Methodology Overview: The Definitive Global Sustainability Benchmark

Analysis for the Global 100 was based on the work of a group of sustainability research providers used to isolate a short list of the top ten per cent of sustainability and financial performers from a universe of 3,000 developed and emerging market stocks. These were then ranked by a set of Key Performance Indicators (KPIs) calculated using environmental, social, governance (ESG) and financial data from ASSET4 (a Thomson Reuters business) and The BLOOMBERG PROFESSIONAL® service, with supplemental financial information provided by FactSet Research Systems. Companies were analyzed by region and MSCI Global Industry Classification Standard sectors according to the MSCI All Country World Index (ACWI).

To determine the Corporate Knights Global 100 for 2010, the following significant improvements were made:

1. ESG information was obtained from a group of data providers rather than a single data provider.

2. ESG data was integrated with financial data to enhance analysis.

3. Companies were ranked transparently by a set of ten objective sustainability indicators as opposed to a "black-box" approach.

4. A greater number of companies from emerging markets were included in the analysis.

The process was carried out with two fundamental limitations of corporate sustainability research in mind:

1. A lack of ESG data persists despite the growing importance of sustainability to the corporate world.

2. No single sustainability research provider is currently able to provide a total picture of global corporate sustainability due to coverage gaps and methodological biases.

THE FIRST STEP

The Global Sustainability Research Alliance (the world's largest ESG research consortium formed by Global Currents Investment Management LLC and Phoenix Global Advisors LLC, which integrates research from ten leading firms across the globe including Goldman Sachs | GS SUSTAIN, Société Générale, EIRIS, and RiskMetrics Group), isolated the top ten per cent of sustainability and financial performers** from a universe of 3000 developed and emerging market stocks. The top ten per cent list comprised of 300 company names was then turned over to Corporate Knights Research Group and Inflection Point Capital Management for further analysis.

THE SECOND STEP

The second level of analysis was completed using a proprietary 5-Factor Model developed by Dr. Matthew Kiernan and the IPCM team. This model represents an advance upon existing sustainability analytical models in two respects. First, the 5-Factor Model adopts a more explicit focus on the quality of a company's strategic management capabilities. Second, the model expands previous working definitions of corporate sustainability by extending traditional ESG factors to include elements such as a company's capacity for innovation and its ability to respond to changing competitive forces.

The model was applied using ten equally-weighted environment, social, and governance (ESG) Key Performance Indicators (KPIs) and a Transparency Indicator. The KPIs were developed by Corporate Knights Research Group (CKRG), a signatory to the United National Principles for Responsible Investment (UNPRI), with support from Inflection Point Capital Management, and input from the Global 100 Council of Experts comprised of thought leaders at the interface of sustainability and finance. The KPIs (for which a 70 per cent average threshold of data availability was achieved) were used to rank companies within industries. The top-ranked companies in each sector, paying attention to weightings of the MSCI ACWI, comprise the final Global 100.

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Click here for the Global 100 Council of Experts