This report evaluates if and how 600 large U.S. companies are meeting many of the expectations outlined in The Ceres Roadmap for Sustainability. The Ceres Roadmap was designed to be a leadership framework that is grounded in practical examples of where and how companies are meeting the expectations of a 21st century sustainable corporation. As the journey toward business sustainability progresses, we will look for new and innovative practices from companies and will adapt The Road to 2020 assessment methodology to reflect these developments.
The data used for this assessment report was compiled and evaluated by analysts at Sustainalytics, an independent environmental, social and governance (ESG) research provider with substantial experience and expertise in evaluating best practices in the ESG performance of publicly-traded companies. Each of the companies included in this report is profiled in Sustainalytics’ Global Platform, where a broad range of indicators are used to assess ESG policies, management systems and performance outcomes. The Platform was adapted to align with the expectations detailed in The Ceres Roadmap using the Sustainalytics' standard research process and methodological approach.
Universe of Coverage
The for this report includes 600 companies listed on at least two out of three of the following indices: S&P 500, Russell 1000 and MSCI Developed Markets. The vast majority of the companies are U.S.-based; however, ten companies have headquarters that are located elsewhere, yet are traded on the S&P 500 and either the Russell 1000 or the MSCI DM. All companies included are publicly traded corporations; limited partnership and liability companies have been excluded from the research universe.
The 600 companies have been organized into 19 distinct sectors based on their unique business models and operations. The sector headings are aligned with the Global Industry Classification System (GICS). The report examined nine of these sectors in greater detail: Autos & Transportation, Financial Services, Food & Beverage, Footwear & Apparel, Oil & Gas Producers, Retail, Technology Hardware, Technology Software & Services and Utilities. To supplement the main report, overviews of each of these priority sectors are available online, allowing users to delve deeper into sector-specific performance on The Ceres Roadmap expectations. Depending upon resources and data availability, additional sectors may be added to this list in the future.
Indicators & Weights
This report is based on the findings of 57 core and sector-specific indicators. Forty-nine of these indicators were selected from a larger pool of indicators tracked in Sustainalytics' Global Platform. These indicators were used as proxies to measure The Ceres Roadmap expectations, and eight new indicators were developed to allow for a more comprehensive indicator mapping. For this first report it was not possible to capture all of the data required to fully assess The Ceres Roadmap expectations. However, we will be looking at additional indicators in the future to capture the meaning of the expectations more completely and to ensure that the continuous improvement and understanding of sustainability issues are reflected in the assessment process. Please see What We Measured, which provides a chart that maps each of The Ceres Roadmap expectations to the indicators used to measure progress and also notes those expectations not covered in this assessment.
Of the 57 indicators tracked, 27 are core indicators assigned to all sectors, while 31 are sector-specific indicators assigned on the basis of sector impact and exposure. Given the consistent set of expectations assigned to all sectors in the areas of governance, stakeholder engagement and disclosure, weightings were uniformly assigned to the accountability expectations. Customized weightings were applied at the performance expectation level for each sector. For example, supply chain operations are weighted more heavily for sectors with considerable exposure by virtue of their lengthy supply chains, such as Technology: Hardware and Footwear & Apparel.
Controversy Assessment Process
Sustainalytics has a rigorous monthly controversy assessment process that distinguishes the level of incident severity based on variables such as recurrence, degree of impact and company response. This screening was applied to the 600 companies included in this study as an extra layer of analysis, but was not accounted for in the performance assessment weighting. It is not uncommon for a company to have a strong environmental management framework or human rights policy in place, yet still be embroiled in environmental or human rights controversies due to poor implementation. This screen was used to avoid acknowledging companies for having strong performance on a given expectation, if the business was also implicated in significant, related controversies. It is recognized, however, that with businesses and sustainability issues moving quickly, this process may not have captured every negative incident involving a company's impact. It is also important to note that singling out a company’s performance on a given expectation does not imply it is an overall sustainability leader. Rather examples from Tier 1 and 2 companies are used to illustrate specific practices others can emulate or adapt for implementation within their own businesses.
This report is not a benchmark and does not disclose individual scores. Instead, it is a tool for companies to assess their performance against sector peers and learn from sustainability initiatives other sectors are adopting. It is not an absolute measure of performance but a relative one. Simply because a company is performing better than its peers with regard to a specific expectation does not mean it has fully met that expectation. The report focuses on solutions and improvements companies can make to meet The Ceres Roadmap expectations by 2020. A tiered approach has been applied to assess and present company performance.
At both the chapter and expectation levels graphs illustrate how the 600 companies evaluated are positioned across the four tiers.
For the first three chapters focused on accountability measures for sustainability—Governance, Stakeholder Engagement and Disclosure—information is available for each of the 600 companies. For the graphs displaying overall progress for these chapters, users will be able to filter results for each of the 19 sectors assessed and view a list of companies included within each of the four tiers. At the expectation level for the first three chapters, users will be able to view the list of 600 companies and how they are positioned across the four tiers.
Within the Performance chapter, tier assessments for overall progress are not disclosed. Data limitations for certain sectors and expectations, along with sector-specific environmental and social impacts, would render sector comparisons meaningless. Therefore, only performance information at the expectation level is disclosed.
For certain Performance chapter expectations, all 600 companies were assessed. For others, a smaller number of companies were assessed for reasons cited above. For the Performance expectations, the filtering option is limited to the nine priority sectors (or a sub-set depending upon the expectation) and users will only be able to view a list of companies within those sectors to see how they are positioned across the four tiers.
See the indicator mapping to see how proxy indicators were used to measure progress against each expectation and a list of sectors covered per expectation.
The analysis for this report is supported by a comprehensive set of data gathered through a variety of primary and secondary sources and specialized third-party data providers. With the exception of direct company feedback, the sources consulted are publicly available, though often through subscription. Company reporting constitutes the starting point for research, with key sources including sustainability reports, financial reporting and websites. A company spokesperson is contacted upon completion of each full profile update and sent a draft copy of their report for verification. Any relevant feedback communicated by companies tracked in this report has been processed and incorporated.
Sustainalytics' analysts use a centralized media database to conduct a monthly search for all companies (including their subsidiaries); an extensive list of NGO sources is also centrally tracked on a monthly basis. Other core sources include the Carbon Disclosure Project, UN Global Compact, Organization for Economic Co-operation and Development (OECD) Watch, and Business & Human Rights. Regional sources are consulted for labor relations, environmental, and health and safety data (e.g. OSHA, EPA, and NLRB in the U.S.). Further, each analyst also tracks industry-specific sources tailored to the key ESG issues in their sectors.
Data Collection Frequency and Process
The data assessed in this report represents a snapshot of company ESG performance based on data housed in Sustainalytics’ Global Platform as of December 31, 2011. As such, company reporting corresponds to FY2010 or 2011, depending on fiscal year-end and reporting schedules. Sustainalytics has updated information derived from media and NGO sources on a monthly basis, while other centralized data points are updated on a quarterly to semi-annual basis.
Quality Control Process
Sustainalytics applies a rigorous quality assurance process, which includes an internal peer review of all profiles prior to company verification and tabulation of scores. The peer review process ensures overall consistency in accordance with Sustainalytics’ analyst guidelines and quality standards. A quality assurance team at Sustainalytics that oversees broader quality control initiatives was explicitly tasked with supporting this report by fact checking a number of scores across a broad sample of companies and indicators.