March 8, 2023 – by Hank Boerner – Chair and Chief Strategist, G&A Institute
Literally hundreds of thousands of loyal readers closely follow the content of Barron’s magazine, sister publication to The Wall Street Journal — because Barron’s is an important investor-focused publication reaching almost a half-million subscribers each week with keen interest in content about the capital markets.
Six years ago, Barron’s began to focus more intently on ESG and sustainable investment topics. That was an important signal of the importance of ESG information to capital markets players and a wide range of investors.
Each year since Barron’s has analyzed the largest U.S. publicly-traded companies and publishes its “100 Most Sustainable U.S. Companies” ranking.
The rankings are done in collaboration with Calvert Research and Management, a major asset manager and mutual fund advisory company that has been focused on sustainable investing for many years.
This year’s results are out; the methodology to rank the 100 most sustainable companies includes:
• Calvert starts with the largest 1,000 publicly-traded U.S. companies by market cap.
• Calvert researchers apply more than 230 ESG performance indicators for these companies using data from seven rating companies, including MSCI, ISS, and Sustainalytics, along with other data and Calvert’s internal research.
• The data is organized into 28 key topics sorted into five categories based on major stakeholder constituencies (Shareholders, Employees, Customers, Community, the Planet). For example, key topics for shareholders included board structure and exec compensation, while key topics for the planet included GHG emissions and water stress.
• Calvert assigned a score of zero to 100 in each category based on company performance and then created a weighted average based on how financially material the category was for that company’s industry. Poor performance by a company in any of the key categories that was financially material would be automatically disqualifying.
The featured story is edited by Lauren Foster, who writes: “ESG may sound like a meaningless acronym. To some politicians, it’s nothing less than a threat to American capitalism, and it needs to be reined in.”
The story goes on to punch holes in the Republican-led arguments that ESG is a threat to capitalism, or to state employee pension funds, or to investing in general.
Barron’s notes for its investment readers that 63 of the 100 ranked companies outperformed the S&P 500 Index® last year and the list overall outperformed the broad index, delivering a negative 9.5% return in 2022 vs a negative 18.1% for the entire S&P 500 Index.
This is an important feature story you will want to read and share with colleagues. The G&A team is pleased and proud to say that a number of our valued clients appeared on the 2022 list, including some for the first time. Onward, sustainable companies, and upward ESG investing!