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How Leading Financial Firms Make It Into the World’s 100 Most Sustainable Companies

Indeed, we are in the age where corporate sustainability is moving to the core of the businesses and many organizations and managers have recognized the need to include environmental engagement in their decision-making process while aiming for their financial objectives. It is therefore no wonder that more and more companies and organizations, most especially top companies and multinational corporations, have invested in sustainability efforts and have eventually reaped profits at the same time.

And early this year, Environmental Leader published an article announcing the companies who made it into the Global 100 index — a list comprised of the world’s 100 most sustainable companies. Corporate Knights (CK), a Toronto-based media and investment research firm, compiles the list that recognizes the top overall sustainability performers in their respective industrial sectors and determines the inclusion of companies that make it into the Global 100 index through using 12 quantitative sustainability key performance indicators (KPIs) . The KPIs include the amount of revenue that companies generate per unit of energy consumption and how they are able to incentivize management support of sustainability commitments and performance targets.

Why become a Sustainable Company?

Definitely, companies who made it to this list have seen the importance of evolving into sustainable companies — that by being a sustainable company, the entire organization is embracing “sustainability” principles in its values system and its inclusion in the long-term strategies. The Business Case for being a Responsible Business identifies seven (7) key benefits that these organizations are currently enjoying as a sustainable company. These are:

  • Improved brand value and reputation.
  • Increased employee motivation, productivity, satisfaction, and retention.
  • Operational effectiveness.
  • Risk reduction and management efficiency.
  • Positive direct financial impact.
  • Marked organizational growth; and
  • More business opportunities.

Leading Financial Firms that Top this Year's List

While sustainability efforts are more often evident in industries where supply and production value chains are significantly emphasized (e.g. retail, food, manufacturing), it is not surprising however to find out that firms from the financial sector are among the most sustainable companies, and have even topped the list.

On the Global 100 index's tenth year, Westpac Banking , one of the largest financial service providers in Australasia, was named as the most sustainable company in the world . With annual revenues of $38 billion (US) and over 36,000 employees, the bank has a long history of leadership and innovation in the corporate sustainability arena. Accordingly, 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.

Other financial firms that made it to the list were Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, and Shinhan Financial Group Co Ltd. So, how did these leading firms from the financial sector make it to the most sustainable companies list?

It must be noted that in a 1995 research by the United Nations Environment Programme (UNEP) and Salomon Inc. of New York, it was discovered that 70% of respondents in a group of 90 commercial and investment banks from four different continents, believed certain issues (including environmental concerns) had a material impact on their businesses. Bankers also saw the need to be cautious about the financial implications of lender's liability, which is associated with the financial risks banks face when granting or extending loans and the borrower's ability to meet financial obligations.

However, while the challenges mentioned above were seen, new business opportunities were also highlighted. Several international banks were able to adopt innovative and proactive strategies to capture the opportunities associated with sustainability. These included new products such as ethical funds or loans specifically designed for environmental businesses to capture new market opportunities associated with sustainability. This prodded the financial sector to include sustainability initiatives in their boardroom priorities.

In a 2013 Harvard Business Review blog, Robert G. Eccles and George Serafeim emphasized that sustainability practices among members of the financial services industry should not be only confined to corporate social responsibility (CSR) initiatives like, "green programs", (e.g., using energy efficient light bulbs or operating out of a LEED Platinum building) because these are mandatories for individuals and business organizations to use energy and natural resources more responsibly.

Banks and insurance companies should challenge themselves in batting for transparent information about their true source of sustainability — their social and governance performance, and how it relates to financial performance. Social performance indicators include talent recruitment, employee compensation, customer security and privacy, customer transparency, responsible products, and financial inclusion. On the other hand, examples of governance performance include management of the legal and regulatory environment, systemic risk management and managing conflicts.

By having broader sustainability initiatives, financial firms will be able to enhance their competitiveness while also advancing the economic and social conditions in which these companies operate in order to meet social needs. Ultimately, they are able to create shared value with their customers which in turn creates business value by identifying and, more importantly, by addressing social issues that intersect with their trade.

Creating Shared Value and Winning at the Same Time

Let's examine how three of the leading financial firms made it to the list.

1. The Global 100 Index top-notcher Westpac Banking , places sustainability in action through a formal corporate governance structure that promotes programs on operating principles and policies, sourcing policies and accessibility, among others. On the other hand, it also incorporates sustainability activities that focus on responsible banking and investment and issues that help customers, communities and people grow in the long term.

2. Australia & New Zealand Banking Group Limited or ANZ, another Global 100 Index lister, is committed to actively managing and reducing the environmental impacts of their activities while working with others to reduce their impacts, too. ANZ has annually tracked its Environmental Reduction performance by putting in place a solid energy management solution . ANZ also forged a partnership with WWF-Australia to increase awareness and understanding of the environmental sustainability issues that affect the sectors and geographies where the firm operates in. Awareness, education and information programs of work will be implemented globally over the duration of ANZ's partnership with WWF.

3. Shinhan Financial Group Co Ltd has actively minimized its greenhouse gas emissions through efficient use of resources and energy ; managing green financial products by supporting the green industry and green lifestyle; and strengthened the "green" communication with its stakeholders. Currently, Shinhan supports financing for green enterprises and customers and has expanded its investment into green industries. It has strengthened the Environmental Management capabilities of its employees and its green partnerships with other companies. Finally, it has consistently disclosed environmental management performances.

These three leading financial firms saw how rising above the myriad of sustainability challenges will not only improve corporate competitiveness, but will also contribute to the social needs of the community. And to do so, internal stakeholders from the corporate boardroom down to the employees must be engaged and well-advised of the massive task of aligning both the economic and the environmental goals. For this, external sustainability experts , like FirstCarbon Solutions (FCS) should be sought for environmental consulting for sustainability in operations and investments, as well as in energy management.

FirstCarbon Solutions can Help Financial Firms in their Sustainability Programs

FCS can help financial institutions achieve sustainable profitability both in their internal operations and the investments made. Through fully integrating consulting and software with unmatched expertise in back office data processing, FCS puts you on the path to sustainable profitability in finance. They provide expert services for conducting Phase I and Phase II site assessments to establish financial risk from an energy, water, and resource cost perspective. FCS also assists firms with audits and reducing costs, finding opportunities for conservation and waste reduction, and implementing energy management plans that will significantly improve organizations’ financial health.

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