How to rank sustainability?

After choosing the Good, the Bad & the Ugly for our group presentation, I was wondering how to rank companies which differ in industry, size, different global presence etc. within one ranking. After doing some research, I found a quite plausible methodology: Newsweek’s green rankings of America’s 500 largest corporations which they conduct in collaboration with three research partners.

They strive to assess each company’s use of resources, emissions, its policies and strategies in combination with their reputation. Moreover, the revenue, market size and number of employees are integrated as well to assess the situation holistically.

To get a complete view, the “green score” consists of three components:

  • The Environmental Impact Score which reflects the total cost of all environmental impacts adjusted according to revenues and size.
  • The Green Policies Score which captures company’s environmental policies and performance based on initiatives and best-in-class policies and community impact combined with other factors.
  • The Reputation Score which reveals a company’s CSR approach evaluated by professionals, academics, and other experts. This measure considers sector differences and analysis.

It is not surprising that IT companies are ranked the highest, since some industries can be considered as ‘born sustainable’, whereas others ‘grow sustainable’ and go through the journey of sustainability. Only a single oil company, Marathon Oil, is ranked in the top 100. The company still suffers from a very low reputation score compared to the IT companies. Hence, all those rankings seem to make more sense when looking at individual industries.

In my opinion, the methodology of Newsweek’s ranking seems very sophisticated, although the scope is limited since it focuses North American companies only. An application of the ranking on global businesses seems very interesting, but would be very difficult to compile due to diverging access to information and research consultants.

Anyhow, most global rankings (e.g. global 100 ) are done by capital and investment management companies which could be influenced by various interest groups. Newsweek might be influenced as well, but the strong collaborative approach reduces the likelihood significantly in my eyes.

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Posted in sustainable development
2 comments on “How to rank sustainability?
  1. After studing the study guides for today’s class, I came up with more theoretical and holistic assessment indicators: The Bellagio Principles, which seem to be too complex and hard to apply for individual companies as a guidline though. Anyhow, principles could be chosen based on a context-specific base.

  2. crazykouts says:

    Cool blog Constanze.

    How much influence do you think these types of rankings have over a company’s own sustainability strategy. For example, would a company design its strategy to achieve strong rankings from these types of scorecards instead of applying the most appropriate plan for its business model?

    I expect that the impact of sustainability measures within a company would be best managed and measured through performance metrics appropriate for the company’s strategy map. In fact, if a company was truly integrating sustainability into its value offering, it would probably need to redesign its strategy map altogether.

    Perhaps a stronger evaluation of a company’s sustainability is an inside look at its strategic map or logic model!

    (For more info on stat maps & logic models, please see Kaplan, R.S & and Norton, D.P. 2000. “Having Trouble with your Strategy? Map it.” Harvard Business Review, September-October, 2000, http://hbr.org/product/having-trouble-with-your-strategy-then-map-it-hbr-/an/5165-PDF-ENG?Ntt=having%2520trouble%2520with%2520your%2520strategy)

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