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July 26, 2007

Twenty Diverse Companies Make the Sustainability Cut
    by Anne Moore Odell

With some help from KLD, releases their 6th annual Sustainable Business 20 List: The World's Top Sustainable Stocks. -- What do large-cap apparel maker Nike, medium-cap office furniture maker Herman Miller and small-cap coffee roaster Green Mountain Coffee Roasters all have in common? They are all found on the 2007 Sustainable Business 20 (SB20) List of the World's Top Sustainable Stocks.

The SB20 list ranges from sector to sector, from large company to small, from mainstream companies to specialized environmental companies, in search of companies that are raising expectations for what it means to be a sustainable company.

The SB20 list was recently released in the July/August edition of the Progressive Investor newsletter that is published by In its sixth year, the list is designed to help investors and businesses recognize publicly traded companies that over the past year have taken steps forward in improving the sustainability of their internal operations and/or helped bring to market green technology. For the first time, partnered with KLD Research & Analytics to create the initial list of sustainable companies.

"Over the past six years, we seen the universe of companies we have to chosen from grow larger and we've seen it deepen," said Rona Fried, Ph.D., CEO and Editor of Progressive Investor. "Early on, we were just happy to see companies that were doing something sustainable. Now companies have to go beyond just having a green product, to changing their internal operations."

The twenty international companies that made the cut this year are Best Water Technology (Vienna: BWT.VI) (Austria), Canon (NYSE: CAJ) (Japan), Comverge (Nasdaq: COMV) (USA), Chipotle Mexican Grill (NYSE: CMG) (USA), First Solar (Nasdaq: FSLR) (USA), Fuel Tech (Nasdaq: FTEK) (USA), Green Mountain Coffee Roasters (Nasdaq: GMCR) (USA), Groupe Danone (Paris: DN.PA) (France), Herman Miller (Nasdaq: MLHR) (USA), Interface (Nasdaq: IFSIA) (USA), Land Securities (London: Land.L) (UK), NIKE, Inc. (NYSE: NKE) (USA), Novozymes (Copenhagen: NZYM.CO) (Denmark), Ormat Technologies (NYSE: ORA) (USA), Precious Woods (Geneva: SWX: PRWN) (Switzerland), Renewable Energy Corp - REC (Oslo: REC.OL) (Norway), Royal Philips Electronics NV (NYSE: PHG) (Netherlands), Schmack Biogas AG (Frankfurt: SB1) (Germany), Vestas (Copenhagen: VWS.CO) (Denmark) and Whole Foods Market (Nasdaq: WFMI) (USA). Google, Inc. (Nasdaq: GOOG) received Honorable Mention.

KLD supplied a list of 50-60 companies that scored highest on the KLD environmental ratings, as well as companies on the KLD Global Climate 100 Index. The starting list of companies also drew on previous SB20 companies and companies that judges nominated. Companies were divided into themes, including Advanced Materials, Transportation, Energy Efficiency, Renewables, Water, Resource Efficient Industrial Processes, and Agriculture.

"Although we were looking for all-around best company examples, it is helpful to consider each in terms of its particular strength" said Andrew Brengle, Senior Research Analyst, KLD, a judge for the 2007 SB20. "No company is perfect either, so we weighed offsetting negatives aspects as well."

Sustainability is widely defined for the SB20 list as judges looked at a variety of contributions companies have made in the sustainability arena including their products, practices, and/or policies. The list has always included familiar names like Nike and Canon to stress the importance that companies that have broad consumer recognition act in a more environmentally and socially responsible manner.

SB20 judge Rafael Coven, Managing Partner for Cleantech Indices, LLC, spoke to about the inclusion of large companies like Nike, Groupe Danone and Chipotle Grill as an indicator that sustainability is going mainstream. Coven said, "It may be more indicative of the increasing leverage that shareholder activism and pervasive media exposure can have on companies. First and foremost these companies (particularly in those consumer products) value their corporate reputation."

"I think you'll notice far fewer purely industrial or commercial services companies adopting sustainability, such as mining or steel making companies. Ben Franklin said something to the extent that reputations are like fine china, once damaged they can never fully be repaired," Coven concluded.

Under the theme of Green Building, Land Securities was recognized. The UK's largest developer and owner, Land Securities is upgrading its energy efficiency and all its new buildings must meet green building standards. BWT Water Technology was commended by SB20 for its use of magnetic fields instead of chemicals for filtering water.

Coven pointed to Comverge and its competitor EnerNOC as companies that represented sustainability in their field of energy management: "I see the energy management over an intelligent electrical grid as the single most attractive area for growth, investment, energy conservation impact, and national security - all without subsidies. I wouldn't be surprised if this sector quickly become as large as aerospace or consumer electronics - whether these companies and others like them remain independent is another matter," Coven added.

Although the performance of each company's stock was taken into consideration, financial performance was secondary to environmental and social performance for the SB20 companies. One goal of the list is to help investors, the media and other businesses identify what businesses are setting the standards of sustainability.

Progressive Investor Editor Fried worked with a panel of six experts in the field of green investment to help narrow down the list of progressive companies to 20. The 2007 judges were Andrew Brengle, Senior Research Analyst, KLD Research & Analytics, Rafael Coven, Managing Partner, Cleantech Indices LLC, Matt Patsky, Managing Director, Winslow Green Growth Fund, Patrick McVeigh, President, Reynders, McVeigh Capital Management, Max Deml, Editor & Publisher, Oeko Invest Publishing Ltd and Ton Rennen, Senior Sustainability Analyst, Triodos Bank NV.

After six years of helping create the SB20 list, Fried is unsure what to expect next for sustainable businesses, but she is both optimistic and questioning. She thinks the average consumer holds the keys to ensuring companies make changes to help the environment, demanding sustainable products and services.

"We see on the news terrible weather events, floods, high temperatures and I still don't hear climate change. We are at the tipping point and I don't know how long it will take to get people to change. When you look at what some companies are doing now, it is incremental. But then some companies are making serious commitments, like Canon pledging to cut carbon emissions 50% by 2010."

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