In this article, we take a look at 15 most capitalist companies in the world.
The unbridled capitalism that has gone around in countries like the US has created unprecedented levels of harm on a planetary scale. It has resulted in massive resource depletion, ecological degradation, global warming, wealth inequality and labor exploitation.
The Capitalist Impact on the Planet
An MIT study in 1972 used World3, a system-dynamics simulation with variables like population growth, food production, industrial output, pollution rate and resources, to predict that our business-as-usual approach was grievously unsustainable.
The study further said that unsustainable capitalistic practices would likely result in collapse of global infrastructure somewhere in the mid-21st century unless measures were taken in time to transition to a more sustainable approach to growth. A new study, published in Yale Journal of Industrial Ecology, tested the World3 model with the data of the previous 38 years and vindicated it, concluding that we’re headed towards a societal collapse if we don’t change our practices.
Wealth Inequality and Labor
Apart from environmental damage, this form of capitalism has also resulted in income inequality. For instance, Bloomberg showed that while the wealth of the top 1% increased by 27% in 2021, the American middle-class saw its wealth decline by 26.6% in the same year. Additionally, many companies are known for union-busting to maximize shareholder value and prefer that wages are determined by supply and demand.
According to data from the US Bureau of Labor Statistics, union membership has declined from 20.1% in 1983 to 10.3% in 2021. This is reflected in another statistic from the Economic Policy Institute, which shows that productivity has gone up by 62.5%, while wages in comparison have only grown by 16% from the period 1979-2021.
As population and education levels rise, more skill-oriented people are available for particular jobs. The competition becomes more intense, and so productivity grows exponentially relative to the linear wage-growth.
This is where ESG investing comes in. ESG is an acronym for Environmental, Social and Governance. It is a set of standards that determine how ethical a corporation is environmentally, socially and in corporate governance. It helps socially and environmentally conscious investors to find and invest in companies that share their values, in practice.
ESG and Corporate Finance
Stern School of Business did a meta-analysis of a 1000 studies published on ESG and corporate financial performance between 2015-2020 and found a positive correlation between corporate ESG measures and financial performance (in metrics like Return on Assets and Return on Equity) for 58% of the studies.
It also found that corporate investment in environmental sustainability not only had no negative effect on short-term financial performance but actually had a positive effect in the long-term. Another insight is that a good performance in ESG provides downside protection in times of social and/or economic crisis as well as improved risk management.
Tech companies have some of the lowest ESG risks. For instance, Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) have ESG-risk scores of only 16.7 and 15.2 respectively, making them some of the most pro-ESG companies in the world.
Pixabay/Public Domain
Our Methodology
For our list of the 15 most capitalist companies in the world, we’ve selected companies with high ESG-risk scores from the top 25 corporations with the biggest market share. We’ve gathered ESG-risk scores from Sustainalytics, a Morningstar firm that rates corporate sustainability. It defines ESG risk as the risk to a company’s economic value from the lack of, or poor management of, ESG factors.
It calculates ESG-risk scores based on unmanaged risk to a company. Unmanaged risk is divided into unmanageable risk – risks that can’t be managed by the company, and management gap – risks that can be managed by the company for ESG but aren’t.
Sustainalytics assign a quantitative ESG risk score between 0 and 50 to each company and based on that score, it groups them into any of the five risk categories; Negligible (0-10) Low (10-20), Medium (20-30), High (30-40), and Severe (40-50).
15. The Geo Group, Inc (NYSE:GEO)
ESG Risk Score: 31.7
ESG-Risk: High
The Geo Group, Inc. (NYSE:GEO) is a multinational real estate investment company that invests primarily in private prisons and mental health facilities in countries like the United States, United Kingdom, South Africa and Australia. The company has a high ESG risk score.
14. Wells Fargo & Company (NYSE:WFC)
ESG Risk Score: 33.6
ESG-Risk: High
Wells Fargo & Company (NYSE:WFC) is one of the most capitalist companies in the world, going by its ESG risk. The company’s audits by KPMG have been questioned for their independence by several Democratic politicians like Elizabeth Warren.
In September, 2016, Wells Fargo & Company (NYSE:WFC) was fined $185 million by the Consumer Financial Protection Bureau for issuing 5,60,000 credit cards to customers without their consent.
13. 3M Company (NYSE:MMM)
ESG Risk Score: 33.6
ESG-Risk: High
3M Company (NYSE:MMM) is an American global corporation that manufactures products primarily related to industrial safety and healthcare. It has been subjected to several lawsuits, including a recent one by California Attorney General Rob Bonta, who said that the case followed a multi-year investigation that showed that 3M Company (NYSE:MMM) marketed products containing Polyfluoroalkyl and Perfluoroalkyl compounds for decades.
The lawsuit alleged that 3M Company (NYSE:MMM) knew that these compounds were carcinogenic, and were responsible for developmental defects in addition to cancer but continued selling them.
12. Meta Platforms, Inc. (NASDAQ:META)
ESG Risk Score: 34.5
ESG-Risk: High
Meta Platforms, Inc. (NASDAQ:META) is the biggest social media company in the world, with a user-base of roughly 3 billion people on their platforms – Facebook, Instagram and WhatsApp. Meta Platforms, Inc. (NASDAQ:META) ESG risk is “High” according to Sustainalytics.
11. Hitachi, Ltd. (TOKYO:6501.T)
ESG Risk Score: 34.6
ESG-Risk: High
Hitachi, Ltd. (TOKYO:6501.T) is a Japanese global conglomerate primarily involved in designing and manufacturing electronics for various industries like construction, defense and automotive.
In November 2018, Hitachi Chemical, an arm of Hitachi, Ltd. (TOKYO:6501.T), disclosed that it discovered over 30 products that are used in consumer electronics, and approximately 1,900 businesses that it supplies to, were affected by inspection problems that were pervasive across all of its factories in Japan.
The issues were made public in late June in the same year when Hitachi acknowledged that it had fabricated data for 500 clients’ industrial lead-acid batteries. Employees skipped inspections or used testing methods other than those agreed upon with clients. Some test results were also fabricated.
10. Exxon Mobil Corporation (NYSE:XOM)
ESG Risk Score: 36.5
ESG-Risk: High
Exxon Mobil Corporation (NYSE:XOM) is one of the largest oil and hydrocarbon companies in the world. Its ESG-risk score is high, at 36.5. Exxon has one of the biggest carbon footprints in the world as far as corporations go. In 2019, the scope-3 emissions of Exxon Mobil Corporation (NYSE:XOM) amounted to 730 million tonnes of CO2 equivalents. For perspective, this is how much Canada emits in a year.
9. Devon Energy Corporation (NYSE:DVN)
ESG Risk Score: 36.7
ESG-Risk: High
Devon Energy Corporation (NYSE:DVN) is another energy corporation from the US. While the company has pledged net-zero emissions by 2050, these do not include its scope-3 emissions. In addition, Devon Energy Corporation (NYSE:DVN) hasn’t laid out any particular details in its sustainability reports that show how it intends to achieve its net-zero goals.
As per the Climate Action 100+ Net-Zero Company Benchmark, Devon Energy Corporation (NYSE:DVN) has not worked to meet the indicators for capital allocation alignment for its long-term GHG reduction targets as of 2021. The company does not have a Paris-Agreement-aligned lobbying position either.
8. Shell plc (NYSE:SHEL)
ESG Risk Score: 37.6
ESG-Risk: High
Shell plc (NYSE:SHEL) is one of the world’s largest energy companies. It has one of the worst ESG ratings, primarily because of its environmental impact. The company has “committed” to bring its carbon emissions to net-zero by 2050. However, Shell plc (NYSE:SHEL) is accelerating its exploration of additional sources of hydrocarbons and intends to grow its fossil fuel business by 20% in the coming years, per Client Earth, a nonprofit environmental group.
Shell plc (NYSE:SHEL)’s 2020 emissions amounted to 1.3 billion tonnes of CO2 equivalents, and its emissions for the period 2018-2030 are projected to account for 1.6% of the total carbon budget.
7. Chevron Corporation (NYSE:CVX)
ESG Risk Score: 38.4
ESG-Risk: High
Chevron Corporation (NYSE:CVX) is another American oil and gas company. It has one of the highest ESG-risk scores of all companies, at 38.4, and is the second biggest polluter in the world.
Chevron Corporation (NYSE:CVX) is also anti-union. According to Reuters, the United Steelworkers union filed charges against Chevron in May, 2022, with the U.S. National Labor Relations Board, about the strike at the company’s Richmond, California, refinery.
According to the report, the USW claimed that Chevron Corporation (NYSE:CVX) has made changes to the terms of employment, withheld information, took coercive measures, such as surveillance, and declined to bargain with workers at refineries.
6. General Electric Company (NYSE:GE)
ESG Risk Score: 40.3
ESG-Risk: Severe
General Electric Company (NYSE:GE) is an American multinational conglomerate based in Boston. The company operates in several sectors including aviation, power, automotive and finance among others. In October, 2022, the IUE-CWA filed unfair labor practices charges on General Electric Company (NYSE:GE) after it fired two pro-union workers, including a pregnant woman, at GE Aviation Auburn facility.
General Electric Company (NYSE:GE) has also been called out by the Natural Resources Defense Center for quietly backing dozens of coal power plants overseas despite claiming to be a “leader” in clean energy.
5. Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD)
ESG Risk Score: 41.1
ESG-Risk: Severe
Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) is the holding company for Aerojet Rocketdyne, which manufactures propulsive systems for space, defense, commercial, as well as civil applications. In July, 2022, the company settled with the Justice Department and paid $9 million over allegations that it violated False Claims Act, by misrepresenting its compliance with cybersecurity mandates in a number of federal government contracts.
4. Chesapeake Energy Corporation (NASDAQ:CHK)
ESG Risk Score: 43.3
ESG-Risk: High
Chesapeake Energy Corporation is another energy company on our list of most capitalist companies in the world. It is based in Oklahoma city. Apart from having a sizable carbon footprint, the company has been involved in several controversies and lawsuits.
It has faced thousands of court cases due to “underpayment” of royalties to individuals that rented the company their land in Pennsylvania. It has settled with the plaintiffs for over $35 million as of 2017.
A subsidiary of the business was hit with a $3.2 million fine and ordered to pay $6.5 million in order to “repair 27 sites damaged by improper discharges of fill material into streams and wetlands” by the Environmental Protection Agency in 2013.
3. Citic Group Corporation
ESG Risk Score: 43.3
ESG-Risk: Severe
Citic Group Corporation is China’s biggest state-owned conglomerate. The corporation runs several companies in several sectors including real-estate, construction, food, press, and banking & finance. One of its most notable companies is the Citic Bank. Citic Group has one of the world’s worst ESG-risk scores, at 43.3. The conglomerate has been known for several controversies. Some have highlighted its poor state of corporate governance.
Most recently, Sun Deshun, the president of Citic Bank from 2016 to 2020, confessed in court to taking bribes worth $155 million during the 16 years of his career, which involved his time at Citic Bank as well.
2. Saudi Arabian Oil Company (SAUDI:2222.SR)
ESG Risk Score: 45.3
ESG-Risk: Severe
Saudi Arabian Oil Company, more commonly known as Saudi Aramco, is the biggest carbon emitting corporation in the world. Aramco doesn’t disclose its scope-3 emissions but according to Bloomberg estimates, it’s likely about 1.6 billion tonnes of CO2 equivalents for 2019. That would roughly be 4% of overall global greenhouse gas emissions. Its ESG risk score is 45.3, and falls in the ‘severe’ category.
1. Arch Resources, Inc. (NYSE:ARCH)
ESG-Risk Score: 55.9
ESG Risk: Severe
Arch Resources, Inc. (NYSE:ARCH) has the worst ESG-risk score of all the companies on the list of most capitalist countries in the world. Previously known as Arch Coal, Arch Resources is a US-based coal mining and processing corporation. The company practices mountaintop-removal mining, which is considered rather controversial because of the reduction in mountaintop heights.
The company was subject to a lawsuit in 2020 that alleged that it was violating the federal Clear Air Act in its Western Elk coal mine in Western Colorado, by failing to limit the emissions of volatile organic compounds and methane which was contributing to smog.
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Disclosure: none. 15 Most Capitalist Companies in the World is originally published on Insider Monkey.
