Emerging markets companies win green race in Consumer Goods and Retail
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Trucost and Sustainalytics scored 500 of the world's largest companies on their direct and supply chain impacts, environmental management and disclosure for Newsweek's third annual Green Rankings. Emerging markets companies achieved the highest scores in the competitive Consumer Goods, Retailers and Materials sectors.
Strong environmental management helped Consumer Electronics firm LG Electronics Inc pip Sony Corp. and Panasonic Corp. to the top spot in Consumer Goods, and the firm was ranked 65th out of all 500 companies analysed. A high environmental management score also helped Wal-Mart de Mexico S.A.B. de C.V. beat Marks & Spencer Plc and Staples Inc to lead the Retailers sector.
Wal-Mart de Mexico was joined by four other emerging markets companies - Banco Bradesco S/A (Brazil), Tata Consultancy Services Ltd (India), Infosys Ltd (India) and Banco Standander Brazil Unit - to be ranked among the top 20 globally. Brazil's relatively clean energy mix could help companies purchasing from suppliers located there to reduce their supply chain impacts and exposure to rising fossil fuel costs. Almost half of Brazil's energy comes from renewable sources, compared with a global average of 12%.
South Africa-based Anglo American Platinum Ltd outperformed LG Chem Ltd and UK-based Xstrata Plc on environmental management and impacts respectively. All of Anglo American Platinum's managed operations have environmental management systems certified against the ISO 14001 standard, and the firm addresses energy and water use, as well as greenhouse gas emissions, as material issues.
On average, 90 companies in Asia, Africa, Russia and Eastern Europe achieved an overall green score of 53%, compared with 58% for 410 companies based in Europe, North America, Australia and Japan. The ranking is biased towards relatively low-impact service-based sectors such as Financials and Information Technology & Services, which achieve higher green scores on average (see Chart 1 below). Outside of the Financials and IT industries, three of the five highest ranking emerging markets companies are based in the Republic of Korea - Samsung Electronics Co. Prf, LG Electronics, and Hyundai Motor Co. Ltd. Efficiency and green growth could contribute to their strong showing - South Korea is implementing a Green Growth strategy to improve energy efficiency, cut greenhouse gas emissions and fossil fuel dependence, develop green industries and shift to a green economy and infrastructure.
Food, Beverage & Tobacco companies had lower scores on average than Utilities, Energy and Materials firms, partly due to significant water impacts in supply chains. The gap between the emerging markets companies ranked highest and lowest is widest in these sectors. For instance, the score for Food & Beverage firm Fomento Economico Mexicano S.A.B. de C.V. is almost three times higher than that of Singapore-based Wilmar International Ltd, ranked 500th.
Companies that lead on environmental sustainability could gain competitive advantage through greater resource efficiency, lower exposure to environment-related risks, stronger brands, more efficient supply chain management and a greater ability to identify related opportunities. There are wider gaps between sector leaders and laggards in the emerging markets than in developed countries in the Consumer Goods, Utilities, Energy, and Vehicles & Components sectors, as shown in Chart 1.
Chart 1: Average and range in environmental scores by sector: Emerging markets vs. developed
Newsweek Green Rankings