Erin Gardhouse, Associate Publisher of Corporate Knights: “Companies can make money and impact society positively at the same time”

Corporate Knight is a media, research and financial information products company founded in 2002 and based in Toronto (Canada). It’s focused on promoting an economic system it calls «clean capitalism», where prices fully incorporate social, economic and ecological costs and benefits, and market participants are clearly aware of the consequences of their actions. The company, where Erin works since 2013, is media partner in Sustainable Brands Madrid 2018.

How would you describe Corporate Knights?

Corporate Knights is a media and research company focused on sustainability at the intersection of business and society. Our mission is to provide information to foster a better world, and we do this through our flagship magazine and digital platforms on the media side. All of us are working towards a common goal of advancing sustainability across society, and particularly in the corporate sector where there is a lot of potential for improvement and impact.

Erin Gardhouse

Every January you publish the ranking ‘Global 100 Most Sustainable Corporations in the World Index’. What features must a company have in order to be considered sustainable?

Corporations must be publicly-listed with a gross revenue of at least $1 billion to be eligible for evaluation in this ranking. Large companies are more likely to disclose their sustainability information. When we take this pool of eligible corporations we define sustainability by using key performance indicators designed to represent environmental, social and governance (ESG) priorities. These indicators include energy, carbon, water, and waste intensity, clean air productivity, innovation capacity, percentage tax paid, CEO-Average worker pay, pension fund status, supplier score, safety performance, employee turnover, leadership diversity, and sustainability pay link- that last one is any mechanism that links senior executive pay to sustainability targets. Companies are then given weighted scores on each of these areas depending on how much their industry contributes to them or deducted based on lack of action.

Our research team now also assesses a score for clean revenue, which is designed to capture revenue streams that have clear environmental and, in a limited number of cases, social benefits. So not just doing less harm, but actively doing good. An example could be bank loans for renewable energy projects, when we look at the financial sector; or hydroelectric energy generation if we’re assessing a utilities company; and enzymes and microbes from natural sources if we’re assessing the chemical sector. The recent changes are designed to capture our evolving understanding of sustainability, as well as our increasing ability to measure these areas. And so companies that are competitive across these ESG indicators in a way that is meaningful in their industries, we define in this context as the “most sustainable” companies.

Your slogan is «The Company for Clean Capitalism». Have companies learned anything from the crisis started in 2007/2008? Is it possible another capitalism that thinks about more than just making money and impacting society?

There’s no question that a cleaner, fairer form of capitalism is possible. Companies can – and many already do – make money and impact society positively at the same time. The competition inherent in capitalism can be harnessed to solve environmental and social problems, or to be the best environmental steward, have the most efficient processes. In fact, if we accept the necessity of a low carbon economy, the constraints on resources that climate change can bring, the social problems that impede our collective stability and prosperity, companies that want to be competitive in the future have to be competitive on environmental and social metrics. But, to address your first question, regardless of what we have learned from the crisis that began a decade ago, we have not changed enough across all levels of the economy to prevent a similar crisis in the future.

What is the trend in sustainability reporting and corporate transparency?

One interesting trend that our Head of Research has identified is that large companies ($1 billion or more in revenue) in developed and emerging countries have comparable disclosure rates in GHG, water, energy, and injury categories. Historically, emerging countries disclosed at lower rates in these areas than they do now.

Does the purpose of companies play a role in their goal of gaining the trust of citizens?

I think most Sustainable Brands attendees would agree that the “why” of a company is crucial to having a successful brand. The “why” is the mission or the motivation behind what a company does, beyond just the goods or services they offer. If your purpose is important and is evident in your organization’s interactions with communities, it lays a foundation for trust. Having purpose is also a form of long-term planning, incentivizing those within an organization to think deeper about the communities they serve and how they are uniquely equipped as an organization to make an impact beyond short-term profits.

Your media was founded in 2002. How has it evolved since then? How have you tried to reach more readers and make Sustainability interesting to more people?

It’s evolved quite a bit since then, as most media companies have in the last 15 years. The one thing that hasn’t changed is our commitment to independence in our research and editorial and to publishing research that has value to citizens, companies, and investors. We’re always working to grow our reach and impact. We utilize partnerships with major media outlets, such as the Globe and Mail in Canada to maximize our reach. We differentiate ourselves by being transparent and forthcoming, and this helps, at the very least, to start a conversation about sustainability.

Corporate Knights is a media partner of Sustainable Brands Madrid 2018. Why do you think that professionals working in different areas of companies concerned with sustainability should not miss this event?

Sustainable Brands is unique as a conference for its high level of energy, openness and optimism, punctuated with a few heated discussions that I think represent attendees’ commitment to building a better world. I last attended the conference in Vancouver, and I learned a lot about the challenges the hotel industries and some consumer-oriented brands are facing, for example, and the resulting innovations in their products and services and how they communicate with customers about their brand. It was interesting to talk with and listen to people form industries I don’t have much personal expertise in. As an attendee, you might pick up an idea from another organization that sparks your own solution, or perhaps you are simply challenged to consider issues outside your specialization, but either way you’re likely to walk out a bit more motivated and a bit more capable of tackling the next thing.

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