Carbon Clean 200 (Investing in a Clean Energy Future)

A list compiled by As You Sow and Corporate Knights

    The Clean200 is an educational tool intended to give individuals the ability to research companies that are effectively balancing people, planet, and profit. The Clean200 companies are ranked by their clean revenues in U.S. dollars. To be eligible, a company must earn more than 10% of total revenues from clean sources. On average, 58.3% of revenues earned by Clean200 companies are classified as sustainable, representing close to $2.4 trillion in revenue, roughly unchanged from last year and significantly above the 5% average sustainable revenue for their MSCI ACWI peers. The Clean200 also uses negative screens. These screenings factor in social responsibility, for example palm oil, paper/pulp, rubber, timber, cattle, and soy producers that are screened on As You Sow’s Deforestation Free Funds. Companies that use child or forced labor, are involved in the manufacture of harmful pesticides, and that engage in negative climate lobbying are not included. The clean 200 list is broken up into 10 sectors, that range from “materials”, “industrials”, and to “consumer staples”. The “materials” sector accounts for 30 companies out of, with Nucor leading the sector holding the 14th spot.

Nucor is the largest steel producer in the United States, operating 24 scrap-based steel mills that have an annual production capacity of more than 27,000,000 tons. Nucor is also North America’s largest recycler, processing approximately 20 million tons of ferrous scrap annually to produce new steel that is 100% recyclable at the end of its useful life.  

In its climate pledge, Nucor is committed to a 35% combined reduction in steel mill scope 1 and scope 2 GHG intensity by 2030, using 2015 baseline goals. This goal will take Nucor’s steel mill CO2 emissions down to 77% less than 2020’s global steelmaking average. In addition to scope 1 and 2, Nucor will continue to reduce and disclose most of its scope 3 emissions. Most recently, Nucor announced a new product, Elcyon a sustainable high strength steel for offshore wind energy.

To learn more about the Clean 200 list, I sat down with the CEO and founder of As you Sow, Andrew Behar and Corporate knight’s director of ratings, Michael Yow.

What is as you Sow?

• Founded 30 years ago, As you Sow creates dynamic content that focuses on corporate accountability, sustainability, and green investments. Annually, As you Sow publishes 10 reports a year on topics ranging from CEO pay, gender pay gap, and sustainable revenue. Through their reports they create lists of KPIs and help determine emerging leaders within their respective industries.  After publishing these reports, As you Sow goes a step further and engages with companies that were ranked low to help resolve issues that resulted in their respective score.

 Who are the Corporate Knights?

• Corporate Knights is an award winning magazine that keeps an editorial focus on climate change, responsible investing, and the ideas, actions and innovations that shape a sustainable economy. The Corporate Knights’ research division, produces global sustainability rankings, research reports and financial product ratings based on corporate sustainability performance. The Knights play an integral role in flagging companies that do not have the appropriate credentials to make it onto the clean 200 list, they also assist in calculating a company’s sustainable revenue which in the end contributes to their respective ranking.

What inspired the clean 200 list?

• The list and report are rooted in the fossil fuel divestment movement. As you Sow and Corporate Knight founders wanted to help educate and inform people on where their money was being invested. To provide some background, the divestment movement is where the owner of a fossil fuel assets commits to selling it to demonstrate adherence to sustainable finance practices and climate risk management. Once the investor “divests” from their fossil fuel assets, the clean 200 list can provide a guidepost on what companies, portfolios, and funds to invest in that are sustainable.

What purpose does the clean 200 list serve today?

• The clean 200 list should be used as an educational tool for individuals who are interested in investing with their values and want to ensure a future return. “Put your money into companies that will be thriving in 5,10,20,30 years and your portfolio will do better. “Take your money out of companies that are in the extraction business. The companies that are going to thrive in the future are the ones that are going to be driving the transition, we are witnessing an opportunity that is bigger than the industrial revolution.”

• Do you have any outstanding uses/ case studies?
  • As of January 31, 2023, the Clean200 outperformed its MSCI ACWI peers by 3.36% since the Clean200 was launched in July of 2016. Clean200 companies generated a total return of 91.21%, beating the MSCI ACWI broad market index (87.84%) and MSCI ACWI/Energy Index of fossil fuel companies (61.31%) on Total Return Gross — USD Basis from the Clean200 inception of July 1, 2016, to January 31, 2023. There is a potential of turning the clean 200 list into an investment portfolio or exchange traded funds (ETF). For example, if you would have invested US$10,000 in the Clean200 on July 1, 2016, it would have grown to $19,121 by January 31, 2023, versus $18,784 for the MSCI ACWI broad market benchmark and $16,131 for the MSCI ACWI/Energy benchmark for fossil fuel companies.

What is the Corporate Knight sustainable taxonomy?

• The main function includes determining the company’s “sustainable” revenue. It is a combination of the EU taxonomy and Corporate Knights KPIs. The Corporate Knight sustainable taxonomy covers all the industries that the EU taxonomy includes and even covers an additional industry, the pharmaceuticals industry. Another core function of the taxonomy is to flag or determine if a company is ineligible to be a part of the list. Currently, there are 16-17 points that can invalidate a company.

How does the taxonomy play a role in the report?

• • The sustainable taxonomy calculates the sustainable revenue and does a complete background check to deem the company socially responsible as well as sustainable. Another important function of the taxonomy includes deeming a company ineligible. If a company is flagged, they are taken out of the list and deemed socially irresponsible and are no longer apart of the clean 200 list. For example, 29 companies were taken out of the list this past year for utilizing thermal cooling.

What are some actions and that make a company ineligible to be a part of the clean 200 list.

• Some invalidating actions include thermal cooling, investment in oil & gas, weapons & military involvement, and a history of political opposition to climate policies. Investyourvalues.org is another project started by As you Sow, they offer sustainable investment tools that give people the ability to rank their retirement plan according to similar KPIs used in the clean 200 list. Their list is cross checked with the clean 200 list to help filter out any companies that may have fallen through the cracks. The companies are screened and are ranked based off these three questions:  
  • 1. What are the environmental and social sustainability risks of the default plan option?
  • 2. How much money do plan participants have invested in different sustainability risk categories?
  • 3. Do plan participants have any access to sustainable investments?

What does the report tell the normal every day person?

• “Invest companies that are defining the future. Invest in companies that are going to be transformative that will create a world that you want to live in and thrive in the future.” The list is outperforming the broadest market index that there is and has been standing the test of time.

What does the future for this list look like? Upcoming plans and goals?

• The clean 200 lists future is looking extra bright, the team is currently working on creating an ETF so that the list may become an investable portfolio. Each year brings new companies, technologies, and groups that may be able to make an appearance on the list for that year. The KPIs and sustainable activities are always in development and will continue to become more rigorous.

At its core, the clean 200 list can is as a tool that identifies companies that are actively achieving the difficult balancing act of people, planet, and profit. Whether the list is used for a conscious consumers next shopping destination or helps educate someone on their next investment, the list will be accessible to people at no charge. Rooted in the divestment movement, the founders wanted to solve a gap in the movement that they identified. Its easy to place the blame and highlight problems but what’s the good in that if not provided an alternative solution. Companies such as Nucor, are industry leaders in steel but also in supply chain management. To provide the much-needed attention to supply chain management it would be interesting to see an added sector to the clean 200 list that identifies excellent supply chain management and or adding extra points for a company that excels in supply chain efficiency. Especially since COVID-19 exacerbated supply chain management issues the clean 200 list could identify companies that adapted despite major complications and backups. The work that As you Sow and Corporate Knights is not going unnoticed, and we look forward to reporting back when the Clean 200 list is an investible ETF.