VIEWS: Green Accountability: How Do You Match Up?

Dispatched from the SSC Team

From corporate behemoths to private universities, these days it seems any capital-generating institution is on a “sustainability rankings” chopping block. Where do you match up? Well, that all depends on who is publishing the final report. Let’s take a look at two of the most public benchmarking systems.

Newsweek’s “Green Rankings”

Newsweek debuted its first annual Green Rankings Report in September of 2009. It will be interesting to note how the industries and companies commanding the top spots remain or disperse, come fall of 2010. A quick glance at the list’s leaders will reveal that the technology sector is doing something right. That being said, it is a competitive industry to be in if your organization is vying for a high scoring place on the list. Conversely, if your corporation is within an industry that rarely makes an appearance among the top performers, this is a great opportunity to get noticed.  We’re talking to you, Transportation!

So, how exactly does Newsweek come up with these so-called winners and losers? The process is actually quite extensive. The goal of the list is to obtain competing organizations’ environmental footprint and, based on the results, rank them accordingly. To come up with this information, Newsweek works with several environmental research teams, with RiskMetrics group operating as the lead. These teams compile information on each company’s resource use, emissions, industry reputation, environmental policy and strategies. Newsweek then assigns each organization a “Green Score” which is derived from information assigned to one of three categories:

  • Environmental Impact Score (EIS): a quantitative performance measurement revealing an organization’s environmental impact due to annual operations.
  • Green Policies Score (GPS): this result is derived from an analysis of each company’s environmental policies and progress.
  • Reputation Score: to calculate this, CSR (Corporate Social Responsibility) professionals are surveyed in reference to each organization’s progress in sustainability.

Now, any public benchmarking system is sure to be criticized and, in this case, with merit. Fast Company’s review of the report stated that the rankings are unfair in their combination of industries. It is true that an organization within one industry has an unfair advantage against a company in another. For some industries, going “green” is a breeze while for others it requires a complete overhaul of every aspect of operations. A more fair and telling approach would be to rank organizations against others within their own industries.

Dow Jones Sustainability Index

Perhaps the most well known benchmarking system of sustainable business practices is the Dow Jones Sustainability Index. This is likely due to its focus on the largest or most financially well off of companies. To determine those listed on the Index, Dow Jones analyzes the economic, environmental and social performance of the largest 2,500 corporations in the world. Specifically, each organization’s energy consumption, knowledge management, human resources development, climate change strategies, stakeholder relations and corporate governance are scrutinized. Further, and unlike Newsweek’s “Green Rankings,” Dow Jones places particular emphasis on industry differences and closely analyzes trends. Based upon these criteria and the research methodologies employed, the top 10 percent of those ranked will be listed on the Index.

Clearly, these two sustainable benchmarking systems are drastically different from one another. However, it is useful to understand the ways in which your organization can be analyzed. We live in a cyclical world. You may say that the media’s obsession with environmental benchmarking is fueling public interest. It can be countered, however, that the media has latched onto this practice because people want to know about it. The key takeaway is that consumers are holding organizations of all facets accountable for their actions and it is up to you to stand out against others within your industry. Not sure how to do this? No problem. Contact us to learn how to end up on the right side of the “green rankings” competition.