Methodology

The research mainly focuses on quality of decision making and governance of sustainability issues. The scope encompassed 197 different companies from 10 industries in 7 countries. The companies are trading at key sustainability stock exchanges which are signatories of Sustainable Stock Exchanges Initiative. The companies which have asset size higher than 1 Billion Dollar are selected and diversified by different initiatives and reporting schemes. Selected 10 industries are comparable across countries. Financial and technology companies are not selected since their regulatory standards may vary by country.

The SG Scorecard^© identifies and utilizes 421 measurable criteria for sustainability governance. The criteria are either met or not met (0/1), and are defined to assess the governance quality of companies’ sustainability efforts under four main areas:

• providing guidance,
• implementation,
• oversight of the board,
• continuous learning throughout the cycle*.

Each of these areas are assessed with objective criteria, designed through a lens of governance. The key areas SG Scorecard identifies are listed in the following table:

The analysis is limited only with the publicly available data. The research utilizes;

• 2019 Annual Reports,
• 2019 Sustainability Reports,
• Governance and Sustainability section of the companies’ websites.

After the data collection process was finalized, we shared our evaluation of the data with the investment relations departments of Global Sustainability Leaders to provide them an opportunity to review the way we have interpreted their disclosures with respect to the 421 criteria (See: Criteria) for this research.

In SGS 2021, we have sharpened our data collection approach in various areas, such as targets to be SMART. In that respect, we have updated some results in SGS 2020 when needed.

Measurement is conducted by weighted average method. The evaluation includes two dimensions;

• Breadth of sustainability approach: Criteria which all the companies should adopt in order to ensure the sustainability climate in the company. Breadth criteria give clues to the question “what?”, and provides information about the approach the company has adopted in terms of sustainability governance.
• Depth of sustainability approach: Criteria which show the internalization of the essence of sustainability governance culture. Depth criteria give clues to the question “how?”, and provides detailed information about how the company deploys sustainability governance throughout its impact span.

Company scores are evaluated based on the combination of breadth and depth scores and they are distributed to 5 tiers –providing better granularity in order to identify good examples. Companies in each tier are listed alphabetically.

The SG Scorecard does not aim to measure the sustainability performance but seeks the presence of an environment and a climate of sustainability governance where sustainability efforts can flourish. In line with this perspective, the Report is distinguished by sharing best in class examples of various sustainability governance steps which fosters the learning pace among peers.

The research is expected to provide an opportunity for benchmarking and serve as a guideline for creating effective sustainability governance mechanisms, learning from peers, and thereby contributing to the deployment of good practices on sustainability.