Hats off to Newsweek for its green rankings of the 500 largest US corporations. And congratulations to Hewlett Packard for coming first.
Hang on… Hewlett Packard came out top? Surely a software company or some other organisation that is inherently more environmentally friendly should have topped the list? Yet four of the top five are computer companies. (The other was Johnson & Johnson.) Making computer equipment is known to be environmentally damaging. In fact, when Newsweek considered the environmental impact of the supply chain up to the point of delivery, it ranked these same four computer companies at 115th (IBM), 160th (Dell), 175th (HP) and 268th (Intel). Discrepancy or what?
The environmental assessments were done by a company called Trucost. Its methodology is widely regarded and is a heck of a lot cheaper than a company having to embark on a full lifecycle analysis (LCA) of its activities. Trucost maintains a research database of over 4500 companies which takes into account over 700 environmental impact measures.
The results are not good showings at all for the IT companies but they are in line with what you might expect. However, their ratings rocketed because the Newsweek team decided to give 'green policies' equal weighting with 'environmental impact'. And it chucked in 'reputation' as well, for a further ten percent of the overall assessment.
The main elements of the green policies score were, 'climate change policies and performance, pollution policies and performance, product impacts, environmental stewardship and environmental management.' The reputation scores were derived from, 'an opinion survey of corporate social responsibility (CSR) professionals, academics and other environmental experts who subscribe to CorporateRegister.com and CEOs or high-ranking officials in all companies on the Newsweek 500 list.' Weightings were applied: 3x for CEOs, 2x for professionals and 1x for others.
You can see that the elements of the survey make sense individually and the outcomes can, no doubt, be argued mathematically. But the weighting of the scores, especially the importance given to the three major elements, has to be questioned.
Also, was it wise for the research to try and assess vastly different sectors against each other and come up with a common measure? If a company knows it is not damaging the environment too much, then why should it spend fortunes on PR and CSR to influence external perceptions and, hopefully, internal realities? At this point, one can almost feel sorry for Newsweek for having taken on such a challenge.
So is the report of any value to you? Well, yes. It does allow you to look at rankings by sector and this has the potential to be helpful, but only if you consider each contributing factor separately. You might be wondering (if you've read this far) how your potential suppliers stack up in environmental performance or in green policies. Whether you care about reputation as seen through the eyes of C-level executives of the target organisations and several thousand CSR professionals is another matter.
What you clearly don't want to do is take the overall results too seriously. Treat them as a guide. Perhaps think of them as a cake that contains all the right ingredients but which didn't quite make the grade because inappropriate measures were used.
And this doesn't just apply to the Newsweek story. If you are being told something which jars with your reality, see if you can dig around a bit for the underlying assumptions.