Lessons from firms that consistently achieve top scores can reveal how other organizations can better understand and improve key sustainability metrics.-By Simone Summers

Lacking one firm global standard, firms often have to get strategic about achieving desirable sustainability scores across multiple geographies and rating entities. The stakes aren’t small, either. A top score can unlock millions in potential investments and contracts, while a bad score can wreck corporate reputations along with shutting off access to critical capital. Yet which strategies are best for achieving a fair score and ensuring full credit for green initiatives, sustainable processes, and ecologically friendly supply chains? Best, of course, is a subjective term. However, firms that consistently earn top marks from a wide variety of rankings agencies around the world provide many insights and replicable business practices. Here, some of these global success stories will be examined, with an eye toward gleaning the knowledge needed to earn and maintain top marks for sustainability no matter which group is providing a rating.

The crux of the sustainability scoring problem

According to McKinsey, the core issue with the hundreds of potential ratings, rankings, and reviews on sustainability for companies comes down to communication. When firms fail to loudly and transparently broadcast their own numbers, rating groups and ranking organizations are often left to their own devices when assigning scores. Yikes!

Of course, the entirety of the burden shouldn’t rest solely with companies. According to a July 2021 report from the International Organization of Securities Commissions (IOSCO), many ratings groups could do more to dig out data points around carbon mitigation efforts, packaging changes, supply chain sustainability, and dozens of other measurements, so that rankings would correlate more consistently between entities. Yet many ratings organizations operate under tight time constraints and limited budgets, making it difficult to find the time for follow up interviews, deep dives into corporate reports, or extensive verifications of supplier standards. As a result, the more information and transparency that companies can provide, the less variation and errors there will be in ratings and rankings.

Firms that provide success models

Despite the variation potential from different rankings agencies, there are a number of firms that seem to have figured out how to consistently rank well across multiple scorecards. What these firms do can translate to other organizations, if their practices are studied carefully.

First, consider Neste, the Finnish petrochemical company. While it was founded as a traditional oil-based refining firm, Neste has been transitioning its production and energy outputs to a renewable fuels model. To ensure it receives full credit for its authentic progress on renewables and sustainable fuels, the firm has also become a leading proponent of more in-depth and exacting measurement of sustainability progress. Thus, Neste is tailoring its own reporting to match the EU taxonomy and get out ahead of legislation like the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDD), which will be requiring greater detail from EU-based firms. While this seems like a great deal of work now, the added details and transparency of information have helped Neste earn top environmental marks, and the firm anticipates a continuation of high marks under the new framework based on its reporting efforts.

Another company to look at it is 3M, an American manufacturer of a wide variety of household and office products. The company has a long-running pollution prevention project that has been altering product formulations to be more environmentally friendly for over 30 years. However, rather than keeping this project as a pure internal operations, 3M has in recent years built partnerships with the US Environmental Protection Agency and opened its systems up for study by a variety of academic institutions. This, in turn, has made 3M’s progress more visible and transparent, helping the company earn top ratings across multiple rankings groups due to the public and third-party verified data available on the gallons of water saved, chemicals recycled, and pounds of pollutants diverted.

A final company to examine is O-I Glass, which in recent years has dramatically improved its rankings across multiple scorecards. To achieve this, the company notes that it established a C-suite position dedicated to sustainability and made that position responsible for coordinating sustainability projects and reporting across the firm’s international subsidiaries. This allowed for significant progress in the adoption of more sustainable manufacturing processes and better deployment of capital for eco-based charitable partnerships. As a result, the firm earned top awards in 2021 for its efforts and has a number of fresh regional partnerships on sustainability projects to support its new business model.

Concluding thoughts

While ratings agencies may not always deliver consistent rankings or scores due to how they collect information, firms can step up to ensure their sustainability efforts are appropriately noted. Some of the ways that companies can do this include getting out in front of new reporting requirements to lead the way on details and transparency, like Neste. Or, firms may opt for 3M’s approach, forming partnerships with regulatory and academic groups to ensure sustainability practices are noted and public. Companies may also choose to emulate O-I glass, elevating sustainability to a C-suite priority so that meaningful and demonstrable progress can be made on corporate sustainability metrics.

Without one unified global sustainability standard in place – yet – firms do have to make an extra effort. However, businesses are fortunate that there are multiple paths that can lead to success on critical sustainability scorecards. By examining what other leading firms are doing, it is possible to evaluate different approaches and determine which options may lead to less stress, better scores, and of course, better environmental outcomes for all involved.