What are we looking for?
The highest-ranking North American stocks based on environmental, social and governance (ESG) metrics.
The screen
In 2016, professionally managed assets with ESG strategies grew to $8.1-trillion (U.S.) in the United States alone, almost double the $4.8-trillion reached in 2014, according to the US SIF Foundation. Integrating ESG factors is a key component of responsible investing; this means evaluating how a company positions itself across issues such as climate change, diversity, human rights and business ethics.
Using Thomson Reuters' ESG database, we screen for the highest ranking companies through an aggregate ESG score, which takes 400 metrics across the following categories into consideration.
1. Environmental
- Resource use: capacity to minimize the use of materials, energy, or water, and finding more efficient solutions by improving supply chain management;
- Emissions: commitment toward minimizing emissions in production processes;
- Innovation: reducing environmental costs through creation of new technologies;
2. Social
- Work force: effectiveness toward job satisfaction, in addition to maintaining diversity and equal opportunities;
- Human rights: respecting human-rights conventions such as avoiding child labour;
- Community: protecting public health and respecting business ethics;
- Product responsibility: integrating safety, integrity and data privacy into products and services offered.
3. Governance
- Management: following best-practice corporate governance principles such as independence of compensation committee;
- Shareholders: equal treatment of shareholders such as the one share, one vote principle;
- Corporate social responsibility strategy: communicating integration of social and environmental practices into day-to-day decision making – for example, signing the United Nations Global Compact initiative.
More about Thomson Reuters
Thomson Reuters delivers trusted news and intelligent information to more than one billion people in 140 countries every day. Our content, software and technology support the way professionals work in a rapidly changing, ever more complex world. Thomson Reuters Eikon is the platform used by financial and corporate clients to access top research, portfolio analytics, charting and screening for every asset class.
What did we find?
The screen highlights the top 20 companies that match our criteria, ranked by aggregate ESG score, with Texas Instruments Inc., Autodesk Inc., Accenture PLC and General Electric topping the list.
This commentary does not provide individualized advice or recommendations for any specific subscriber or portfolio. Investors should conduct further research before investing.
Khaled Eniba works in the financial and risk unit of Thomson Reuters and specializes in banking and research.