the list, including 15 from Scandinavia.

In Asia, Japan was the largest single country represented, with eight companies, but these all ranked in 73rd place or lower. South Korea is represented with three companies, including multinational conglomerates the LG Group (rank 30) and the Samsung Group (rank 83), followed by Singapore with two real estate development firms, namely City Developments Limited (rank 25) and CapitaLand Limited (rank 33). Not a single company from China or India made it into the list.

Corporate Knights launched its Global 100 annual sustainability ranking, which is released during the World Economic Forum in Davos each January, in 2005. The ranking is based on financial filings, sustainability reports and other publicly disclosed data and uses 21 KPIs including financial management, clean revenue, supplier performance, employee management and resource management.

Source: Forbes/The Most Sustainable Companies In 2019

Translated by Susanne Ganz
Edited by TC Lin, Sharon Tseng