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Barron’s ‘Most Sustainable’ List Suggests It Pays to Care About ESG

Judging from Barron’s latest ranking of America’s Most Sustainable Companies—in which, PVH, Nike and Walmart all made the top 25—it pays to care.

The 100 companies on this year’s list beat out the S&P 500 in 2021, with shares returning 34.4 percent versus the index’s 28.7 percent, the financial and investment news magazine reported Friday. Forty-seven of the 100 corporations bested the S&P 500.

The listing, curated by Morgan Stanley’s Calvert Research and Management, started with the 1,000 largest publicly traded companies by market value and ranked them according to more than 230 environmental, social and governance (ESG) performance indicators, including workplace diversity, data security and greenhouse-gas emissions.

Calvert assigned each company a score of zero to 100 in five categories—shareholders, employees, customers, community and the planet—and then calculated a weighted average based on how “financially material” each category was for the company’s industry. If a company ranked in the bottom quarter in any category “that was financially material,” it was removed from contention.

PVH Corp., which owns brands like Tommy Hilfiger and Calvin Klein, ranked fifth, up from No. 19 last year. The company, which has a goal of sustainably sourcing 100 percent of its cotton by 2025, announced in September it would further it efforts by joining the U.S. Cotton Trust Protocol. By 2030, PVH aims to use 100 percent renewable electricity, achieve zero waste and source regenerative materials ethically.

Nike stayed static in 18th. The footwear giant has taken a number of sustainability-minded steps in the past year, including by exploring alternative materials like pineapple leather, embracing recycled materials, and signing a partnership with AirCarbon manufacturer Newlight Technologies to explore the possibility of adding the firm’s carbon-negative plastic-and-leather alternative to its lineup.

Walmart soared from 74th place to 25th. The retailer, which in September closed on a $2 billion inaugural green bond offering, is targeting zero emissions—without carbon offsets—across its global operations by 2040, as well as 100 percent renewable energy by 2035.

TJX Cos., Gap and VF Corp. all landed in Barron’s top 50. Ralph Lauren, Target, Levi Strauss, Nordstrom and Columbia Sportswear also appeared on the list.