Inclusion in the Global 100 index is determined using twelve (12) quantitative sustainability indicators, including the amount of revenue companies generate per unit of energy consumption, the ratio of CEO to average worker salary and lost time injury rate.
“The Global 100 follows a rules-based index construction methodology,” said Doug Morrow, Managing Director at Corporate Knights. “We unpackage “sustainability” into its component parts, and build the index from the ground up using clearly defined ratios and performance indicators.”
Beginning February 1, 2014, the Global 100 index will be calculated by Solactive, the German index provider.
The Global 100 index can be used as a benchmark, or as a basis for financial production construction, including exchange traded funds and structured products.
The top-ranked company in this year’s Global 100 index was Westpac Banking Corporation (ASX: WBC). Headquartered in Sydney, Australia, Westpac Banking Corporation (Westpac) is one of the largest financial service providers in Australasia, with annual revenues of US$38 billion and over 36,000 employees.
Westpac has a long history of leadership and innovation in corporate sustainability. It was the first bank to join the Australian government's Greenhouse Challenge Plus and the first financial institution in Australia to create a matching donation program.
The top five were rounded out by Biogen Idec (NASDAQ: BIIB), the U.S.-based biotech firm, Outotec Oyj (OMX: OTE1V), a Finnish mining technology and capital goods company, Norwegian oil giant Statoil (OSE: STL) and Dassault Systèmes (Euronext Paris: DSY), a French company that specializes in the production of 3D design software.
Of note in this year’s ranking is the strong performance of U.S. firms, capturing eighteen (18) of 100 spots on the Global 100 index. Canada followed with thirteen (13) spots, and the U.K. and France tied for third with eight (8) spots each.
Emerging markets accounted for three (3) positions on the index, consisting of firms from Brazil (2) and China (1).
The Financials sector took twenty-two (22) spots on the index, followed by the Consumer Discretionary and IT sectors, each with twelve (12) constituents.
The Global 100 index commenced on February 1, 2005. From inception to December 31, 2013, it delivered a total return of 91.01%, compared to 87.80% for its benchmark, the MSCI All Country World Index.
According to Toby Heaps, CEO of Corporate Knights, the Global 100’s out-performance of 3.21% over this period speaks to the investment benefits of sustainability. “The results speak for themselves. Topping a well-diversified benchmark is not easy, but the Global 100 has managed to squeak out marginal out-performance across a turbulent period in the history of the capital markets. We attribute this excess return to the growing investment relevance of core sustainability themes, including water scarcity, rising energy prices and growing competition for human capital, all of which are captured in the Global 100 methodology.”
