Best and Worst Places for Ethical Companies
Which countries get the highest marks for sustainability--for hosting companies that not only make money but have exemplary levels of environmental, governance, and social behavior as well?
To answer that question, George Serafeim and Robert Eccles, both of Harvard Business School, teamed up with Sustainable Asset Management, to examine the state of sustainability reporting in 23 countries. The researchers looked at reporting rules in each country and analyzed SAM's database of 2,255 companies, their reporting, and their financial results. To get a bead on the level of investor interest in sustainability reporting in each country, the researchers turned to Bloomberg. They were able to use data from that company to show how often investors used their Bloomberg terminals to find environmental, social, and governance metrics.
The resulting ranking sorts countries into four categories, based on two criteria:
- The amount and quality of information that the companies made available
- How much investors seemed to care about it.
Most "Sustainable" Countries
In these countries, a high level of investor interest in sustainability information is coupled with reasonably stringent sustainability reports.
- Denmark
- U.K.
- Germany
- Spain
- Switzerland
In these nations, the companies are doing a decent job of sustainability reporting, but investors don't seem to care much. Since the previous research demonstrates that sustainability reporting does have measurable effects on a company's performance, the authors believe there's a need for better investor education in these countries.
- Brazil
- Finland
- France
- Netherlands
- South Africa
- Sweden
These countries have very involved investors, with high levels of interest in the types of performance metrics generated by sustainability reporting. But the companies aren't doing much to satisfy that interest, and there's little regulatory pressure to do so.
- Canada
- Greece
- India
- Japan
- Singapore
- United States
Here, investors aren't inquiring into companies' sustainability efforts or performance, and the companies aren't being proactive in enlightening them, either. Without pressure from either government or investors, earlier research suggests this can lead to a downward spiral where environmental, safety, and governance concerns are pretty easily ignored.
- Australia
- Belgium
- China
- Hong Kong
- Italy
- South Korea
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Kimberly Weisul is a writer, editor and editorial consultant. Follow her on twitter at www.twitter.com/weisul.