Global 100 flawed on corporate sustainability

When is a ‘sustainability ranking’ not a sustainability ranking?

 

Corporate Knights Inc. has announced its 2012 list of the “Global 100,” its annual ranking of what are ostensibly the world’s most sustainable companies. And once again, because of flawed methodology, the list is deeply misleading.

The list is topped by pharmaceutical maker Novo Nordisk, Brazil’s Natura Cosmeticos, Norwegian energy company Statoil, the Danish biotech firm Novozymes, and ASML Holding, a Dutch manufacturer of photolithography machines used in the semiconductor industry. Some will surely express surprise at the list—after all, none of these companies is in an industry known for being squeaky-clean. But that’s not the real problem. Like all similar rankings, this one has to choose some criteria. And the devil is in the details.

Here are the criteria used to determine the Global 100—a sustainability ranking—for 2012:

1. Energy productivity
2. Greenhouse gas (GHG) productivity
3. Water productivity
4. Waste productivity
5. Innovation capacity
6. % taxes paid
7. CEO to average employee pay
8. Safety productivity
9. Employee turnover
10. Leadership diversity
11. Clean capitalism paylink

The problem is that more than half of these criteria—Nos. 5 through 10—have nothing to do with sustainability. I do realize that the exact definition of “sustainability” is up for grabs at this point, and many people interpret it quite broadly. And yes, if you use your imagination and squint your eyes a bit, I guess you can conjure up a connection between “Leadership Diversity” and sustainability. But it’s a stretch.

One sustainability consultant who shall go unnamed recently told me that “sustainability doesn’t mean ‘sustainability’ any more—it just means all the good stuff that business does.” The problem is, that’s not what the term conjures in the mind of the public. When they hear “sustainable” they think “green.” So a sustainability ranking that is only partly based on environmental performance fails in its basic functions, namely to reward companies for their green behaviour, and to educate consumers about which companies are performing well on issues that are important to them.

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