May 30, 2012

In conjunction with my data provider, IW Financial, Inc., I am pleased to announce the release of an update of our study of the disclosed environmental management practices of the largest publicly traded corporations in the U.S.  The new study reveals those with the strongest environmental governance, policies, and infrastructure, and distinguishes them from the great majority of publicly traded companies, most of which have little or no discernible capability with which to manage complex environmental and sustainability issue.

The study, Benchmarking Analysis of Disclosed U.S. Corporate Environmental Practices, follows up on my initial (2010) report on this topic, and similarly makes use of the Governance and Environmental Management Strength (GEMS) Rating™, an environmental rating methodology I developed that assesses the presence or absence of 50 distinct indicators.  I designed the GEMS Rating™ to rigorously evaluate the ability of companies to anticipate and actively manage the environmental issues that pose risks to and present opportunities for their operations.

This latest study reflects my continuing attempts to identify the environmental, health, and safety (EHS) issues that will most affect the future business success of firms, and builds on my work over the past several years to illuminate the issues that are of greatest relevance to corporate senior managers as well as to the investment community and other stakeholders.  The GEMS Rating™ allows me (and others) to evaluate a broad and diverse array of companies in a way that is meaningful, consistent, and transparent.  I believe that my method and latest results provide important insights regarding which publicly traded U.S. firms truly are environmental leaders and which are not, based upon whether and to what extent they demonstrate appropriate governance practices; policy elements; goals, systems and other infrastructure; performance results; and transparency.

Key findings in the study, among many others, include the following:

  • Intel is once again the top-rated company.  In second place, and demonstrating very strong improvement in disclosed environmental management practices, is Whirlpool Corporation.   Similarly dramatic gains were made by 3M, EI duPont, PG&E, EMC, and Bristol-Myers Squibb.  Two companies, Avon Products and Medtronic, made even more dramatic advances.
  • Of the 970 firms in the sample, 40 percent have total scores (across the 50 evaluation criteria) of less than ten, and a significant fraction (13 percent) still have a total score of zero, meaning that they do not disclose any of the 50 individual pieces of information comprising The GEMS Rating™ scale.

This latter finding is troubling, given that increasingly, Investors, analysts, and other stakeholders are making judgments about the management quality of publicly traded companies based on a variety of environmental governance, policy, management, and performance indicators, such as those comprising the GEMS Rating™.  These stakeholders will perform their analyses using whatever data they can obtain, so it stands to reason that everyone concerned would benefit from broader disclosure, as well as more extensive use of complete and coherent approaches to managing EHS issues.

Those interested in the study can obtain a free copy by visiting the following web site:  http://info.iwfinancial.com/RESOURCES/White_Papers/2012_GEMS_Analysis_of_U.S._Corporate_Environmental_Policy.

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