Company Evaluation Criteria

Portfolio 21 developed and employs the following proprietary framework to evaluate which companies understand their ecological risks and opportunities, and are taking positive action to integrate sustainability strategies in their business models.

In our view, there are no truly sustainable companies in Portfolio 21, therefore no companies excel in all of the areas listed below. However, we select companies with strengths in multiple areas that are well positioned to make further advancements in addressing sustainability challenges.

Business Model

The company's business model is adapting to gain competitive advantages within ecological constraints. Specifically:

  • The company's business model is forward thinking and addresses the ecological constraints that are increasingly limiting 'business as usual.' The company's model may encourage products of service, sustainable mobility, localization of inputs/suppliers, lean manufacturing, or the use of regional manufacturing and distribution.
  • The proportion of the company's product range that is ecologically superior places it in a strong competitive position as the impact of ecological constraints increasingly affect the business environment.

Impact of Products/Services

The company understands the ecological impact of its products and/or services and has taken significant steps to reduce those impacts. Priorities include:

  • Product life cycle analyses encompassing raw materials use and supplier requirements, packaging and transportation, take-back and recycling programs, and the energy efficiency of products.

Investments

The company has demonstrated an environmental commitment through its investments. Priorities include:

  • Significant investments in the research and development of ecologically superior products or technologies, or in new plants or equipment with advanced environmental performance.
  • Merger, acquisition, and divestiture decisions are made with resource availability and environmental impacts as significant considerations in determining the long-term success of a business.

Leadership

The company's management understands the magnitude of the ecological crisis and views environmental sustainability as a major business opportunity. Priorities include:

  • Corporate leaders demonstrating expertise in environmental sustainability.
  • Company activities educating employees, customers, suppliers, and competitors about sustainable business practices.
  • Support for progressive environmental legislation and regulation.

Environmental Management

The company's environmental management system helps identify and address environmental impacts and liabilities, develop action plans and procedures, and establish environmental accounting practices. Priorities include:

  • Identification of business activities with the greatest ecological impact.
  • Public reporting on how these impacts are being addressed, as well as continuous improvement of performance over time.
  • Third party certification of the environmental management system and effective employee involvement in the ongoing implementation of the company's identified priorities.

Resource Efficiency

The company is doing more with less by efficiently using and re-using resources. Priorities include:

  • Recognition of the value of resource efficiency and waste reduction. Setting associated goals and measuring progress.
  • Improvements in building design and operations, including actions to minimize the impacts of facilities on the local environment.

Environmental Risks & Liabilities

Climate destabilization is among the greatest ecological risks we face, and the associated liabilities pose a threat to investors as well as the world. Priorities include:

  • Strategic planning for reducing direct and indirect greenhouse gas emissions.
  • Decreasing exposure to other environmental liabilities such as superfund sites, spills, toxic releases, and the fines and penalties associated with these liabilities.

Other Issues

We exclude companies with negative performance in the areas of employee relations, human rights, community involvement, or product safety, as well as those with significant business activities in nuclear energy, tobacco, gambling, or weapons.