This Ratings Tool Lets Investors See Companies’ Sustainability Score

Environmental policies are increasingly important to consumers

Person holding glass world globe in hands
Companies will be held accountable for climate pledges through the new tool. Unsplash

Key Insight:

As the effects of climate change worsen, the onus is increasingly placed on brands to become more sustainable.  To better determine which brands are doing their part, sustainability assessment group CDP and environmental nonprofit World Wildlife Fund (WWF) teamed up to create a temperature ratings dataset that scores 4,000 global companies based on their greenhouse gas (GHG) emissions and how much they need to cut them.

This is an issue close to the hearts, and wallets, of today’s consumers. Marketing technology firm Valassis’ 2020 Consumer Intel Report shows that 48% of shoppers are more likely to be loyal to brands that practice and share environmental sustainability efforts.

The report noted that while product quality remains a major concern for shoppers, “nearly half of consumers indicated weighing just as much the sustainability efforts of the business and how closely the company’s values match their own.”

Investors are taking note of the increased responsibility being placed on companies, and the temperature ratings can be used to measure how much they plan to invest in the coming years to lower their emissions. The methodology is open source, and will soon be included as a target-setting standard for the Science Based Targets initiative (SBTi), which includes 50 financial institutions looking to improve sustainability efforts.

Europe’s largest asset manager, Amundi, will be the first to utilize this dataset in its investment decision-making.

“Mobilization and concrete action can only be achieved through a common understanding of the target impacts set by companies, and a recognition of the remaining required efforts,” said Jean-Jacques Barbéris, member of Amundi’s executive committee and head of institutional clients coverage and ESG [environmental, social, governance], in a statement.

According to CDP, the dataset differentiates itself from other environmental reports by outlining corporations’ targets and their plans to reduce emissions in a given timeline, and providing a rating for their possible long-term outcome. This provides investors an analysis of how sustainable a corporation plans to be in the future.

The ratings include an analysis of each company, as well as reporting and disclosure, portfolio assessment and target setting, and corporate engagement, allowing investors to see which brands hold the sustainability values that consumers care about before putting money into them.

The tool is holding global corporations accountable for their impact on the planet at a time when many companies are setting lofty goals for emissions reductions. Apple pledged to be 100% carbon neutral by 2030, and Verizon said the same for 2035. Even Burger King is changing the diets of its cows to lower emissions.

Kaila is a graduating senior at Villanova University pursuing a degree in PR & Advertising and Journalism. She is currently working as the Social Media Manager for CLLCTVE, and covers brand marketing and retail stories as a contributor for Adweek.