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oekom Corporate Responsibility Review 2017: Global report on companies’ sustainability performance


Munich, Paris, New York, 05 April 2017
- For the first time, independent sustainability rating agency oekom research has identified a more than just slightly upwards trend in its latest annual report – the Corporate Responsibility Review 2017 – on sustainable business governance around the globe. One of the possible reasons for this trend, which is most noticeable in the midfield of rated businesses, is the pressure to change and pushes for increased sustainability which are impacting companies from many angles. These include international initiatives such as the UN Sustainable Development Goals (SDG), national regulations, increasing demands of sustainable capital markets, and a general rise in sustainability awareness. Businesses also need to respond increasingly to transformation processes in the economy, e.g. decarbonisation in the Energy sector, and e-mobility in the Automobiles industry. The study shows clearly that not all industries are equally well prepared to face these opportunities and challenges. Consequently, there is still considerable room for improvement, with industry having a long way to go before it can speak of holistic sustainability.

 

Corporate sustainability performance: a slight positive tendency
While the share of companies in the top group – rated with good or very good sustainability performance and therefore receiving oekom Prime status – remained relatively stable compared to last year (16.29 percent in 2015, rising to just over 16.5 percent in 2016), the share of companies in the midfield with at least rudimentary sustainability management systems, rose comparatively sharply from 35.86 percent in 2015 to 40.15 percent today. However, the majority of companies – at 43.31 percent – continues to show inadequate commitment in the area of sustainability, a value which has nevertheless fallen almost ten percent over the past four years.

The industry ranking is headed by the Automobiles and Household & Personal Products industries, even though they are still far from achieving a top score.  With values of respectively 46.5 and 44.7 points on a scale from 0 to 100 points, they remain below the midway mark. Similarly to carmakers – which continued to score relatively well despite downgrades of individual companies following exhaust- and emissions-reporting incidents – the Household & Personal Products sector is also relatively small. It exercises good standards in several central areas without larger negative deviations. In the ranking of countries with the highest numbers of best-placed businesses, France leads (with 16 companies), followed by Germany (12) and the UK (11); these are followed by the USA and Sweden (both 6), the Netherlands (5) and Japan (4). This year, too, the most controversial industries with severe breaches of the principles of the UN Global Compact come from the raw materials sector. The negative frontrunner is the Oil & Gas Equipment / Services sector in which six out of every ten companies are affected by controversies.

 

Transformation processes: how businesses are facing up to the challenges...
Against the background of manifold transformation processes and the expectation of making a true contribution to achieving the UN SDGs, integrating sustainability into companies’ core businesses has become more pressing than ever before, and is also necessitating radical changes in their business processes. The oekom CR Review 2017 takes a close look at several industries to see how their companies are facing up to these challenges and what concrete measures they are taking to attain the SDGs.

With respect to the climate change-induced transformation challenges, it is important for companies and investors that climate risks be considered along the entire value chain. The valuations of the oekom Carbon Risk Rating show, for example, that much effort is still needed to achieve the global climate goals: of the almost 1,600 companies analysed, over 91 percent receive scores of 0 to 50 points (on a scale of 0 to 100), and fewer than 9 percent between 51 to 100 points.

The central transformation challenges for the Automobiles industry are the introduction of emissions-free alternatives to the combustion engine, as well as the furtherance of radically new mobility concepts, and the effective and sustainable networking of different modes of transport. Especially here, it becomes evident how the old product strategies are failing. Although central issues regarding the future of mobility must urgently be addressed today rather than tomorrow, carmakers continue to place their bets primarily on the combustion engine. It is therefore likely that, over the mid- to long term, the industry’s relatively good performance for 2016 will be put to the test.

Companies in the Oil & Gas industry have also come under pressure, especially with being increasingly the focus of divestment measures. From a sustainability stance, enormous change will be needed if global climate goals are to be met. Current business models essentially remain centred on a largely unabated demand for oil and gas, with barely any noticable efforts to change – a trend that, if anything, is being amplified by the USA’s latest climate-political decrees to the benefit of fossil fuels. Consequently, this is one of the worst sectors in the oekom Universe with just four of the 146 rated companies qualifying for Prime status. The industry performance of 23.4 points also qualifies as one of the worst in the oekom Universe.

The Food & Beverages industry plays a key role in transforming global economic cycles to the benefit of a more sustainable world. It is seen as one of the central contributors to global megatrends such as climate change, resource scarcity, and loss of biodiversity. But it is responding inadequately to the growing pressure to change. As well as manufacturing products which in most cases are problematic from a nutritional perspective, the industry also continues to tolerate massive negative consequences for the environment and society in its supply chains. At 33.3 points, the average industry performance is albeit in the lower mid-field, but also still has massive room for improvement.

 

“Many negative consequences of unsustainable business practices – such as the accelerating pace of climate change and depleting supplies of raw materials – are now manifesting themselves financially and become very tangible,” says oekom research CEO, Robert Haßler. “Although not all industries are equally prepared for the transformational challenges to come, last year’s figures show more clearly than ever before that things are moving in the right direction. Also, the financial industry’s increasing demands for superior ESG standards and growing investments in sustainable business models give reason for hope: that sustainability has meanwhile become so entrenched that even political setbacks in some countries – especially those currently to be seen in the USA – will not seriously derail the necessary change processes. I therefore agree with the assessment of Joschka Fischer – the author of this year’s CR Review Editorial and former German Foreign Minister and Vice Chancellor – that sustainability is the order of the hour and the future. It can no longer be stopped and must be embedded in all future considerations and decisions – in industry and by the capital markets,” he continues.

 

The entire findings of the oekom Corporate Responsibility Review 2017 can be found at:
http://oekom-research.com/homepage/english/oekom_cr_review_E_2017.pdf

 

About the oekom Corporate Responsibility Review 2017
As an annual report on global corporate responsibility, the oekom Corporate Responsibility Review has been documenting central trends in the integration of sustainability criteria into corporate governance since 2009. The evaluations relate to around 1,600 internationally active businesses whose headquarters are situated in industrialised countries and which form a part of oekom research’s Universe of over 5,600 corporate issuers.

 

Contact:
Dieter Niewierra, Director Communications
dieter.niewierra@oekom-research.com
+49 89 5441 8457

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