Toby Heaps on the World’s Most Sustainable Companies

Toby Heaps is the founder and CEO of Corporate Knights, a leading sustainable-economy media and research organization based in Toronto, Ontario Canada.

Heaps says that Corporate Knights is committed to advancing an economic system in which both people and the planet can thrive.  

The organization is best known for its magazine, Corporate Knights, a quarterly that focuses on climate change, responsible investing, and the ideas, actions and innovations that shape a sustainable economy. 

With a circulation of 126,000, the magazine is distributed in the Globe and Mail, the Washington Post and the Wall Street Journal.  

Corporate Knights’ research division produces global sustainability rankings, research reports and financial product ratings based on corporate sustainability performance. 

The flagship ranking is the Global 100 Most Sustainable Corporations in the World, released each year during the World Economic Forum. 

In 2012, Corporate Knights spearheaded the Council for Clean Capitalism, a multi-industry group of leading Canadian companies dedicated to advocating for economic and social-policy changes that reward responsible corporate behavior. 

“We believe that companies meet their highest purpose when they serve the interests of people and the planet,” Heaps said. 

Earlier this year, Corporate Knights released its Global 100 ranking of the world’s most sustainable companies.

It is a list of the top firms that are increasing their investments in green solutions such as renewable energy, energy efficiency and the circular economy.

“When we launched the Global 100 in 2005, the green economy was a quaint idea. Many companies didn’t publish in-house sustainability reports,” Heaps said. “There were no standardized key performance indicators, and none of the companies were reporting the percentage of their revenue or investments that were green. We did the best job possible with limited qualitative corporate disclosure.”

“Now we can measure this green business exposure for the majority of companies and are able to count annual green investments that run into the trillions, growing six times faster than the economy at large,” Heaps says. 

In the 2024 Global 100 ranking, the top-ranked firms allocated 55% of their investments to sustainable projects, up from 47% the year prior. 

That compares with sustainable investments at a paltry 17% among the broader universe of publicly traded companies with more than $1 billion in annual revenue.

The top ten most sustainable companies were: 

Sims of Australia, Bramble of Australia, Vestas Wind Systems of Denmark, Taiwan High Speed Rail of Taiwan, Nordex of Germany, Banco do Brasil of Brazil, Schneider Electric of France, Chr. Hansen of Denmark, Stantec of Canada, and SMA Solar Technology of Germany.

Not one company from the United States in the top ten. Overall, only sixteen companies from the United States in the top 100.

Given the size of the U.S. economy, why such a low number?

“Well, in a lot of indexes, the United States represents something like 40 percent of the world economy,” Heaps told Corporate Crime Reporter in an interview last week. “So the fact that the U.S. companies make such a small percentage of the list means that something is going on.” 

“There are some good companies in the United States. The spice company McCormick is one. (Number 49 on the list.) They are building a cooperative clean economy as part of their supply chain. And the cooperative clean economy is one way to dig ourselves out of the hole we are in. It’s a Fortune 500 company that is doing that on scale globally.”

“There is a disclosure culture in the United States where people are concerned about liability. They disclose less. And in our rankings, if we can’t put a number on it we put a zero on it. So you get penalized for non disclosure.” 

“The Inflation Reduction Act has been a driver of sustainability and climate in the United States. There is a culture of evading taxes in the United States that’s more prevalent than in other countries. The United States has been behind Europe for the last twenty years on climate solutions. China and India are also underrepresented on the list. That has a lot to do with disclosure also. Japan is a little underweight as well. Singapore is a little overweight.”

“We are seeing more companies from Europe and Asia making it. To make the list you have to be good and you have to be transparent.”

Corporate Crime Reporter puts out listings of criminal companies. Other groups put out listings of bad companies. You put out listings of good companies. Your idea is to encourage companies to be good companies so they can make your list and boast about making your list.

“Yes. There is a reputational element that motivates the companies. They like to get together and look into the indicators of the companies that make the list so that they can set up metrics for their businesses. And the list is now taken into account by mutual funds and ETFs. So there are capital benefits to being on the list.”

“We’ve noticed that some of the companies like McCormick, the spice company, and other companies were able to parlay making the list to attract a group of investors to take larger positions in the company.”

“They can use the list now more than they could before because it has credibility. Larger institutional investors now care more about these issues. Schneider Electric was another company that was able to use our list to increase their long term shareholder base.”

“These larger pension funds have ESG sustainability conviction portfolios. They might allocate ten percent or twenty percent of their equity in larger positions of certain companies that they like. These are large funds like Calpers or a country’s sovereign wealth fund, or the Church of England’s endowment.” 

“They are looking for companies that might stand above the rest and more strategically position to benefit from megatrends that they want exposure to, whether it’s climate leadership. I don’t love the term ESG, because it could mean anything. It’s vernacular used as a proxy for companies that are doing a better job for people and the planet.”

Years ago, we interviewed Marjorie Kelly, who was a founder of the magazine Business Ethics, which listed good companies. Was Business Ethics a predecessor to Corporate Knights?

“I was working for a mutual fund magazine in 2000 or so. I wanted to write more about this topic. I went to a bookstore and saw a Business Ethics magazine there. They were doing a ranking of the 100 best corporate citizens in the United States. I thought – this is pretty cool.”

“It was a smaller magazine. I thought – we could do this in Canada. And so we started our first issue with the best corporate citizens in Canada. It was inspired by the Business Ethics Top 100.”

What happened to Business Ethics magazine?

“I believe it was taken over by a Wall Street kind of guy. It wanted to create a club of chief responsibility officers (CROs).  I don’t think in the end it panned out financially. He stuck with it for a while, but he wasn’t a lifer on it.” 

Is your magazine the only one in North America?

“It might be the only one in the world. There’s not one in Europe that I know of.”

Your most recent magazine is Winter 2024. It includes the 20th annual Global 100. Those are the 100 most sustainable companies. You also come out with other lists. What are they?

“We put out a list of the top 50 corporate citizens in Canada. We also come out with a list of the top 40 MBA programs for a better world. We look at the core courses that integrate sustainability factors. And we look at alumni working in impact areas. It’s a contrast to the usual MBA rankings that look at who is making the most money.”

“We also do a responsible fund ranking of Canadian mutual funds and ETFs based on their holdings.” 

“But the recurring ones are the Global 100, the Canadian 50 and the MBA survey.”

You also put out a Clean 200 survey.

“It’s the 200 biggest companies measured by one metric – how much money do they make from clean revenue.”

Apple is at the top of that list. How is Apple the cleanest company in the world?

“Apple has done a lot of work over the last fifteen years to clean up on the environmental side. They refurbish devices. They are very high on environmental protection goals and sustainable electronics. The majority of their phones are certified to the highest standard. They are much better than they were before on the issue ofright to repair.”

The EU just hit Apple with a $539 million antitrust fine. Had that fine come out while you were creating your list, would it have made a difference? Would Apple still be number one?

“It must have been after our calculation. If their fines divided by revenues are over one percent, then they are disqualified from the ranking.”

If they are over that percentage, it just kicks them out of the ranking?

“Yes. In our Global 100 ranking, there are red flags that can kick you out.”

You publish Corporate Knights four times a year. You run a lot of ads from corporations who make your lists boasting about themselves. You say the companies are great.  The company then takes out ads in your publication saying – Corporate Knights says we are great. What part of your revenues are these company ads?

“When we started they used to be 90 percent. Now they are probably 30 percent. We used to have more oil company type ads. Now most of our ads are from solution oriented companies. We had a big debate about taking ads from Enbridge, which is an oil and gas pipeline company. They don’t make our rankings anymore, because you have to really be good as an oil and gas company to make the rankings. You have to be spending over 50 percent of your capital expenditures in renewables or you are disqualified. So Enbridge doesn’t make the list anymore.”

“They advertised in the magazine and some people attacked us saying – you guys are engaging in disinformation. You are helping them perpetuate these myths by allowing them to advertise in these positive locations.”

“I see it differently. I would like to have at least a couple of these advertisements from these oil and gas companies. And maybe somebody on Capitol Hill or in the Parliament in Ottawa sees this publication running oil and gas ads and they won’t dismiss as quickly as they would a Greenpeace type organization.” 

By running these types of ads, you get more credibility from the business sector?

“We would get more credibility from the people we are trying to influence than we would if we didn’t run the ads. It only works if you can keep the editorial independence – if you don’t allow the ads to influence the editorial.”

“I know if we ever made one mistake, we would be nailed to the wall. There is one thing that you can get fired for at Corporate Knights. And the one thing you can get fired for is letting a revenue relationship influence editorial.”

Or as you put it on your masthead – “Corporate Knights has a strict policy regarding the separation of advertising/sponsorship and editorial content (including rankings, online events and podcasts). Any employee who allows an advertiser/sponsor to influence editorial will be dismissed.”

“Yes, that’s on our masthead in every issue of the magazine and it’s on our website.”

Other than publishing the magazine and compiling these lists, are you a public policy organization?

“We use the carrot to nudge companies to what is possible. We are never going to get where we need to get unless we have more of a level playing field. Eighty percent of the solution is policy. We started getting involved with policy early on. We have supported laws on mining accountability. The law didn’t go where it needed to go.”

“We created an alternative swat team of CEOs who were willing to stretch a little bit in Canada. It’s called the Council for Clean Capitalism. It’s been mostly quiet.”

[For the complete q/a format Interview with Toby Heaps, see 38 Corporate Crime Reporter 12(13), March 18, 2024, print edition only.]

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