World’s biggest firms still largely unsustainable – ESG firm Oekom

The majority of the world’s biggest listed companies continue to score poorly when it comes to sustainable management of their business, according to German ESG research firm Oekom in a new study.

Of the 1,800 companies examined, Oekom said 53.1% did not fulfil its requirements for a sustainably managed business in 2013. This is up from the 52.3% deemed unsustainable under Oekom’s criteria in 2012.

“Violations of human and labour rights, the disrespect of environmental standards and corruption continue to be rampant at internationally active companies,” said Matthias Bönning, Oekom’s Chief Operating Officer and Head of Research. “We’re not seeing big enough steps by the companies toward sustainable development.”

According to Oekom, violations of labour rights as defined by the International Labour Organisation (ILO) were most prevalent among manufacturers of electronic goods (26.7% of all examined in the sector) and textile firms (20%). A telling example of the violations was last year’s collapse of the Rana Plaza clothing factory in Bangladesh, said Oekom. The facility supplied apparel for such brands as Benetton, Mango and Walmart, and more than 1,000 people died in the accident.
Violations of human rights were found most in the mining sector (8.9% of all examined in the sector), Oekom said,adding that the most frequent infractions were either displacing natives from the mine or not providing them with adequate compensation. Mining companies also scored very poorly on the environment, with 35.6% having polluted.

Regarding corruption, Oekom said that suppliers of medical technology and products were the worst (14.3% of all examined in the sector), followed by oil and gas service firms, pharmaceuticals and builders (10% of companies in the respective sectors).

On the positive side, Oekom said its study showed a slight uptick in the number of firms overall that met its sustainable criteria (16.8% in 2013 against 16.7% in 2012). Moreover, just under one-third of the firms surveyed had some aspects of sustainable management, it added.

Finnish and German firms were considered to be the most sustainable by Oekom (64.3% and 58.3% respectively), followed by those in Italy, Netherlands and France. In terms of sectors, producers of household goods got Oekom’s highest rating for sustainability, with the automobile industry ranked second. Oekom’s worst rankings were handed to the fossil fuel and real estate industries. Link