Owens Corning once again took the top spot in an annual ranking of companies that follow the best practices in corporate responsibility.
The ranking of the “100 Best Corporate Citizens,” which has been published since 1999, comes from 3BL Media, a communications platform that evaluates companies based on ESG, or environmental, social and governance, metrics.
ESG investing is growing in popularity as consumers demand more transparency from companies on areas like carbon footprint reduction as well as boardroom diversity. Far from just a moral issue, experts warn that in order for companies to survive in a rapidly changing world, companies must think critically about these factors.
“Companies are finding that it’s economically advantageous to embrace ESG. …There’s much more interest at the board level and in the C-suite than there ever has been before,” said 3BL Media CEO Dave Armon. “ESG is something that investors care about as well as [company] employees — that’s a huge constituency for them — and customers as well.”
In order to compile its list, 3BL Media surveys the 1,000 largest publicly traded U.S. companies, and each company is evaluated on 141 factors divided into eight pillars: climate change, employee relations, environment, ESG performance, financial, governance, human rights and stakeholders and society.
The company’s custom methodology and weightings for each category is supported by research from Institutional Shareholders Services. All of the information comes from publicly available resources, such as securities filings and annual reports.
Questions over reporting
Armon said that what distinguishes this list is that it’s driven by company performance and transparency, and that using information that’s widely available ensures objectivity. It also helps promote accountability and action within corporations, since companies are penalized for not disclosing data.
“If the data has to be publicly available, companies see where they rise and fall in the ranking, and will use the ranking as a way to make the case internally for why they need to disclose a particular strategy,” said Robbie Lock, executive director at 3BL Media. “It really does advance ESG and corporate responsibility internally at companies, since that is often the roadblock to actually making things progress.”
Additionally, companies do not pay to be included in the ranking — they are evaluated whether or not they want to be.
Lock added that while newer companies and tech giants specifically might have been better able to bake ESG considerations into their businesses models from the get-go, 3BL Media’s list demonstrates that older companies are adapting to the changing world around them.
“We have a lot of legacy companies on our ranking. Companies in the capital goods and materials industries that are heavy industry companies … it speaks to how even if you’re making complex machinery and composites or filters, you can still think about this and integrate this into your business model.”
Last year’s top five companies were: Owens Corning, Intel, General Mills, Campbell Soup and HP.
Going back to 2009, there are 22 companies that have made the list each year, including Microsoft, Nike, 3M, Abbott, General Mills and IBM.
As ESG investing has grown in popularity, it’s attracted a number of critics. Among other things, these skeptics say that there’s no uniform way for companies to report the metrics. But Armon said that soon might change.
“The SEC doesn’t require ESG disclosure in the same manner that it’s required in Europe and some other countries, but the winds are blowing in that direction. …[companies] are preparing for a time that it is required and not recommended.”
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.