Late last week, Barron's released it's sixth annual, "Most Sustainable Companies in the US (right now)" rankings. Barron's collaborated with Calvert, a prominent ESG investment firm, to compile a list of the most sustainable companies.
Calvert evaluated the 1,000 largest publicly traded companies based on their market value and ranked them according to their performance in five crucial areas: shareholders, employees, customers, community, and the planet by analyzing over 230 ESG performance metrics from seven rating agencies, such as ISS, MSCI, Sustainalytics, Thomson Reuters Asset4, and TruValue.
Then, rated each company's performance in each category on a scale of zero to 100 and then created a weighted average of the categories based on their financial significance in the industry. To qualify for Barron's list, a company had to score above the lowest quarter in each relevant stakeholder category. A company would be disqualified if it performed poorly in any financially significant key category.
One of the major themes observed in this year's rankings was the advancement toward a circular economy. The objective is to reduce waste and emissions by increasing the recirculation of products and materials in the economy. These endeavors encompass various initiatives, such as decreasing the use of new or virgin plastic in packaging and renovating heavy equipment to extend its usability.
The Clorox Company tops Barron's Top 100 list flipping spots with Intel (2). Clorox is making large strides in its goal to achieve net zero greenhouse gas emissions by 2050, starting with its commitment to using all green energy and increasing its energy efficiency. ESG initiatives are reflected in its IGNITE strategy, which aims to tackle the issue of waste, particularly the use of virgin packaging. By limiting the amount of new plastic it uses and increasing its use of recycled or reused materials, the company is taking an important step toward reducing its environmental impact.
Clorox has partnered with suppliers, customers, and governments to find innovative solutions. Its involvement in the Ellen MacArthur Foundation's New Plastics Economy Global Commitment and membership in the US Plastics Pact demonstrate its commitment to working with others to create a more sustainable future.
In 2021, Kimberly-Clark (3) doubled the percentage of recycled content in plastic packaging, and it further increased the amount of packaging globally that is reusable, recyclable, or compostable to nearly 84%, as it strives for 100% by 2025. Last year, the company was ranked 23 on the list.
Newcomers make up approximately one-third of this year's list, including WestRock (43) a company in the paper and packaging industry, that has pledged to achieve 100% recyclable, compostable, or reusable products by 2025.
Another newcomer on the list, Hasbro, makes its debut in the tenth spot. Hasbro strives to continuously seek innovative methods to reduce the environmental impact of its operations. Significant progress has been achieved in decreasing greenhouse gas emissions, water consumption, and waste generation within its facilities. By 2025, the company has set a target to reduce, energy consumption by 25%, greenhouse gas emissions by 20%, waste to landfills by 59%, and water consumption by 15%.
In addition to making strides in sustainability, numerous companies also achieved impressive outcomes for their shareholders. Out of the top 100 companies, the average return for 2022 was -9.5%, which was better than the S&P 500 index's negative return of 18.1%. Additionally, 63% of these companies outperformed the index, a significant increase from 47% in the previous year.
