For the seventh year, Maclean’s has partnered with Sustainalytics, the leading independent provider of environmental, social and governance research, to determine the Top 50 Most Socially Responsible Companies in Canada.
Social responsibility is central to the operations of these companies—they know it’s smart business to consider global issues and the broader community, whether it is through offering discounted loans for electric cars (Vancity) or helping to set up organic cotton seed banks in India (Zara). This year, for the first time, Sustainalytics ranked the companies within their industry to determine which firms are leading the way. Ten companies emerged at the top of their industries by demonstrating strong performance across important sustainability issues such as resource efficiency, impact on local communities, treatment of employees and responsible supply-chain management. We’ve highlighted the work of these standout companies below. Two newcomers to the list—L’Oréal SA and Pacific Rubiales Energy Corp.—both ranked at the top of their respective industries in their inaugural year.
All the firms were selected based on their performance across a broad range of environmental, social and governance indicators tracked by Sustainalytics. Each of the companies is either Canadian or a wholly owned subsidiary of a foreign-listed company with significant operations or brand presence in Canada.
Food and beverage
Soft drinks, packaged foods, restaurants
The multinational food and beverage company has made tackling global water scarcity a focus of its business. PepsiCo has a range of programs to manage its water intake throughout its supply chain. The company’s Colombian manufacturing plants, for example, recycle 75 per cent of the water used, and its Gatorade bottles are purified with air instead of water. Globally, PepsiCo has increased its water efficiency by roughly 20 per cent from a 2006 baseline and has cut an estimated 14 billion litres of water from its operations.
The company is also forging partnerships with NGOs to deliver clean water to communities in need. In 2007, it set a goal of providing three million people around the world with safe water by 2015. It met its target three years ahead of schedule. The company has teamed up with six organizations to help deal with the global water crisis: the Columbia Water Center at the Columbia University Earth Institute, the Inter-American Development Bank, Water.org, Safe Water Network, China Women’s Development Foundation and 2030 Water Resources Group.
PepsiCo also has a sustainable farming initiative that measures the environmental and local economic impact across its agricultural supply chain.
In Canada, the company has focused its environmental sustainability efforts on water, energy and packaging. It reduced water usage by 40 per cent at manufacturing plants. It was also the first manufacturer in Canada to introduce all-electric, zero-emissions, green-powered delivery trucks.
Richard Glover, president at PepsiCo Beverages Canada, describes the company as “committed to achieving business and financial success while leaving a positive imprint on society—delivering what we call ‘performance with purpose.’ It’s at the heart of every aspect of our business.”
The other top companies in this category are: Kellogg Co., Starbucks, Danone, Molson Coors Brewing Co.
Gold, precious and diversified metals, mining, packaging
Kinross Gold Corporation
Mining has significant social and environmental consequences. But the Toronto-based gold company with mines and projects from Brazil to Russia believes it has a moral and business imperative to be a good corporate citizen and makes social responsibility part of its daily operations. President and CEO J. Paul Rollinson’s message is simple: “I believe corporate responsibility is core to both our overall strategy and day-to-day activities, and it will remain a key priority for Kinross Gold.”
In a recent corporate report, Rollinson gave assurances in five areas where the company was committed to being socially responsible: safety, energy, greenhouse gas emissions, water use and waste generation.
Kinross’s approach to corporate responsibility combines designing programs specific to each operation with company-wide standards and global best practices.
Kinross implemented Site Responsibility Plans (SRP) to understand how its operations affect communities. The company designs programs to manage the impact of its business operations and create opportunities to benefit locals. “The SRP framework empowers our operations to get it right—to manage our impacts, generate opportunities and above all to respect local cultures, traditions and peoples,” says Ed Opitz, the vice-president of corporate responsibility.
The company is trying to make a difference in areas where it has mines. A 2013 survey conducted near its Tasiast mine in Mauritania by local sociologists found that the number of households living below the poverty line had been cut by more than half since 2011 and the unemployment rate had declined from 47 per cent to 24 per cent. The progress was partly attributed to Kinross’s partnership with the local Bedouin co-operative, whose 35 members received literacy and business skills training.
In 2010, the company became a signatory to the United Nations Global Compact, the world’s largest corporate responsibility initiative, with more than 6,500 business and non-business participants across 135 countries.
This year’s other top companies in this category: Teck Resources, IamGold Corp., Goldcorp Inc., New Gold.
Retailing and household goods
Food, specialty, general merchandise, home improvement
L’Oréal uses more than 250 raw materials to produce its wide range of cosmetics. Shea butter and palm oil are two ingredients that are at the centre of the company’s ambitious initiative to source responsibly. As a member of the Roundtable on Sustainable Palm Oil (RSPO) since 2006, L’Oréal sources 100 per cent of its palm oil from RSPO-certified sources. In addition, the company implemented a program to comply with fair trade principles in Burkina Faso. The goal of the company: By 2020 at the latest, it aims to source 100 per cent of renewable raw materials from sustainable sources with a commitment to zero deforestation.
In 2013, the company announced the launch of its Sharing Beauty with All program for sustainable development. The program is geared toward reducing the company’s environmental footprint and informing consumers about the environment. In April 2015, it reported it had reduced production-related CO2 emissions by 50 per cent, from a 2005 baseline. It also noted that 67 per cent of new products had an improved “environmental or social proﬁle” and the company had created 54,000 jobs for people from underprivileged communities in social or financial difficulty.
Jean-Paul Agon, chairman and CEO of L’Oréal, said in April: “Companies have an important role to play in society, and L’Oréal intends to make a significant contribution.”
The other top companies in this category are: Rona Inc., Loblaw Companies Ltd., Canadian Tire Corp. Ltd.
Hardware, software, software services, semiconductors
One of the world’s largest companies, Intel takes its role in the global community seriously. It documents energy use and emissions and discloses detailed environmental impact data for more than 10 of its manufacturing facilities worldwide. Site-specific information—on metrics such as water use, waste recycled and emissions—is updated quarterly online, along with environmental audit reports. To ensure staff participation, Intel’s employee bonus and compensation structure is tied to the company’s overall environmental performance.
Intel’s founders instill a strong commitment to environmental responsibility. According to the U.S. Environmental Protection Agency (EPA), since 2008, Intel has been the largest voluntary corporate purchaser of green power in the U.S. Since 1998, the company has invested more than $220 million in water conservation programs.
Intel also launched the She Will Connect digital literacy program, focused on women throughout Africa, India and Latin America. Working with NGOs throughout these regions, Intel aims to reach five million women.
The other top companies in this category are: SAP SE, Cisco Systems Inc., International Business Machines Corp. (IBM), Accenture PLC.
Telephony services, electronic equipment, communication equipment, consumer electronics
Telus recently created a sustainability office as part of its commitment to being a responsible corporation. According to Andrea Goertz, the company’s chief sustainability officer: “We believe that the health of our communities, our customers and our team is tied to the health of our planet. Sustainability is a holistic mindset that guides every decision we make and challenges us to innovate.”
The company was named to the Dow Jones Sustainability North America Index 14 years in a row. It also signed on to the Catalyst accord, a pledge by major Canadian corporations to increase the proportion of their board seats held by women to 25 per cent by 2017.
Telus is known for its strict animal-advertising code that requires it only work with reputable owners, accredited zoos and sanctuaries when filming animals for its advertisements. Telus also requires that a professional advocacy representative oversee the ethical treatment of animals during its productions. Telus’s data centres in Rimouski, Que., and Kamloops, B.C., are built to LEED gold standards and consume 80 per cent less power than a typical data centre of the same size.
The other top companies in this category are: BCE Inc (Bell Canada), Sony Corp., Rogers Communications.
Textiles, Footwear & Apparel
Apparel, accessories, footwear, sportswear
Industria de Diseno Textil SA (Zara)
The textile business faces many challenges around social and environmental issues. This company works to reduce any negative impact from manufacturing and sourcing of materials. Across its brands, it has developed products that are certified organic —free of pesticides and bleach—and has sold 3.5 million garments made of 100 per cent organic cotton.
As a member of the Better Cotton Initiative, the firm collaborates with farmers on sustainable agricultural training projects. For example, it initiated a project to support co-operatives in Odisha, India, by training female farmers to build and conserve organic cotton seed banks, which reduces farm operating costs and improves profitability. The company branches into many areas of sustainable responsibility. It is a “fur-free” retailer and has committed to end its production of garments made from angora wool in 2015. As well, it has worked with Médecins Sans Frontières (MSF) since 2008. It provides more than $16 million in funding for projects in developing countries and has partnered with MSF to offer medical and humanitarian aid to Syrian refugees.
The other top companies in this category are: Hennes & Mauritz AB (H&M), Adidas AG, Gildan Activewear Inc., Nike Inc.
Personal, commercial, corporate, investment banking and credit unions
Vancouver City Savings Credit Union (Vancity)
Vancity, a financial co-operative and Canada’s largest community credit union, is heavily invested in the environment and was set up as a “values based” company. In April 2015, it developed Canada’s first mutual fund that excludes companies associated with fossil fuel production. The fund follows recent regulatory changes in British Columbia that put a price on carbon. The credit union believes its fossil-free-fund carries lower risks compared with traditional funds. “We have many members who are asking for fossil-fuel-free investment products and opportunities,” says Tamara Vrooman, president and CEO of Vancity. “We believe the fund is an important step toward developing more fossil-fuel-free investment options and a sustainable, healthy future for our members and the communities they live in.”
Vancity has also increased its holdings of clean tech and renewable energy companies. It is leading the way by integrating environmental, social and governance factors into its investment decisions. In 2015, Vancity was named one of Canada’s greenest employers. It was noted for maintaining a corporate target to ensure no less than 70 per cent of office waste is recycled and for offering green financial products, including financing rewards for green home renovations and discounted loans for the purchase of fuel-efficient, hybrid and electric cars.
It has an investment fund targeting companies with progressive social, environmental and corporate governance practices and offers scholarships to businesses that want to make their operations more environmentally friendly. It has helped more than 160 firms measure and manage their carbon footprint.
Vancity is also invested in local community initiatives. In 2013, it supported 23 farmers’ markets through its granting program, “Growing farmers’ markets,” which aims to bring local and organic food to communities throughout Vancouver and surrounding areas. It was also the first financial institution to provide mortgages for properties in Vancouver’s working-class east side.
The other top companies in this category are: Toronto-Dominion Bank, Desjardins Group, Bank of Montreal, Canadian Imperial Bank of Commerce (CIBC), the Co-operators Group Ltd., Royal Bank of Canada.
Transportation & Logistics
Automobiles, railroads, shipping
As part of its plans for sustainable production, BMW is testing various forms of alternate energy throughout its manufacturing network. The company’s U.S. hydrogen storage and distribution facility fuels hydrogen-powered equipment at its Spartanburg, S.C., plant. The team there aims to run factories using only renewable energy. The gas-to-energy pilot project at the Spartanburg facility streams methane gas from a nearby landfill to produce on-site renewable hydrogen for the plant’s electrical requirements. Efforts at this location alone have saved 92,000 tons of CO2 every year.
There are numerous other initiatives at BMW, all aimed at leading the way on the environment. Earlier this year, BMW announced a partnership with Pacific Gas & Electric to test the potential for electric vehicle batteries to provide services to the electric grid. And in Rosslyn, South Africa, BMW uses more than 70 solar collectors on its roof to supply most of the hot water it needs in its paint shop.
Some initiatives are simple: the company changed the setting on employees’ PCs to save around 27,000 megawatt hours a year —the equivalent of 12,200 tons of CO2. The BMW i8 plug-in hybrid is an example of the same commitment. It uses laser-light technology, an improved vehicle headlight that contributes to better nighttime visibility and 30 per cent greater energy efficiency compared to already highly efficient LED headlights.
BMW is a signatory to the Automotive Industry Action Group’s 2014 guiding principles to enhance sustainability performance in the supply chain. The guidelines set minimum industry standards for business ethics, working conditions, human rights and environmental impact throughout a company’s entire supply chain.
The other top companies in this category are: Volkswagen, Ford Motor Co., Air Canada, United Parcel Service.
Industrial conglomerates, machinery, aerospace and defence
Koninklijke Philips N.V. (formerly Philips Electronics)
Philips, one of the largest electronics companies in the world, sources major quantities of raw materials, including tin, tantalum, tungsten and gold. It has made a commitment to eliminate the use of so-called conflict minerals. It has also joined the Electronic Industry Citizenship Coalition (EICC) to support local economic development. In collaboration with the EICC, Philips launched the Conflict Minerals Reporting Template, a survey used to identify suppliers that process metals in its supply chain.
Minerals from conflict regions around the world can end up in electronics, jewellery, airplanes and automobiles. Metals from mines in the Democratic Republic of Congo (DRC) are estimated to provide approximately 19 per cent of the world tantalum production and less than two per cent of the world production for tin, tungsten and gold. Some of the mines in the DRC are controlled by militias responsible for atrocities committed in the Congolese civil war. Philips does not source from there but says its “commitment to sustainable development compels us to address this conﬂict.” For example, it has a conﬂict-free smelter (CFS) program that makes it possible to identify smelters that demonstrate, through an independent third-party assessment, that raw materials they procure did not originate from sources that contribute to conflict in the DRC.
In 2013, the company won the responsible supply-chain management award from VBDO, a Dutch association of sustainable investors. The company was recognized for its extensive and transparent reporting and its dedication to improving its suppliers’ sustainability performance.
The other top companies in this category are: Bombardier Inc., 3M Co., General Electric Co., Siemens AG.
Energy & Utilities
Oil & gas exploration and production, power generators
Pacific Rubiales Energy Corp.
Across the world’s biggest energy companies, women remain underrepresented, even though growing energy demand has increased the need for a larger and more diverse workforce. To address this issue, Pacific Roubles struck a gender committee to implement a series of programs and tools to promote gender equality across the company and the communities in which it operates. Pacific Rubiales, which is headquartered in Toronto, reports employee statistics annually, including age, gender and percentage of women in executive positions. It believes there are certain entrenched inequalities between men and women and the company is committed to promoting greater equality.
In 2014, Pacific launched its “gender declaration,” which stems from its sustainability policy and is in keeping with its corporate goal: “diversity and inclusion.” It ran a campaign titled “Our differences make us stronger” to educate employees in the operational fields and in corporate offices in Colombia and Peru.
The company, which is involved in the exploration, development and production of oil and natural gas through interests in Colombia, Peru, Guatemala, Brazil, Papua New Guinea and Guyana, has a set of commitments, including working in harmony with the environment, contributing to the sustainable development of communities and respecting and promoting human rights in their operations. It has been recognized for its efforts. The London ﬁrm World Finance named it the most sustainable oil and gas company in Latin America; Capital Finance International ranked it the best oil and gas producer in corporate social responsibility; and the Foundation Siembra Columbia gave it the silver and gold medals for environmental responsibility.
The other top companies in this category are: Cenovus Energy, Cameco Corp., Suncor Energy Inc., Talisman Energy Inc.
The Top 50 Socially Responsible Companies in Canada were selected based on their performance across a broad range of environmental, social, and governance (ESG) indicators tracked by Sustainalytics. The companies selected rank at the top of their respective industries in Sustainalytics’ Global Platform. These companies have demonstrated strong performance in areas such as environmental initiatives, impact on local communities, treatment of employees and supply-chain management. Some are notable for their development of products or services that contribute directly to sustainability. Companies must also demonstrate strong public disclosure on ESG management and performance. Using Sustainalytics’ rigorous controversy-assessment framework, the companies have also been screened for their level of complicity in major controversies to determine their degree of severity and accountability. Each of the companies featured is either Canadian-listed or a wholly owned subsidiary of a foreign-listed company with significant operations or brand presence in Canada. Each of the companies has a significant market capitalization or brand presence in Canada and is featured on at least one of the following lists: the ROB Top 1000, Globe & Mail’s 20 Largest Co-Ops and Credit Unions or Interbrand’s Best Canadian or Best Global Brands lists. Given that Canadian subsidiaries of foreign companies are inextricably linked to their parent companies, the evaluation is based on the performance of the foreign corporate entities. The Top 50 Socially Responsible Companies are categorized across 10 diverse industries, distinguished as consumer-facing, garnering significant public interest and demonstrating a diversity of sustainability challenges and approaches. Within each sector, companies are ranked based on their unique ESG scoring in Sustainalytics’ Global Platform. Sustainalytics’ research process includes a thorough examination of company documents, media sources, online databases, government sources and NGO research, as well as direct communication with key stakeholders. Analysts use a Best-of-Sector™ methodology to compare companies within a given peer group to industry best practices.Sustainalytics’ research is used by some of the world’s largest institutional and individual investors who consider environmental, social and governance performance, in addition to financial performance, in the management of their investments.
By Sustainalytics Analysts: Alberto Serna Martin, Annie White, Dayna Linley-Jones, Gavin McLaughlin, Hardik Sanjay Shah, Hyun-woo Lee, Jean-François Obregón, Joshua Zakkai, Kate Marshall, Kyuwon Taylor Kim, Larysa Metanchuk, Liam Conway, Lucas Schoeppner, Matthew Barg, Roxana Dobre, Sonja Siewerth, Sophia Burress, Yumi Fujita www.sustainalytics.com