Why this Index?
All newsrooms know what they’re against. We started Tortoise looking to set out what we’re for.
In a word, it’s responsibility.
There is now a broad consensus that companies must live up to their responsibilities, from respecting and enhancing the rights of people, to ensuring that the planet remains habitable.
Yet, such behaviour is not being measured – even among Britain’s most powerful companies.
We created the Responsibility100 Index to track corporate responsibility. Inspired by the UN Sustainable Development Goals, it measures how FTSE 100 companies are performing on their commitment to key social, environmental and ethical issues.
In September 2019, we launched a version of the Index in Beta form and, following consultation with more than 70 FTSE100 companies, officially launched the first Responsibility100 Index in January 2020. In March, we released the first of many quarterly updates.
We hope to use these continual updates of the Index to push corporate transparency to the top of boardroom agendas and inspire companies to compete in a “race to the top”.
People – and our planet – depend on it.
Alexandra Mousavizadeh, Director of Tortoise Intelligence
Introducing the Responsibility100 Index
Inspired by the UN Sustainable Development Goals, the Index:
- quantifies each company’s commitment to equality, education, the climate, partnerships, justice and good business using over 100 publicly-available data points.
- distinguishes between what a company is saying and actually doing on these commitments. Annual reports often declare a commitment to sustainability goals alongside profit – but rarely are these pledges followed up fully or, in some cases, at all. The Responsibility100 answers this problem by directly comparing a company’s commitments – in the form of their ‘talk’ score – with their actions – their ‘walk’ score.
- aggregates these performance measures in order to rank companies against one another, inspire a ‘race to the top’ and put pressure on underperformers to adapt or improve.
What is the FTSE 100?
The FTSE 100 is an index tracking the 100 largest companies listed on the London Stock Exchange, as measured by their market capitalisation – the price of their shares, multiplied by the number of shares in total.
What are the UN Sustainable Development Goals (SDGs)?
Seventeen global goals to ensure a better and more sustainable future for all by 2030. These goals were adopted by every UN member state in 2015 and include a universal call-to-action to end poverty, protect the planet and ensure everyone enjoys peace and prosperity. Although designed for countries, we believe companies have a large role to play in reaching these goals, too. We have taken the SDGs as inspiration to guide our data selection but we have also included indicators we consider important which are not explicitly in the SDGs, for example how well companies support LGBT+ employees.
Using these results, company executives, CSR experts and journalists can track and assess companies’ strengths and weaknesses in contributing towards a more sustainable future.
Often, the shortfalls between company objectives and actual performance go unnoticed by the general public. The Responsibility100 Index is designed to ensure that more information about the performance of individual companies reaches our ears.
But this rests on two methodological foundations: consistency and transparency.
Comparing companies is not straightforward: different industries face fundamentally different issues when it comes to responsibility and even within the FTSE 100, companies can vary widely in size and structure. Given this, a key challenge for Responsibility100 is how to fairly compare these companies.
To meet this challenge we need companies to measure their social impact in consistent and cross-comparable ways. In other words, we’ve taken a sector agnostic approach – we don’t make any judgements on sectors and include a list of metrics we think that the majority of are reasonably achievable by the majority of FTSE100 companies. The indicators themselves are a mixture of mandatory reporting metrics, indicators companies report on for other indices or frameworks, and lastly indicators we think are important but don’t have enough attention yet – the inclusion of representation of protected groups is an important issue to us, is not mandatory reporting for companies yet and in the case of LGBT+ representation goes beyond the remit of the SDGs.
All of this is possible. We have found the following areas to have high-levels of consistency:
- Emissions. The mandated ‘Scope 1’ and ‘Scope 2’ greenhouse gas emissions and also, increasingly, ‘Scope 3’. Standards also exist to encourage companies to further break down their direct emissions, for example those in the extractive industries. Such companies often report further metrics such as methane, nitrogen oxides (NOx), sulphur oxides (SOx) and volatile organic compounds (VOCs).
- Gender. Gender pay gap reporting was mandated by the UK government for companies based in the UK with more than 250 employees. Since 2017, companies have had to provide standardised data on six gender pay gap-related metrics, allowing us to not only access cross-comparable data but also track it over time.
- Financial performance. In particular, the metrics most relevant to investors, such as revenue and profit, and those that are mandated, such as tax information surrounding subsidiaries and tax expense.
There is, however, lots of room for improvement. We have noted that consistency is considerably weaker when it comes to reporting on:
- Responsible sourcing. Just nine companies track the percentage of ‘total’ materials that come from responsible sources. A key issue is that while many more companies might provide this information for a particular product or material, they do not assess responsible sourcing across the whole of their operations. Without a ‘total’ figure, it is very difficult to fairly compare companies on this measure.
- Inclusivity. Unlike gender, FTSE 100 reporting on the representation of – and equal pay for – black, Asian and minority ethnic (BAME), disabled and LGBT+ groups is almost non-existent. This may in part be due to the potential issues with collecting and publishing this data, but it’s likely to also stem from the fact that the government has not equipped companies with the necessary tools or incentives to ensure they can report on diversity and equal pay in an informative way.
- Charitable contributions. While most companies measure and publish their community investments and charitable giving, how they define and measure it varies significantly. For some industries, such as pharma, in-kind product donations tend to make up the majority of their charitable giving, whereas other industries might measure the volunteering hours of their staff or the provision of free online services that have a social impact.
Whereas previous attempts to measure corporate responsibility have used proprietary data, or direct company surveys, the Responsibility100 only uses data that is publicly-available.
What this means methodologically is that if we have not been able to find or verify a data point using public sources, we will report it as ‘missing’. For most indicators, the absence of this data is assumed to mean the absence of the indicated activity: the company is assumed to have done nothing and therefore in most of these cases we will ‘impute’ that this data point is zero. In other particular cases we impute the ‘worst case’ value based on the data we do have – if a company fails to report its water use, for instance, we use the value of the company with the highest water consumption in our index. By doing this we incentivise companies to report as no matter their value, a company with a missing value can only do better in our ranking by publishing that data and losing this ‘worst case’ imputation.
This is a deliberate choice. If companies want to retain control over their reputations, the onus is on them to provide robust and transparent data on their activities. It is no good for companies to mark their own homework: they must be transparent about their impact on the world and publicly demonstrate their performance to the people they serve, employ and otherwise impact.
The data points that are mostly missing
When it comes to ‘missing’ data, we have found that:
- Not one of the FTSE 100 currently publishes data on the representation of LGBT+ and disabled people at a senior management level – or their pay gaps.
- 21 report on the ethnic diversity of their workforce.
- Less than half (46) publish data on the number of employees receiving training.
- Less than half report on their recycling of waste (46) and water (16).
Our hope is that the number of ‘missing’, or unpublished, values will reduce over time.
We’re taking an open and modern approach to index building by dynamically refreshing every quarter to stay relevant and constantly re-evaluate our methodology. This way we can easily add or remove indicators, use new data sources and stay up to date with the latest trends in reporting.
We’re adopting a versioning system in the naming of the Index to reflect these updates, where each year since official launch we increment the leftmost version number and each quarterly update we increment the rightmost version number, resetting to .1 each year. So the Responsibility100 at official launch in January was version 1.1 while this March update is version 1.2, and we will release versions 1.3 and 1.4 later in the year. Next January’s update will be version 2.1.
Meet the FTSE 100 companies
Across seven sectors and 25 industries
Most valuable companies listed on the London Stock Exchange, but with offices and subsidiaries all over the world, and headquartered in 10 countries
- 100 based in the UK
- 40 based in London
In their most recent reporting years, they…
- made £1.79 trillion in revenue
- employed 4.6 million people
The Responsibility100 Index tracks them on measures such as:
- How well are they looking after their employees? 74% employee satisfaction
- What are they doing to address gender inequalities? 18% gender pay gap
- What impact are they having on the planet? 416 million tonnes of greenhouse gas emissions
- How much time is dedicated for employee learning? 31.2 minutes a week
- How much are they investing in their communities? 14p for every £100 of revenue
- Are they respecting the law? £15 billion in fines in the US and UK since 2017
- Are they upholding good business practices? 90% own a subsidiary in a tax haven
Why are the top 10 the top 10?
Firstly, because of their high levels of reporting – these companies are partly rewarded by the index for simply being the most transparent. The Top 10 failed to report only 20% of our indicators on average, compared to the average among the whole FTSE 100 of 30% – or the bottom ten, which failed to report on average over half of our indicators (53.5%
This speaks to one way to view our index: that getting into roughly the top half is more a game of transparency, where companies can climb the lower ranks by reporting more missing data and in turn losing the harsh penalties of our imputation methods.
But, to go further and reach the Top 10, a company’s actual performance matters far more.
And the Top 10 are strong performers – not just in one area, but across all of our pillars. Their strengths include:
- Reducing their negative environmental impact – from emissions intensity reduction to less waste to landfill
- An already closed or closing gender pay gap and strong representation of women on the board of directors
- Large social contributions, including in-kind donations of products to employee hours volunteered
- Strong efforts on ensuring employee wellbeing alongside providing training and company benefits
- Fair and transparent business practices, from tax accreditation to relatively low CEO pay
- The lack of any major fines, employment tribunal cases or human rights concerns
Unilever, the owner and manufacturer of over 400 household brands from Ben & Jerry’s to PG Tips to Dove, keeps its number one position in this edition of the Index. Big strengths include a 100% recycling rate in 21 of the countries it operates in, a reduction in its emissions intensity of 8.2%, a negative gender pay gap, and the second highest spending on training. Likewise, beverage giant Diageo, which has one of the highest rated modern slavery statements on the FTSE 100 and has appointed only women to its board since 2017, remains in second place while property developer Landsec, which is prolific in terms of its sustainability organisation and campaign membership and is one of only 7 companies to publish metrics on its LGBT employees, keeps third.
Who’s new to the Top 10:
- Astrazeneca (now ranked 6th, previously 13th). The pharmaceutical has been boosted to the top 10 by becoming the highest ranked company in the Partnership pillar. Astrazeneca, which donates medicine to healthcare programmes internationally, has benefited from our inclusion in this edition of the Index of in-kind donations of products when counting a company’s social contributions.
- Lloyds (now ranked 7th, previously 16th). Bank Lloyds has made its way to the top through a big leap within the Good Business pillar, climbing 40 places. This movement is the combination of three things since the last edition: the presence this time of a value for employee satisfaction (62%), higher value of tax paid (£2.9bn versus £1.6bn) and lower CEO pay (£4.7m versus £6.3m).
- Barclays (now ranked 8th, previously 18th). Barclays has seen its total rank climb thanks to improvements in its metrics on diversity and inclusion, moving up 18 places within the Equality pillar. Barclays is one of the few companies in finance to have met the Parker Review target of having ethnic representation on its board – a new indicator in this edition of the Index – as well as one of an even smaller minority of companies to provide data on BAME and disability representation in its general workforce.
Who’s out of the top 10:
- British Land (now ranked 22nd, previously 6th): British Land’s rank has suffered two big blows: a 46 place drop in the Partnership pillar and a 60 place drop in the Equality pillar. The first drop comes from a new, lower value for its social contributions (£1.8m versus £2.3m) as a result of a stricter definition of the indicator, while the second arises from changes to our methodology on parental leave. Due to its shared leave policy, we had previously duplicated British Land’s primary parental leave value for its secondary: 26 weeks. However, upon further examination of its parental policies, secondary leave has now been lowered to 2 weeks.
- RELX (now ranked 16th, previously 7th): For publishing giant RELX, the slip in ranking to just the top 20 firstly comes from changes to our methodology on our Talk indicators. In order to ensure greater comparability between companies on our analysis of sustainability reporting, we’ve switched to only examining how a company incorporates the themes of the SDGs into its main annual report. As a result RELX, which has an extensive but nonetheless separate sustainability report, has fallen 36 places in the Reporting pillar. RELX has also fallen 36 places on Equality due to a higher value for its gender pay gap. That’s a reflection of adjustments to our methodology when dealing with a company that fails to report a group level pay gap figure but does report two or more pay gaps for its subsidiaries. In that case, we take the highest value we can find from these subsidiaries in order to incentivise group level reporting – the assumption being that the company will only improve its position by reporting a group value that contains the worst figure alongside better figures. We failed to find a group level pay gap figure for RELX PLC and so used the 39.4% figure for its subsidiary Elsevier. We had previously used subsidiary RELX UK Limited’s figure of 6.2%.
- Severn Trent (now ranked 13th, previously 10th). Out of all those companies to leave the Top 10, Severn Trent has seen the smallest fall of 3 places, with only relatively marginal declines in its ranks across a handful of pillars. One of its biggest falls is 11 places in Justice, but not because the utilities company has, for instance, acquired any new fines. In fact, because for this edition of the Index we are now taking fines from since 2017 not 2016, the company has seen its total decrease with the discounting of a £426,000 fine from the UK Environment Agency in 2016 for repeatedly allowing sewage to leak into a brook. However, enough companies whose fine totals previously topped Severn Trent’s have seen theirs decrease by more, leading to a relative decline for the utilities company.
On average companies in the pharmaceutical and financial sectors are the highest ranked on the Index, while those in travel and extractive rank the lowest. Travel is the worst when looking at both talk and walk scores, but extractive falls to the bottom when examining just walk scores. That’s because extractive industries come top in our index for performance in the reporting pillar – i.e. having an annual report that frequently touches on a broad range of sustainability issues. In turn, companies in the extractive industries also have some of the largest gaps between their talk and walk ranks – the average difference between these ranks is -37.
How else our rankings have changed
Three companies have dropped out of the FTSE 100 in March: Kingfisher, NMC Health and TUI. They’ve been replaced by: Fresnillo, Intermediate Capital Holdings and Pennon Group.
Fresnillo, a Mexican-based precious metals mining company, had itself dropped out of the FTSE 100 in December – but upon its re-entry this month it has ranked 95th in the Responsibility100. Big weaknesses include an increase of 11% in its emissions intensity and a low proportion of female directors on its board at 28%. One clear strength, however, is that Fresnillo employees get the second highest number of hours a week dedicated to training at 1 hour 45 minutes on average.
Asset manager Intermediate Capital Group enters the Responsibility100 Index at 98th. But rather than reflecting drastically bad performance in any one indicator, ICG’s rank is the product of having the highest number of missing values of any FTSE 100 company at 80. This means that for the overwhelming majority of indicators the company has had the worst possible value imputed.
Water and waste management company Pennon Group, subsidiaries of which include South West Water, Bournemouth Water and Viridor, enters at 55th. Despite ranking 3rd in the Good Business pillar in part due to gaining Fair Tax Mark accreditation and the 10th lowest paid CEO, Pennon’s overall position is dragged down by one of the weakest performances in the Justice pillar, where it’s ranked in 98th. Though its total cases at the UK Employment Tribunal of 19 since 2017 is dwarfed by, for instance, the 321 of Tesco, proportional to number of employees Pennon has the highest rate of cases – though all bar one were withdrawn by the claimant and none were upheld by the tribunal.
Biggest faller: Auto Trader is the biggest faller in our March update index, moving down 27 places from 25th to 52nd when compared to official launch in January. Most of its movement comes from our imputation method of assuming the worst case, as Auto Trader has an above average number of missing data – and continues to do so since our last release. For instance, we found Autotrader did not report 74% of our Climate indicators, from annual water consumption to recycling rates, compared to a FTSE 100 average of 42%. In the context of us collecting over 141 more values for this set of indicators, it means Auto Trader fares relatively worse.
Biggest riser: Rentokil Initial is the biggest riser in our March update when compared to official launch, jumping from 66th to 45th. The business services group has achieved this through marginal improvements but across the board in all bar one of our pillars. A 10 place rise in Rentokil’s Partnerships rank comes from an even further rise in its high CEO approval rating on Glassdoor to 94% while a 13 place rise in the Reporting pillar is the result of its annual report moving close to the top third of reports most focused on sustainability.
Talk v Walk
The Talk indicators in the Index reflect the commitments and reporting of a company around sustainable and responsible business practices. We don’t think talk is bad, in fact we think talk is good. It’s important to encourage the need for sustainable practices and the FTSE 100 have a platform to reach a large group of people.
Reporting itself forms part of the Sustainable Development Goal (12.6): “Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.”
Currently a company’s Talk score is generated from indicators under two pillars: reporting and membership.
The Reporting pillar consists of a text analysis of each company’s annual report: we run a list of chosen keywords over the text and search for the number of near or complete matches. This absolute score is used, but also a relative score where we compare the keyword analysis to the size of the reporting as a proportion.
We hope by doing this that we capture not only companies saying a lot on these topics, but also those who are talking about it relatively highly — i.e. We’ve found that every one of the FTSE 100 mentions the word ‘sustainability’ at least once in their annual reports, showing just how ubiquitous the topic has become within reporting. As for the use of the SDGs, at least 60 of the FTSE 100 mention the goals or a specific target directly in their annual report. In terms of our own pillars, keywords related to Good Business are by far the most common – unsurprising given the traditional role of annual report.
A company’s membership score is calculated based on the number of commitments it has made to a handful of organisations and membership bodies that we believe to be relevant to SDGs and agnostic of the sector. Examples include the CDP, RE100 and the We Mean Business Coalition. We hope to expand our current list in future iterations of the Index.
Our walk indicators in our index reflect a company’s actions on its commitments, and measure both the transparency with which a company reports on them and their performance. Every walk indicator can be made quantifiable and this is built into our methodology. If our team of researchers can’t find a value, or if it is ambiguous, then that value will be recorded as ‘missing’ and imputed with the worst case available when the Index is built. This means it is no longer good enough for a company to mention that its carbon emissions reduced year-on-year: it has to report how much the reduction was.
At a glance
The Poverty and Wellbeing pillar measures the extent to which a company’s business model impacts social equality and the extent to which its employment practices prioritise employee wellbeing, for example, by paying employees a living wage or providing flexible working hours and counselling when needed.
The Equality pillar measures companies on the diversity of their leadership and employees, the extent of pay gaps for marginalised groups and inclusive practices such as shared parental leave policies. In addition to gender equality, this pillar looks at inclusion in the workplace for ethnic minorities, disabled and LGBT people.
The Climate pillar measures a company’s contributions to, and mitigations of, the climate crisis, from greenhouse gas emissions to energy consumption and waste management. The pillar also includes measures that take into account broader environmental impacts, such as water consumption and land conservation.
The Education and Skills pillar measures the extent to which a company contributes to the overall education of society through the ongoing training and development of their staff as well as outreach programmes in the wider community.
The Partnership pillar assesses companies on the extent to which they collaborate with external organisations to reach the world’s most important targets – and whether they set up frameworks to keep this collaboration in place.
The Justice pillar measures companies on the extent to which they are promoting peaceful and inclusive societies by looking at their record on human rights, employment disputes and modern slavery.
The Good Business pillar assesses a company on its business practices, from its tax affairs to employee turnover rates, spending on research and development and CEO remuneration.
Poverty and wellbeing
Inspired by the following Sustainable Development Goals:
“We urge leading investors to support companies that build long-term value by investing in their employees and communities”
– The Business Roundtable
In 2019, the Business Roundtable – an association of the CEOs of America’s largest companies – decided to update its 1997 statement on the role of a corporation. Whereas in 1997, it was agreed that “the paramount duty of management and of boards of directors is to the corporation’s stockholders”, the CEOs in 2019 agreed that the paramount duty is to a company’s stakeholders – a group that includes its customers, employees, suppliers and communities, as well as its shareholders.
It is an important acknowledgement that social responsibility is not an optional ‘extra’, but rather companies must now be responsible at their core and in their day-to-day business practices.
To measure how the FTSE 100 are meeting their wider social responsibilities on the Sustainable Development Goals of ‘No poverty’, ‘Zero hunger’ and ‘Good health and wellbeing’, we have looked at:
- How a company’s business practices affect lower-income groups. We have measured this by whether companies have been accredited as a Living Wage provider. The Living Wage is a voluntary higher rate of base pay that requires a company to pay all of its UK-based staff no less than £9.30 an hour (or £10.75 in London). In other words, enough to meet the basic cost of living in the UK and London. Earning a ‘living’ (as opposed to ‘minimum’) wage, can have a big impact for those on the lowest pay grades, whether that’s taking the stress out of affording the basics or enabling parents to spend more time with their children.
- How a company looks after its ‘citizens’ – employees – in particular, when it comes to their health, wellbeing and safety. We have assessed this by looking at various benefits that companies can offer – such as flexible working arrangements and subsidised gym memberships – as well as tracking staff safety.
- How a company’s business practices affect the stability of other businesses. It should be the responsibility of large companies to ensure they pay suppliers on time, but just 51 members of the FTSE 100 are signed up to the government’s Prompt Payment Code.
- How a company is impacting on global food security, measured by food donations and the amount of food waste produced each year. Unfortunately, lack of company reporting in these areas undermines the extent to which we can get an accurate picture: just 26 of the FTSE 100 confirmed in their reporting that they provide food donations, while only four reported on their total food waste, three of them being supermarkets.
In the following section we explore in more detail how well the FTSE 100 companies are meeting their responsibilities towards workers and employees.
Employee pay and wellbeing
The FTSE 100 currently employs nearly 4.8 million full-time equivalent staff.
- 1.7 million, or 38% are guaranteed a Living Wage
- 3.7 million, or 78% can work flexible hours
- 2.3 million, or 49% can consult a company mental health policy.
The sectors that perform the worst on these measure are:
- Travel. Not one of the six travel companies in the FTSE 100 guarantee their employees a Living Wage. Engineering, services and retail & consumer companies also perform poorly on this measure.
- Companies in the extraction sector tended to also perform worse than other sectors, particularly on flexible working hours and mental health policies.
Companies have a duty to protect the health, safety and welfare of their employees. This means assessing potential risks in the workplace and ensuring employees are sufficiently protected against these risks. In their most recent annual reports, 57 FTSE 100 companies reported on the number of fatalities at their company, with 63 reporting on the number of injuries.
Among those reporting these figures, there was a total of:
- 78 worker fatalities
- And estimated 20,701 worker injuries, or an average of 1 worker injury per 100 employees
While half of those reporting worker fatalities could report no fatalities over the last year, others stand out for alarmingly high fatalities. The mining company, Glencore, reported 13 fatalities in 2018, a figure the company acknowledges as “disappointing and unacceptable”. British American Tobacco and steel-making company, Evraz, also both reported more than 10.
For worker injuries, it appears more could be done in the Travel industry. FTSE 100 travel companies reached an industry average of three injuries for every 100 employees – three times more than any other industry.
Inspired by the following Sustainable Development Goals:
Equality is about ensuring everybody has an equal opportunity, and is not treated differently or discriminated against because of their characteristics.
As put by the Global Business Coalition for Education,
“With millions of people excluded from the workforce due to their race, gender, sexual orientation, disability, and many other factors, the business community is in the unique position to address long-standing inequalities.”
That’s where diversity and inclusion come in. If we can promote and support a more diverse and inclusive workforce, we can begin to address some of these long-standing inequalities.
“Diversity is being invited to the party, inclusion is being asked to dance”
– Verna Myers
Our Equality pillar assesses the diversity of the FTSE 100 workforce and the inclusivity of company practices around pay, promotions and parental leave. These measures are relevant to all workplaces, regardless of size or sector.
We have sought to measure representation of, and pay gaps among, the following groups:
- Black, Asian and Minority Ethnic (BAME) people
- LGBT+ people
- Disabled people
However, we have found inequalities affecting women to be overwhelmingly better reported on than for other groups. This is in part due to a UK government requirement that companies with more than 250 employees report on their gender pay and bonus pay gaps. But there are also broader issues around disclosure for other groups: not all employees will want to share their ethnic, disabled or LGBT+ status with their employers.
Nevertheless, here is what we know about how the FTSE 100 performs on diversity and inclusion.
All companies, where possible, report on the representation of women in their workforce. On average, 4 in 10 employees at a FTSE 100 company will be women.
Industry plays a big role and in highly predictable ways: whereas the fashion industry has the highest representation of women (Next comes top, with women making up 7 in 10 employees), the mining industry has the lowest, with women making up just 2 in 10 employees.
Representation of women in the overall workforce is important, but does it translate to power and decision-making? It doesn’t seem so. 91 FTSE 100 companies looked at the representation of women among their senior managers (ie below board level) and on average less than 27% of senior managers were female. The situation is only slightly better at the very top of FTSE 100 companies, with around 35% of FTSE 100 board members being female. With women making up only 39% of new board-level hires over the last three years, this may not change fast.
Did they do it?
Alexander-Hampton set a target for FTSE 100 companies to reach 30% female representation at board level. We found that 70% of the FTSE 100 have already met this, leaving 30% with work to do this year.
The gender pay gap is the average difference between hourly wages for men and women. This is not the same as unequal gender pay, which is when women are paid less than men for doing the exact same work. Rather, the gender pay gap is a reflection of structural inequalities in where women tend to sit on the pay scale.
For example, in the airlines industry the majority of pilots are male and stewardesses female. Like for like, they may be paid equally, but pilots are paid more and therefore there will be a large pay gap. The opposite can be true in other industries. For example, in the construction sector, manual labourers are more likely to be male, whereas managers may be more likely to be female. In this scenario, the gender pay gap could be skewed in favour of women.
On the gender pay gap, the FTSE 100 performs slightly worse than the national average.
FTSE 100 gender pay gap: 18.0%
National average gender pay gap: 17.3%
However, this average hides a wide distribution of results, ranging from the largest gender pay gap of 47.9% (easyJet) down to the smallest gap of 0% (Taylor Wimpey).
One to watch: the industry with the highest average gender pay gap in the FTSE 100 is banking: with a gender pay gap currently at 38.5%, this figure is travelling in the wrong direction, having increased from 38.1% last year.
When it comes to bonuses, the distribution of results is even wider still, ranging from the largest bonus gap of 78% (AAL) to the largest in favour of women at -224% (Ocado). We can see here that 11 companies – Ocado, Autotrader, Associated British Foods, Ashtead Group, Bunzl, BT, GSK, Meggit, Sage Group, Smurfitt Kappa and Unilever – all have a negative bonus gap.
Parental leave is an important measure of inclusivity. Fully-paid, shared parental leave policies are particularly beneficial, since allowing fathers dedicated time off to care for their children also helps to create a more equal expectations around childcare responsibilities in the workplace.
On parental leave, the Index measures the length of fully-paid time off that companies give for primary (traditionally, maternity) parental leave and secondary parental leave.
Lack of transparency is a big issue for maternity leave. Mumsnet have previously reported that just 23 of the FTSE 100 provided detailed public information about their parental leave policy. This bore out in our own research: we found that just 49 of the FTSE 100 provide any information about the length of fully paid primary and secondary parental leave.
Of those companies reporting, we found that on average they pay:
- 16 weeks of full pay for primary leave
- 5.4 weeks of full pay for secondary leave
And the best company for growing families? Standard Life, who are offering 40 weeks to new parents.
“Nurturing a diverse workforce is not something “good” to be done at a cost to your bottom line; it is something that adds value to it.”
– Lord Shinkwin, speaking in the House of Lords
The UK Equality Act 2010 includes ethnicity, sexual orientation, gender reassignment and disabilities as protected characteristics. Yet we have found there to be a shocking lack of reporting and transparency on the representation of BAME, LGBT+ and disabled people at FTSE 100 companies.
Companies reporting on the proportion of their workforce who are:
- BAME: 20
- LGBT+: 7
- Disabled: 11
Reporting on protected characteristics is not without its challenges: companies require consistent classification systems and not all employees will want to disclose this information. But it matters. In London, where 40 of the FTSE 100 are headquartered, ethnic minority employees earn 78p for every £1 earned by a white employee. A 2017 survey by Stonewall found that 1 in 3 have hidden or disguised that they are LGBT+ at work because they were afraid of discrimination. Meanwhile people of working age with disabilities have an employment rate that is 28.6 percentage points lower than that of people without disabilities.
In addition to representation of these protected groups, we also looked at which companies were calculating the pay gap for each of these groups – we found that only BT, ITV and RBS calculated a BAME pay gap, and that no FTSE company reported pay gap for LGBT+ or disabilities.
Mandatory reporting on these protected characteristics may be on the horizon: Lord Shinkwin’s Workforce Information Bill, which is currently going through parliament, proposes an extension to the mandatory gender reporting, so that all companies with more than 250 employees will be required to report on the pay and representation of all protected characteristics.
Inspired by the following Sustainable Development Goals:
“We are supposed to transition to a net zero economy by 2050. So, a question for every company, every financial institution, every asset manager, or pension fund or insurer is: what’s your plan?”
– Mark Carney, outgoing Governor of the Bank of England
Long-term commitment to the welfare of the planet is probably the single most clarifying test of whether a company is behaving as a good citizen.
To assess a company’s contribution to the climate, the Responsibility100 Index looks at:
- Total greenhouse gas emissions
- Reduction in greenhouse gas emissions
- Land area conserved
- Water consumed and recycled
- Energy consumed and the proportion that comes from renewable sources
- Total waste and the proportion that is recycled and sent to landfill
- Donations towards disaster relief funds
Priority number one for our planet has to be reaching ‘net zero’ emissions and so the results for the Climate pillar are heavily weighted towards the total greenhouse gas emissions indicator.
Under the Greenhouse Gas Protocol (GHGP), the World Resources Institute has issued guidance for companies to consistently report on their greenhouse gas emissions. This is typically measured in tonnes of “CO₂ equivalent”, a unit that takes into account other greenhouse gases besides carbon dioxide, such as methane, perfluorocarbons and nitrous oxide. There are three ways for companies to count and report on their greenhouse gas emissions, or CO₂ equivalent:
- Scope 1 emissions are “direct” emissions produced by the company. These must physically occur at sites owned or rented by the company, for example emissions from company vehicles or combustion in the company’s boilers.
- Scope 2 emissions are “indirect” emissions produced by the company. These occur from electricity consumed by the company.
- Scope 3 emissions are additional “indirect” emissions that occur along the company’s value chain. Scope 3 therefore includes any emissions resulting from:
- goods and services delivered by outside providers
- product distribution
- product waste disposal
- employee travel and commuting – for many companies, this is one of the biggest sources of Scope 3 emissions.
All companies listed on the main market of the London Stock Exchange, and therefore all FTSE 100 companies, are required to report their Scope 1 and 2 emissions in their non-financial reporting. When it comes to just Scope 1 and 2 emissions, we see that the top emitter – Royal Dutch Shell – emits only a fraction less than the 91 companies that make up the FTSE 10 to 100. The top emitters are overwhelmingly in the extraction – that is, energy and mining – industries.
The picture does not change dramatically even when measuring emissions relative to a company’s size in terms of its employees.
Reporting on Scope 3 – all indirect – emissions is not required and 31 companies in the FTSE 100 have chosen not to publish their data on this. Our analysis suggests that it is important that they do though, since this can radically alter the picture of a company’s environmental impact.
BHP offers the most dramatic example of this. The company’s emissions from fuel consumed by haul trucks at its mine sites (Scope 1) and from the generation of purchased energy (Scope 2) are relatively small. But when the global resources company takes into account the emissions that emanate from its entire value chain as part of its Scope 3 emission (which includes BHP customers processing their iron ore to make steel), the company’s environmental impact is 75 times greater than when just accounting for Scope 1 and 2.
In what ways can companies reduce their greenhouse gas emissions?
Businesses can limit their energy use and carbon output by:
- encouraging employees to use video conferencing or rail travel rather than air travel or vehicles, where possible
- switching to clean energy sources
- increasing the energy efficiency of buildings and processes
- reducing waste and recycling rather than sending to landfill
- minimising food waste
- working with suppliers towards more sustainable practices
While it’s important to rank companies on their overall climate impact through total emissions, it’s more comparable to rank them on their relative ‘intensity’ whether this be emissions per revenue, by number of employees or by some production related unit.
When we do this, we see:
- BP and Shell and retain their top spots: the oil giants emit the most both in absolute terms and proportionate to their employees.
- That industries that perform better on this measure include:
- supermarkets, such as Tesco
- fashion retailers, such as J D Sports
- Land Securities, Segro, Antofagasta
- banks, such as HSBC, Lloyds Banking Group and Barclays
- That travel companies, such as easyJet and InterContinental Hotel Group, have relatively high emissions proportionate to their number of employees
Beyond absolute and relative emissions, it is also important to look at how companies are changing over time. The Index measures this by looking at a company’s year-on-year change in ‘emissions intensity ratio’. This is when companies normalise their Scope 1 and 2 emissions by comparing them with an appropriate business metric or financial indicator – for example per employee for services industries, or per square meter of floor space for the retail industry. By looking at the year-on-year percentage change in this measure, we can fairly compare the progress made by companies in different sectors.
We found that most members of the FTSE 100 reduced the intensity of their carbon emissions – but not all.
At the sector level, finance and retail are making the greatest progress, while travel is the only sector – no pun intended – moving in the wrong direction.
Beyond emissions, the Climate pillar also rewards (and penalises) companies for their efforts on energy sourcing and waste. While less reported than emissions, these indicators are also vital measures of a company’s commitment to a sustainable future.
Just half (51) of the FTSE 100 provided data on the percentage of their energy or electricity that came from renewable sources. Those that did – perhaps unsurprisingly – performed well on this measure, with four companies reporting an impressive 100% renewable: Admiral, Hargreaves Lansdown, Pearson, St James’s Place and Whitbread.
Companies that report using a high proportion of non-renewables still get points for honesty, though: Anglo American, GlaxoSmithKline and British American Tobacco are all in this bracket.
Even fewer companies report their recycling rates: just 45. Those that do are on average achieving a recycling rate of 54%. Three of the FTSE 100 are able to boast 100% recycling rates: Phoenix Group, Hargreaves Lansdown (both financial services) and Unilever (consumer goods).
The top three sectors for recycling were:
- Supermarkets (97% of waste reused or recycled)
- Telecommunications (97%)
- Fashion (95%)
Education & skills
Inspired by the following Sustainable Development Goals:
“If you think education is expensive, try ignorance.”
– Andy McIntyre
Quality education and decent work are vital foundations for a stable and productive society. Businesses have a non-negotiable role in this, whether that is proactively supporting the ongoing learning of their employees or training the next generation of graduates and apprentices.
To assess a company’s contribution to education and skills, the Index looks at both the ‘internal’ training of employees, graduates and apprentices and the ‘external’ skills gained by those benefiting from outreach programmes.
On training, the Index looks at both the time and the money that companies are investing in their employees’ self-development.
- Evidence for 74% of the FTSE 100 providing a dedicated training resource; while it is these possible that the true figure is higher, we were unable to verify this with publicly-available data only
- The average FTSE 100 employee can dedicate 31.2 minutes a week to learning and self-development; Imperial Brands and Evraz are clear leaders on this measure though with employees dedicating 1h51 and 1h30 a week to learning, respectively.
- On average, FTSE 100 companies spend £539 per employee for their training each year. BP far outperforms any other company on this measure, with £2,397 being spent per employee.
Just 50 of the FTSE 100 reported on their graduate intake, 10 of whom are in the financial and banking sectors.
- The average FTSE 100 company hires 197 graduates each year
- In absolute terms, the companies hiring the most graduates are Tesco, Ferguson and Barclays
- In relative terms, the companies hiring the most graduates are St James’s Place, British Land and Ferguson
One way in which the FTSE 100 can dramatically contribute to the wider issue of education in society is by addressing the UK’s current skills shortage, particularly in hospitality, information technology, software engineers, construction and healthcare.
49 of the FTSE 100 reported on whether they offered apprenticeships, 1 less than reported on the number of graduates in their business.
- The average FTSE 100 company hires 530 apprentices each year.
- In absolute terms, the companies hiring the most apprentices are WPP, BT and Anglo American.
- In relative terms, the companies hiring the most apprentices are Berkeley Group Holdings, Persimmon and WPP.
It is important to note that annual apprenticeships as a proportion of full-time equivalent employees is not the same as the proportion of a company’s employees who are apprentices. For example, while we calculate this figure as 18% for Berkeley Group Holdings, in fact 10% of the company’s employees are graduates, apprentices or undertaking formal training at any one time.
58 of the FTSE 100 reported on the number of people reached by their education and skills programmes.
- The FTSE ‘58’ who reported this figure, collectively reached 12.3 million – but not necessarily unique – people through their education and skills outreach programmes. That’s equivalent to 18.1% of the UK’s population.
- The average number of people reached per reporting company was 215,484.
- In absolute terms, the companies reaching the most people were Barclays, BT Group and Unilever.
- In relative terms, the companies reaching the most people were Barclays, Rolls-Royce and Ocado.
Inspired by the following Sustainable Development Goals:
“If we can get business seeing itself differently, and if we can get others seeing business differently, we can change the world.”
– Michael Porter, Professor at Harvard Business School
How are companies working with third parties on sustainability? While our other pillars examine a company’s efforts on getting its own affairs in order, in Partnership we shift focus to external relationships, from the charitable activities a company engages in to the management of its reputation and brand. We’ve drawn on UN SDG 17 – “Strengthen the means of implementation and revitalize the global partnership for sustainable development” – for the Partnership pillar, in the sense of its emphasis on creating the frameworks for delivering sustainability.
Charitable and community work
From our analysis of the most recently published annual and sustainability reports, we found the FTSE 100 in total put £2.6 billion (£2,551,008,362) towards social contributions across 2018 and 2019.
We’ve adopted the definition of ‘social contribution’ used by the FTSE 100 themselves in their reporting, which they firstly used to mean any cash donations to charity made directly by a company or donations made to charity by trusts connected to a company. But this term was also often used to refer to the amount ‘donated’ in terms of the wage cost of volunteering by employees or in-kind donation of products. We’ve not excluded mandatory contributions – for example, the UK government requires some utilities companies to make contributions to alleviate fuel poverty and support national carbon reduction targets. The difficulty from a data collection perspective was that more often than not the FTSE 100 did not break down their headline social contribution figure into these constituent parts.
With that in mind, we found the biggest contributors amongst the FTSE 100 are pharmaceuticals – the industry contributed £779.4m (£779,420,805) in total in the most recent reporting period. Astrazeneca and GSK are the top two companies across the entire index, with £555m (£555,409,405) and £224m (£224,000,000) respectively. Their high totals are predominantly driven by large in-kind donations of pharmaceutical products. As Astrazeneca details, the company “donated more than $686 million (2017: $401 million) of medicines in connection with patient assistance programmes around the world, the largest of which is our AZ&Me programme in the US.”
For a comparison point, Oxfam’s charitable spending in the 2018/19 period was £298.3m – over 8 times less than the FTSE 100 as a whole. However, on average a FTSE 100 company contributes £27.4m socially. Only one individual company tops Oxfam’s total – Astrazeneca.
The picture is of course much different when taking into account how much money companies could be contributing. Taken as a whole, the FTSE 100 put 14p towards social contributions for every £100 of revenue they earn i.e 0.14% of revenue. The average proportion of revenue by company is 0.21%. Astrazeneca is again the biggest contributor in proportional terms, contributing £3.36 per £100 of revenue, followed by ITV with £1.64.
Turning to Oxfam for another comparison point, the charity’s gross income was £434.1m in the 2018/19 period. This means it spends roughly £69 on charitable activities for every £100 of gross income. None of the FTSE 100 come close to this rate.
Looking for an internal benchmark, 39 companies on the FTSE 100 paid their CEO more than their social contributions. On average a FTSE 100 CEO is paid 19 times more than their company’s social contributions. Online grocer Ocado fares worst on this metric by far, with its CEO’s earning a pay packet of 1,000 times more (£58.7m in pay versus £55k raised by the Ocado Foundation). On the other hand, mining giant Glencore’s CEO was paid just 1% of the company’s total social contributions (£1.1m in pay versus £95m in contributions).
As a final comparison point, the UK government commits to spending 0.7% of GDP on overseas aid. One might rationalise this as an admittedly imperfect target for companies in the sense that UK citizens see no direct benefit from aid spending just as company employees or perhaps shareholders see no direct benefit from a company’s social contributions. Only five companies contribute at least 0.7% of their revenue to social causes: pharmaceuticals GSK and Astrazeneca, mining giants Antofagasta and Fresnillo, and ITV.
Aside from gathering data on charitable activities through spending, we’ve collected the volunteering hours companies reported. In total FTSE 100 companies gave 2,377,321 hours to charity – that’s 99,055 days or 271 years. Using median weekly earnings of full-time employees in the UK of £585, that’s the cash equivalent of roughly £34.8m.
Another way of thinking about this hours total is: taking the average FTSE 100 employee as working 8 hours a day for 254 days a year, the FTSE 100 together hire the equivalent of 233 full time employees dedicated to volunteering. That’s 0.005% of the FTSE 100’s total 4,638,888 employees. Oxfam has 5,054 employees, according to its 2018/19 report.
Or, In simpler terms, our data implies the FTSE 100’s employees volunteer for on average 2 and a half hours in a year.
The company with the most amount of employee volunteering is Sage Group in the software industry, which volunteers the equivalent of 2.5 half working days per employee. The least is aerospace and defense company BAE Systems, which offers only 0.002 of a day (approximately a minute) per employee.
Of the 45 companies who report their volunteering hours, only 3 see employees volunteer at least one day in the year to charity.
By far and away the banking sector offers the most hours to charitable causes – 1,119,569, which accounts for nearly half the total volunteering hours across the FTSE. That’s despite banks only accounting for 10% of total FTSE 100 employees.
Aside from contributions, we found 89% of the FTSE 100 had long-term partnerships with at least one charitable organisation. To look for evidence of whether such relationships existed, we first examined company sustainability reports and websites. Secondly, we took each of the SDGs in turn, established the main charities working on that SDG’s issues, and then examined their websites and reports to find evidence of corporate partnerships.
On top of their work with charities, we’ve looked at companies Glassdoor profiles for the Partnership pillar. Our Glassdoor indicators could equally have come under the Good Business pillar – but given potential difficulties in taking Glassdoor at face value as a source for employment rights and job satisfaction, we chose to place it here. In addition, we felt Glassdoor worked in Partnership insofar as it provides a framework – or rather, a platform – for reporting on the issues of employment rights and job satisfaction, which fits with SDG 17.
We found former and current FTSE 100 employees had left 120,867 reviews on their employers’ profiles – that represents 2.6% of the current FTSE workforce. Of course, Glassdoor review totals are historic and the platform was founded in 2007.
On average, a FTSE 100 company has a rating of 3.6 stars. That’s better than the average rating of companies on Glassdoor of 3.3 stars, according to a 2019 Glassdoor blog post. 64 individual companies had a rating higher than 3.3 stars.
The top 5 FTSE 100 companies on Glassdoor are Barratt Developments (4.5), Auto Trader (4.4), Rio Tinto (4.4), Taylor Wimpey (4.3) and United Utilities (4.3). The bottom 5 companies are Bunzl (2.2), IAG (2.5), Intertek (2.7), Evraz (2.8) and JD Sports (2.8). The highest rated industries are on average Real Estate, Digital Services, Aerospace and Construction, while Fashion, Chemicals, Support Services and Supermarkets are among the lowest rated.
A natural question to ask of us for using Glassdoor as a source is the potential for negative bias. Current and former employees leave reviews anonymously, which leads to the suspicion such reviews will be skewed by those motivated by grievances rather than praise.
In response, one justification for including Glassdoor in the context of an index is that while such bias may exist, presumably it exists across all companies on Glassdoor – making any comparisons of the data somewhat like-for-like.
It’s also important to note that Glassdoor moderates reviews. This is taken from the aforementioned blog post by the company:
“Every piece of content is moderated through a two-step moderation process: technological and human-eye. Steered by Glassdoor’s community guidelines, our proprietary tech filters and algorithms detect attempted abuse and gaming, as well as multiple other attributes.
“Any Glassdoor member can flag a posted review for a second look and review. Human moderators personally inspect content that is flagged for secondary review. Content that is not within the Community Guidelines will be removed, with 5% to 10% of reviews being rejected.”
That said, we do find some evidence of a small negative skew, when at least comparing the proportion of reviewers on Glassdoor who would recommended working at the company to a friend (67.6%) with the FTSE 100’s own self-reported employee satisfaction (74.0%). These stats are not perfectly comparable, of course – company satisfaction and engagement scores are often based on surveys with a wide range of questions, not just recommendation of a company to friends.
Nonetheless, plotting both together, it’s clear that a majority of companies self reporting of employee satisfaction is higher than employee reporting of friend recommendation on Glassdoor. But there are a number of cases where Glassdoor reviewers are more positive than the company’s self-reporting.
Another approach to gauging the representativeness of Glassdoor might be: if employees with a negative bias are more likely to leave a review on Glassdoor, then you would expect a negative correlation between the company’s number of reviews proportional to employees and its rating. In other words, companies with more dissatisfied employees will have more reviews.
But we find no strong correlation in our data, when compared with Glassdoor rating (coefficient of 0.22) and friend recommendation (0.15).
One strength of Glassdoor as a source is the granular data it offers on the provision of benefits by companies. When employees review a company, they can choose to report on the presence and quality of benefits ranging from annual leave to company cars to free lunch and snacks. Employers can verify these benefits with Glassdoor, with the platform in turn providing a green tick on the company’s profile to show such verification.
The 40 benefits Glassdoor offers reporting on:
- Annual Leave
- Apprenticeship Programme
- Bereavement Leave
- Bike to Work Scheme
- Car Allowance
- Childcare Vouchers
- Commuter Checks & Assistance
- Company Car
- Corporate ISA
- Critical Illness Cover
- Death in Service
- Dental Insurance
- Dependent Care
- Diversity Program
- Employee Discount
- Family Medical Leave
- Flexible Working
- Free Lunch or Snacks
- Gym Membership
- Health Cash Plan
- Health Insurance
- Income Protection
- Job Training
- Life Insurance
- Maternity & Paternity Leave
- Military Leave
- Pension Plan
- Performance Bonus
- Professional Development
- Save as You Earn
- Season Ticket Loan
- Share Incentive Plan
- Sick Pay
- Stock Options
- Unpaid Extended Leave
- Vision Insurance
- Volunteer Time Off
- Work From Home
Of the 91 FTSE companies we could find benefit data on, around 34 had provided Glassdoor with verification of at least one benefit. The company with the most verified benefits was Pearson (38) followed by Landsec (33) and Barclays (32). In terms of employee reporting, sick pay, flexible working, and cycle to work schemes were amongst the most frequently reported, while corporate ISAs, free lunch or snacks and vision insurance were amongst the least.
Our benefit heatmap shows the level of benefit reporting by employees on Glassdoor, breaking it down by benefit and company. The darker the cell, the more employees reporting on that benefit. The axes have been ordered so that the most reported benefits on average are towards the top of the heatmap, while those companies with the higher average level of reporting are towards the left of the axis. Note: This only includes benefits which per company had at least 5 people leave a review. We have dropped from the visualisation those companies who had a missing value for any of the benefits, including those whose value was missing because they did not meet this threshold.
Inspired by the following Sustainable Development Goals:
“Don’t be evil.”
– Google’s former motto
Are the FTSE 100 respecting the rule of law? The Justice pillar is different from the others in that it’s not so much about what a company’s trying to do well, but serious missteps and wrongdoings. Drawn predominantly from third party sources rather than annual reports, this is public information about themselves that companies can’t control.
Fines, settlements and penalties
We’ve found the FTSE 100 have paid out over £15 billion in fines, settlements and other monetary penalties issued by regulators in the US and UK in over 270 cases since 2017.
We arrived at this figure using two methods: firstly, by scraping Violation Tracker, an online database of cases of corporate misconduct in the US compiled by accountability watchdog Good Jobs First. It covers cases involving issues of consumer protection, false claims, environmental, wage and hour, and health and safety violations, employment discrimination, price-fixing, and bribery resolved by more than 40 US federal regulatory agencies and all parts of the US Justice Department since 2000. Our second method has been to try to compile the same level of data for UK regulators, examining registers of enforcement actions from agencies including but not limited to the Environment Agency, the Health and Safety Executive, the Serious Fraud Office and the Financial Conduct Authority. While we have more work to do on ensuring our UK coverage is as comprehensive as Violation Tracker and on expanding our coverage into other jurisdictions outside the US and UK, for now we’ve focused on collecting for sources most relevant to industries represented in the FTSE 100.
We found a FTSE 100 company paid a penalty for corporate wrongdoing on average once every four days between 2017–2019, with 31 firms paying out a total of £1 million or more each.
Given the wide range of case types, we’ve split them into two overall classes – ‘people’, those cases relating to things like health and safety, fraud and consumer protection, and ‘planet’, those relating to the environment. The former vastly outweighs the latter – the FTSE 100 paid out roughly £15.1bn in people fines, compared to £168m in planet cases.
US authorities issued penalties worth around 15 times those imposed by UK counterparts. The average size of a UK-originated penalty was £31.4 million compared to £64.8 million from the US.
RBS paid out £8.5bn in fines, over half the value of all financial penalties imposed on FTSE 100 companies since 2017. The vast majority of this total comes from settlements with the US Justice Department and Federal Housing Finance Agency over financial crisis era conduct.
Royal Dutch Shell has received 60 penalties since 2017 – the most of any company – mainly for environmental violations in the US. A Shell spokeswoman said the company was not familiar with Violation Tracker, the open source website used by Tortoise to collate US levied fines. She said Shell aimed to run a safe and responsible business and was “constantly striving to do better and, where we fall short, we work hard to rectify this”. She said the violations flagged related to subsidiary companies within the Shell group rather than to Royal Dutch Shell, the parent company.
Though we’ve only counted cases from 2017 onwards in our rankings, we nonetheless gathered all available data from Violation Tracker involving the FTSE 100. We found the FTSE 100 had amassed a total bill of $55bn from US regulators since 2000, representing 9% of the total $605bn compiled by Violation Tracker across all companies.
However, one caveat to this $56bn total is that it appears Violation Tracker attributes penalties paid by subsidiaries to their parent company even if the parent did not own the subsidiary at the time of the penalty. In other words, when a FTSE 100 acquires a company, their listing on Violation Tracker then includes the historic penalties of this acquired company, and even those penalties paid before the date of acquisition. While we validated those penalties we attribute to the FTSE 100 since 2017 to only include those cases where the subsidiary was indeed owned by the FTSE 100 company at that time – and in turn found this ruled out only a small minority of cases – we have not undergone this exercise for the $56bn total, given the number of fines involved.
Current and former employees of the FTSE 100 have taken their companies to the UK employment tribunal over 1,500 times since 2017, we found. But the vast majority of these cases saw the employee withdraw their claims, rather than have them either dismissed or upheld by the tribunal.
Of the 1,571 cases listed on the UK employment tribunal online ruling register that we could attribute to the FTSE 100, 1105 were withdrawn (70.3%), 315 (20.0%) were dismissed, and 82 (5.2%) were upheld. The rest were either struck out because the claimant was not eligible to take their case to the tribunal (e.g. they had not been at the company for more than 2 years), were still ongoing or had been explicitly noted as resulting in a settlement.
On this last point, we can’t rule out the possibility from the data alone that some of the cases withdrawn also resulted in a settlement. When claimants agree a settlement with their employer through Acas, their case will usually be automatically withdrawn from the tribunal and the employee and employer won’t normally have to go to a hearing. The vast majority of documents on the online register of cases did not offer explanation as to why claims had been withdrawn.
All three of the companies taken to the tribunal the most frequently were supermarkets – Tesco on 319 times, Sainsbury’s on 123 and Morrisons on 100 – and the industry accounts for over a third of all cases. However, when accounting for total number of employees, house builders move towards the top – Persimmon had the highest rate at over 3.5 tribunal cases per 1,000 employees while in second came Berkeley Group at 2.6.
The most frequent claim in the data was unfair dismissal, followed by disability discrimination, unlawful deduction from wages and breach of contract. Of those claims which were made at least thirty times in our data, maternity and pregnancy rights, redundancy, disability discrimination, sex discrimination and age discrimination saw the highest proportion of cases withdrawn, while breach of contract, working time regulations, public interest disclosure and unfair dismissal saw the most cases upheld.
Since 2017, at least 93 human rights concerns have been raised with 23 FTSE 100 companies, including their subsidiaries and joint ventures, according to data collated by the Business and Human Rights Resource Center (BHRRC).
The BHRRC, based in London, helps communities and NGOs get companies to address human rights concerns, and provides companies an opportunity to present their response in full. It’s website contains a database of concerns that its approached companies with, indicating who made the accusation and whether the company responded. Current donors to the project according to the BHRRC’s website include the Australian Government Department of Foreign Affairs and Trade, the German Federal Ministry of Economic Cooperation and Development and The Swiss Confederation, represented by the Swiss Federal Department of Foreign Affairs.
Examples of concerns compiled by the BHRRC include:
- “Report by Clean Clothes Campaign details poverty wages & poor working conditions in garment factories producing for global brands; incl. co responses”
- “Report alleges major banks contribute to climate change through increased funding of fossil fuels”
- “Global Witness report alleges EU investors help bankroll human rights & environmental abuses”
- “Brands respond to mass dismissals of garment workers following minimum wage protests”
We’d like to stress here that we’re not including BHRRC data because we think the concerns in question are true – rather, we’ve included the data insofar as it allows us to assess whether companies are engaging with and addressing human rights concerns. That’s why we’ve only penalised companies in our ranking for poor response rates and number of unresponded concerns, rather than the total number of concerns.
Of the 93 concerns involving the FTSE 100, 17 went unresponded. That represents an aggregate response rate of 81.7%. 5 companies of the 23 failed to respond to any of the human rights concerns put to them. Mining giant Glencore faced the highest number of accusations at 18 but only failed to respond to one, meaning it had a response rate of 94.4%.
Inspired by the following Sustainable Development Goals:
“Sustainable development can only happen when national economies are strong. Fair tax is at the heart of this equation. It requires multinational companies to turn away from tax schemes and tax havens, treating their tax obligations as part of the “corporate social responsibility” that they are so keen to advertise.”
– Richard Brooks, The Guardian, Nov 2010
Being a ‘good’ business and a ‘responsible’ business are not mutually exclusive. Good business practices, from promoting economic growth to providing stable jobs and paying their fair share of tax all benefit both companies and wider society.
Financially strong companies are more likely to be able to provide stable employment and look after their employees. In their most recent reporting years, the FTSE 100 generated a total of £1.791 trillion – roughly the same value as the GDP of Italy. This total was 1.6% less than the previous reporting period, when they generated £1.820 trillion.
The FTSE 100 also saw slightly less in profit before tax last year, down from £200.8bn in the last reporting period to £199.1bn, a 0.8% decrease.
The FTSE 100 employ a total of 4.6 million people, up from 4.5 million (2.1%) in the previous reporting year, with the software and finance industries seeing the biggest increase overall. Despite this, 29 companies cut their number of employees
The Index assesses the quality of these jobs by also looking at employee turnover. On average, FTSE100 companies saw 12.6% of their staff change in the last reporting year. Media companies saw the largest employee churn at 25.9%, with education and publishing company Pearson seeing the most turnover of all companies at 37%. The aerospace, insurance and mining industries had some of the lowest churn rates, at 7.6% and 8.7% respectively.
Tax funds vital public goods and services from education, health and social care, to flood defence, roads, policing and defence. Yet just four of the FTSE 100 have received the Fair Tax Mark – an independent accreditation awarded to companies based on their tax transparency and avoidance. Criteria ranges from basic transparency about company structure and ownership to public country-by-country reporting of what tax has been paid and why. All three are utilities companies: Pennon Group, Severn Trent, SSE, United Utilities.
On average the FTSE 100 paid 20.2% of their income in tax according to their self-reported effective tax rates, which is slightly higher than the UK’s corporation tax rate of 19% in the reporting years. However, nearly one-third of the FTSE 100 companies paid less than this rate in tax. We failed to find the effective tax rate of 7 companies in their annual reports.
The sectors paying the most tax proportionally were energy, mining and banking, while those paying the least were pharmaceutical, packaging and media companies.
What about the FTSE 100’s use of tax havens? To get a sense of this, we’ve analysed the location of companies’ subsidiaries, gathering their countries of incorporation from the ‘related undertakings’ tables usually found at the back of annual reports. We’ve had to exclude several companies from this analysis as, due to headquartering, they did not appear to be subject to UK corporate law on disclosure requirements and so did not provide comprehensive lists of their subsidiaries.
For a definition of tax haven, we’ve used the EU’s blacklist of non-cooperative tax jurisdictions – a list of countries the bloc has designated as failing to comply with rules on tax transparency, abuse and competition. We’ve also used the greylist – those jurisdictions that qualify for the blacklist but are temporarily excluded conditional on promised reforms. We’re using the EU’s lists as of December 2018, which have since been updated but nonetheless better coincide with the reporting period of the most recent FTSE 100 annual reports
- The FTSE 100 own (have greater than 50% control in) 20,478 subsidiaries. 2,032 or approximately 10% of these were based in a country that appeared on either the EU’s blacklist or greylist
- We also note a further 1,130 subsidiaries were based in the US state of Delaware – a notorious tax shelter – alone.
- The FTSE 100’s top tax havens are:
- Jersey 390.0
- Hong Kong 276.0
- Malaysia 145.0
- Switzerland 130.0
- Cayman Islands 126.0
- Guernsey 87.0
- Bermuda 77.0
- Turkey 76.0
- Mauritius 63.0
- Thailand 62.0
- We could find that only eight FTSE 100 companies did not have a single subsidiary in a tax haven.
- The industry with the highest proportion of subsidiaries not in a tax haven were utilities.
We’ve included executive pay in our index as an attempt to measure the relationship between companies and income inequality. The average FTSE 100 CEO took home £5.3 million in pay in the most recent reporting period: over 180 times more than median annual income of a UK household in 2018.
But FTSE 100 CEO pay grades vary between industries: whereas FTSE 100 CEOs in the digital services industry earned an average pay packet of £1.5 million, CEOs in the energy sector earned an average of £14.3 million in the most recent reporting year.
And it adds up. In total, FTSE 100 CEOs were paid £513.1m in the last reporting period, with the top twenty highest-paid CEOs accounting for over half of this total.
We looked to see if there is any correlation between how much FTSE 100 companies pay their CEOs and company profit, changes in company profit and level of employee satisfaction. We found none.
Britain’s largest supermarkets have a huge role to play in the future of corporate responsibility – not least because they employ a vast number of people. The four FTSE supermarkets make up the second biggest FTSE 100 industry in terms of employees, with a combined workforce of over half a million. And out of the FTSE 100’s 24 sectors the supermarkets hired the highest number of graduates last year (2,439) as well as 2,402 apprentices.
Yet none are accredited Living Wage providers and they feature relatively highly in UK employment tribunal cases. The FTSE 100 have been involved in around 1,100 employment tribunal cases since 2017 and the supermarkets featured in over a third of these, with Tesco alone being taken to the tribunal over 200 times.
With pressure on our food economy to reduce waste and cut down on shipping, another big challenge for the supermarkets is food waste. According to our analysis of annual reports, Tesco, Sainsbury’s, Morrisons and Ocado together produced 96,624,000kg of food waste in the last reporting period. This is just the tip of the iceberg, though: a large part of the supermarket sector’s waste impact comes from lower down in their supply chain, a fact we’ve yet to properly capture in our index. For instance, in 2018, 27 of Tesco’s major own-label suppliers revealed they wasted 680,801,000kg of food, compared with the 53,126,000kg Tesco reported had been wasted from its UK operations in the same period.
Britain’s biggest banks earned profits of £31 billion before tax last year, a figure second only to the FTSE 100’s energy and mining companies. And our analysis found banking’s deep pockets are reflected in the sector’s high levels of philanthropy. Employees of the FTSE 100’s 16 banking and other financial services companies volunteered nearly the same amount as those of the rest of the FTSE 100 combined. In total the banks saw volunteering of 1.1 million hours to charitable causes in the last reporting period and social contributions of £238.7 million to charities and community projects.
Yet the banks underperformed on corporate responsibility in terms of run-ins with regulators, with the industry paying out £12.5 billion – a big chunk of this because of RBS’s total of over £8 billion, as previously mentioned. But all banks have had at least one fine since 2017 – from Lloyds subsidiary Bank of Scotland getting fined £45.5 million by the UK Financial Conduct Authority in 2019 for failures to disclose information about its suspicions of fraud to the US Federal Reserve fining HSBC $175 million in 2017 over unsafe and unsound practices in FX trading.
Gender pay and representation is also a particularly weak point for the banking industry, which has the highest gender pay gap on average and the second lowest hiring of women to boards of directors since 2016.
The extractive industries
With business models that rely heavily on fossil fuels, the extractive industries are major contributors to the global climate crisis. Six of the FTSE 100’s top ten climate polluters operate in the extractive sector and the energy and mining industries produce more tonnes of CO2e than the entire rest of the FTSE 100 combined. These companies have a responsibility to invest in clean energy. While they seem to acknowledge this – Shell, for instance, is the first major oil company to link reduced carbon emissions to executive pay – we found their goals to be too modest and commitments too vague.
Their extractive industries’ impact on the environment goes beyond just emissions – for instance, by their use of water. We found that over the course of their operations in 2018, the FTSE 100’s mining giants used 355 billion cubic metres of water – enough to fill 142 million Olympic-size swimming pools.
Aside from the environment, a large focus of the extractive industries’ work on sustainability is towards improving health and safety. We found that 78 employees and contractors died in accidents related to working for the FTSE 100 in 2018, 38 of which occurred in the mining sector. While this figure represents less than 0.002% of the FTSE 100’s total workforce, over 25,000 injuries were also reported across the FTSE 100 with nearly 5,000 occuring in mining and energy companies.
But high health and safety risks go hand in hand with a high amount of training for employees. An employee of a mining giant can expect on average an hour of training each week, compared to employees at JD Sports, who can expect only 10 seconds. Likewise, the extractive industries are big investors in the education of their employees, with an average spend of £1,129 per employee per year in the energy industry, just under double the FTSE 100 average.
The fashion industry
Despite the industry coming under recent pressure over its impact on the planet, two of the FTSE 100 fashion companies are choosing to stay quiet on their environmental record. Between Burberry, JD Sports and Next, it is only the latter who report – and perform well on – their total waste, water consumption and recycling values.
Next could do better at promoting its female employees into leadership roles: while women make up 68% of the company’s total workforce, they hold just 32% of senior management positions. Burberry, on the other hand, would do well to focus on how they reward their top female employees: despite 44% of the company board being women, the company reports a significant gender bonus pay gap of 33%.
One of the 3 pharmaceutical companies make the top 10 – AstraZeneca beating out GlaxoSmithKline in 17th place: it has a higher proportion of waste recycled (46% vs 23%), lower levels of water consumption (4m cubic metres vs 12.9m) and lower carbon intensity in regards to both number of employees or revenue.
The industry is particularly strong on research and development – last year, Big Pharma spent £10bn on R&D, the highest of any sector. An area to watch is big pharma’s tax affairs: compared to a FTSE 100 average of 21%, the pharmaceuticals contributed just 16% (GlaxoSmithKline), 3% (AstraZeneca) and 3% (Hikma Pharmaceuticals) of their profits in tax last year.
And what about health? Despite offering their employees free healthcare, we found that none of the pharmaceuticals have a public mental health policy, they’re not alone though as just 32 of the FTSE 100 publicly displayed this information.
The travel industry
The travel industry – and in particular the airlines – unsurprisingly have an emissions problem, with a particularly high level of emissions per employee. Compared to the FTSE 100 average of 85 tonnes of CO₂e emissions per employee per year, easyJet emit 603 tonnes of carbon per employee and the International Airlines Group emit 466 tonnes per employee.
We need the travel industry to do a better job of prioritising the planet over profits. easyJet emissions increased from 7.6 million tonnes in 2018 to 8.2 million tonnes in 2019, a trend it attributes to “the continued expansion of easyJet’s operations” or, in other words, passenger numbers increasing by 8.6%.
Food waste is another vital statistic to watch, but we need greater transparency. InterContinental Hotels Group is one of just five FTSE 100 companies – and the only travel company – to report their total food waste. Reporting is in itself a good thing, but shouldn’t distract from the fact that InterContinental Hotels Group has owned up to producing over 128m kilograms of food waste last year, or 10,012kg per employee. Compare that with the waste reduction charity WRAP’s estimate of the UK average of 156kg per person per year and it’s clear that we’d be foolish to focus only on our own kitchen waste: big business must play its part.
Below we have detailed the key methodological principles and steps that underpin the Responsibility100 Index.
- Publicly-available. All the data we include in the Index must be publicly-available, either from published company reports or open third-party sources, such as Companies House.
- Recent. As different companies will publish their annual and sustainability reports at different times of the year, the data underlying The Responsibility100 Index is drawn from a range of years rather than only the year of this edition. In order to ensure that the Responsibility100 Index can be reasonably considered to be ‘up-to-date’, we apply a limit of only including data sets that are less than, or equal to, three years old. In this report, that means from 2017 or later. For some indicators, including all Glassdoor-related data, and the Market Capitalisation figure for each company we have recorded a specific value accurate at the end of February 2020.
- Relevant. The Responsibility100 aims to be agnostic about a company’s sector and we have chosen metrics with this in mind: in most cases our indicators are relevant to the majority of the companies. For metrics that are important for sustainability measurement, but more relevant to some industries than others – for example, food waste for supermarkets – we have only applied those to companies to which these metrics are relevant.
- Relative. We often collect data in a raw or absolute form: for example, the ‘total number of apprentices each year’. In order to fairly compare companies of different sizes – in terms of their total revenue or employees – we will calculate a relevant relative measure: for example ‘Number of apprentices each year per total employees’. We still want to track and include some of the absolute figures, though, as it’s important that we recognise the overall impact when we look at the FTSE 100 as a whole.
Step by step
How we make the Responsibility100 Index
Step 1. Data-gathering
We gather data from each company’s most recently published annual and sustainability reports, supplementing this with a number of third-party, publicly-available datasets. All data is taken from companies’ annual and sustainability reports and 20 third-party data sources. We have listed these in full in the Acknowledgements.
Step 2. Imputation
We impute missing values. In most cases, no credit is given for unreported values, so we either impute missing values as zero, or worst-case values. There are a small number of exceptions though. Companies will not be penalised if an indicator is entirely irrelevant for them or if their data is not available from a third-party data source. (For example, not all companies in the FTSE 100 receive a ‘CDP Water Security Rating’ and so they have not been penalised for this.)
Step 3. Normalisation
We normalise our indicators to establish comparability between companies. This means bringing data of varying size and magnitudes onto the same scale, so we can compare different metrics like the number of employees receiving training, with the amount of money being donated to charity.
Step 4. Weighting
We weight each indicator using a combination of the following four factors:
- Engagement. This weight is designed to reflect the level of engagement and effort involved. Each indicator is scored on a five-point scale, ranging from ‘low’ (a bare minimum, ‘passive’ effort, such as becoming a member of WISE) to ‘high’ (a significant financial or procedural commitment, such as moving to using renewable energy across the business).
- Impact. This weight is designed to reflect the significance of what this indicator entails, relative to the other indicators. Each indicator is scored on a five-point scale, ranging from ‘necessary’ to ‘existential’ to human existence. For example, whereas offering a cycle to work scheme receives a low impact rating, reduction in emissions is vital.
- Relevance. This weight is designed to reflect the relevance this indicator has to the UN Sustainable Development Goals. Each indicator is scored on a three-point scale, ranging from ‘in the spirit of’ to ‘explicitly referring to’.
- Reliability. This weight is designed to take into account the quality of the data captured by this indicator. Each indicator is scored on a five-point scale ranging from incomplete or unreliable to complete and reliable.
Step 5. Final scores
We apply weightings to the normalised data in order to calculate three scores:
- A normalised ‘Talk’ score, which takes into account those indicators identified as ‘reporting’ or ‘commitment’-related
- A normalised ‘Walk’ score, which takes into account those indicators identified as ‘action’-related.
- An overall score, which is the weighted sum of a company’s normalised ‘Talk’ and ‘Walk’ scores. We take the view that action is more important than commitment, and therefore weight ‘Walk’ more heavily than ‘Talk’ (specifically with a ratio of 1:4).
Find out more
For a more detailed explanation of our methodology, including information on our randomised weighting sensitivity analysis, please see our full methodology report at tortoisemedia.com/intelligence/responsibility.
Get in touch
If you would like to raise concerns or make suggestions about our data and methodology, please get in touch with the data team at email@example.com.
Third party sources
- Business & Human Rights Resource Centre
- Fair Tax Mark
- Institute of Corporate Responsibility & Sustainability
- Living Wage Foundation
- London Stock Exchange
- Parker Review 2020 Update
- Prompt Payment Code
- UK Employment Tribunal
- UN Global Compact
- We Mean Business
- WISE Campaign
- Yahoo! Finance
The Responsibility Index team
Tortoise Intelligence is Tortoise’s in-house team of data scientists. We analyse large, dynamic global datasets and draw on national and company level data to produce indices, data visualisations and data stories. Since our launch last year, we have produced two major indices: The Responsibility 100 Index and The Global AI Index.
Through our indices, we:
- expose and monitor important global forces
- provide the data and insights that fuel our investigative journalism
- aim to prompt behavioural change across businesses and government
Alexandra Mousavizadeh, Director of Tortoise Intelligence, was previously the Director of Decima Global, a London based organisation that publishes a range of global indices. She has 20 years’ experience in the ratings & index business and data analysis and has worked extensively across the Middle East, Africa and Asia in relation to sovereign credit ratings. She directed the expansion of the Legatum Institute’s flagship publication, The Prosperity Index, and all its bespoke metrics based analysis & policy design for governments. Prior roles include CEO of ARC Ratings, a global emerging markets based ratings agency; Sovereign Analyst for Moody’s covering Africa; and head of Country Risk Management, EMEA, Morgan Stanley.