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Top 100 Global Energy Leaders: Eight Pillars of the Methodology
November 13, 2017 / 9:09 PM / 7 days ago

Top 100 Global Energy Leaders: Eight Pillars of the Methodology

(This content was produced by a division of Thomson Reuters outside of Reuters Editorial.) 

An aerial view shows the Amazon rainforest at the Bom Futuro National Forest near Rio Pardo in Porto Velho, Rondonia State, Brazil, September 3, 2015. REUTERS/Nacho Doce

Environmental Impact
How environmentally sustainable is the company? What is the external impact on environmental resources?

     - Emissions Score: A company’s commitment and effectiveness at reducing environmental emission in its production and operational processes
     - Resource Use Score: A company’s performance and capacity to reduce the use of materials, energy or water, and to find more eco-efficient solutions by improving supply chain management

Financial Performance
How is the company performing financially? How profitable is it?

     - Net Assets: Total assets of the company less its total liabilities
     - Free Cash Flow/Employee: A measure of financial performance calculated as operating cash flow minus capital expenditures; the cash a company generates after laying out money to maintain or expand its asset base (this number is normalized by the number of employees in the company)
     - Leverage: The net debt of the company divided by EBITDA
     - Net debt is a company’s total debt less cash and short-term investments
     - EBITDA is earnings before interest and taxes for the fiscal year plus the same period’s depreciation, supplemental, amortization of acquisition costs, supplemental and amortization of intangibles and supplemental
     - Operating Income Margin: Represents operating income divided by total revenue
     - 3-Year Revenue Growth: 3-year historical revenue growth percentage
     - Return On Invested Capital (ROIC): A financial measure quantifying how well a company generates cash flow relative to the capital it has invested in its business; expressed as a percentage and calculated as ROIC = Net Operating Profit – Adjusted Taxes /Invested Capital

Innovation
How innovative is the company? How much is it investing in R&D and does it protect its inventions with patent rights that are successfully granted?

     - Average Patent Grants/Year: The number of granted patents that are issued each year
     - Patent Grant/Application Ratio: The ratio of granted patents to patent applications R&D Spend: The amount of money a company is spending on research and development (R&D) annually
     - Innovation Score: A company’s capacity to reduce the environmental costs and burdens for its customers and create new market opportunities through environmental technologies and processes or eco-designed products 

Legal Compliance
How litigious is the organization? Does the company live up to its contracts and regulatory obligations?

     - Average Litigation/Year: Amount of litigation where the company or subsidiary is a defendant in the areas of environmental, employment, contracts/breaches, torts and negligence
     - Product Responsibility Score: A company’s capacity to produce quality goods and services integrating the customer’s health and safety, integrity and data privacy

Management & Investor Confidence
How well run is the company? How much confidence do investors have in it?

     - CAM Sector: Quantitative equity alpha models that observe market anomalies and human behaviors to provide investment managers with insight in creating market-beating portfolios, distilling volumes of data to a single score for more than 30,000 stocks daily
     - CCR Sector: The current sector-level percentile rank of a company’s one-year default probability distilled down to one final estimate of credit risk at the company level|
     - Management Score: A company’s commitment and effectiveness toward following best practice corporate governance principles
     - Shareholders Score: A company’s effectiveness toward equal treatment of shareholders and the use of anti-takeover devices

People & Social Responsibility
How well does it treat its employees? How socially responsible is it? What is its impact on external people with whom it is contracted?

     - Community Score: A company’s commitment to being a good citizen, protecting public health and respecting business ethics
     - CSR Strategy Score: A company’s practices to integrate the economic (financial), social and environmental dimensions into its day-to-day decision making
     - Human Rights Score: A company’s effectiveness toward respecting fundamental human rights conventions
     - Workforce Score: A company’s effectiveness toward job satisfaction, a healthy and safe workplace, maintaining diversity and equal opportunities, and development opportunities for its workforce 

Reputation
How well-regarded is the organization by the public? What is the overall news sentiment related to the company?

     - Overall News Sentiment: The median postiveSentiment and negativeSentiment values for each company over the last year; the overall sentiment is calculated as the (positiveSentiment) - (negativeSentiment)
     - Controversies Score: A company’s exposure to environmental, social and governance controversies and negative events reflected in global media 

Risk & Resilience
How operationally stable is the company and is it able to withstand shocks and disruptions? How many customers and suppliers does it have? In what countries is it operating?

     - Geopolitical Risk: A company’s geographical risk exposure as determined by the countries from which the company derives its revenue, and associating each fraction of that revenue with the risk index of that country
     - Number of customers: Number of customers of the company
     - Number of suppliers: Number of suppliers of the company
     - Supply chain risk: The risk associated with a company’s supply chain, based on the country’s risk indices from which the company’s suppliers derive their revenue; it attempts to quantify the risk of a company’s suppliers and whether they’re deriving their revenue from high-risk or low-risk countries

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