Canadian companies have slipped in a global ranking of corporate sustainability practices, with half as many of Canada's largest companies placing in the top 100 as two years ago.
Just six Canadian companies earned a spot in the Global 100 list of the world's most sustainable companies for 2017, a decline from nine in 2016 and 12 in 2015. The list ranks sustainability leaders using 14 environmental and corporate governance metrics, including energy usage, greenhouse gas emissions, leadership diversity and safety performance.
Toby Heaps, chief executive officer of Toronto-based research company Corporate Knights, which prepares the ranking, said Canada has slipped because other countries have introduced various mandatory reporting requirements that have led to more disclosure and better practices around environmental issues.
"There are leaders in Canada who are ahead of the global best in practice and those leaders are still doing okay, but they haven't necessarily upped their game," Mr. Heaps said.
"And the rest of the companies that weren't leaders have not improved that much. So the rest of the world is moving ahead and they're becoming more professional and making sustainability disclosures a standard part of corporate disclosures, and Canada has taken more of a laissez-faire approach."
British regulators, for example, now require all companies listed on a British stock exchange to report on greenhouse gas emissions, while the European Union has introduced a requirement for large companies listed on EU exchanges to report on environmental and social information starting in 2018. European and British companies accounted for 59 of the Global 100 companies in 2017.
Mr. Heaps wants Canadian securities regulators to introduce reporting requirements for companies listed on the Toronto Stock Exchange, and has urged the Ontario government to instruct the Ontario Securities Commission to develop disclosure standards for greenhouse gas emissions.
"Some of our OECD peers are moving forward with intentional policies to enhance sustainability disclosures, and Canada has kind of sat back and we're seeing the consequences of that," he said. "We still have a strong position, but it's weaker than it was. And I think if something is not done to arrest this trend, we can expect to see Canadian representation in all likelihood not strengthen."
Siemens AG of Germany ranked highest in the 2017 Global 100 report, followed by Norwegian financial-services company Storebrand ASA. Royal Bank of Canada is the top-ranked Canadian company in 37th place over all, followed by Enbridge Inc. in 39th and Sun Life Financial Inc. in 45th position.
Last year, Canada's top-ranked company was uranium producer Cameco Corp. in 32nd position, but Cameco dropped to 71st over all in 2017. Four Canadian companies – Teck Resources Ltd., Telus Corp., WSP Global and Celestica Inc. – fell out of the top 100 entirely in 2017, while Royal Bank was not included in the top 100 list last year.
Mr. Heaps said the declining Canadian rankings have been partly due to falling energy prices, which have reduced revenue for energy companies, especially those in Canada's oil sands sector. That impacts some companies' sustainability scores because measures such as energy usage or greenhouse gas emissions are assessed as a ratio of revenue.
Since the Global 100 ranking was launched in 2005, index companies have delivered a cumulative return of 132 per cent, compared to 108 per cent for the global benchmark MSCI All Country World Index, the report said.
Corporate Knights reviewed 4,973 publicly traded companies with market values of at least $2-billion (U.S.) to compile the top 100 rankings. The report is to be released Tuesday at the World Economic Forum in Davos, Switzerland.