The Green Tie – The Official Blog of NAEM

Sustainability rankings: Which are real, which are rubbish?

September 12, 2011 at 9:00 am 1 comment

Albert Einstein once said that not everything that counts can be measured and not everything that can be measured counts.  While I remain a dyed-in-the-wool free market capitalist, the measurement systems we’ve used to date have gotten us in a hole with disasters economic, environmental and political.

As we reconsider what “counts” in the age of sustainability, it’s important that we get it right.   And unfortunately this means suffering through a variety of sustainability rating systems.

In 2000 the world had 21 sustainability-related ranking systems; we now have more than 100.  As a result many folks now want to know how to prioritize the “real” rankings from the “rubbish”.

As Executive Director of the Corporate Responsibility Officers Association I represent you:  the responsibility and sustainability professional.  I know the difficulty different reporting regimes pose.  I also know how hard it is to rate companies because I serve on the Methodology Committee for Corporate Responsibility Magazine’s 100 Best Corporate Citizens List.  As a result, I have discerned a few hallmarks of the better rating systems.  Here’s what I can offer as a guide to prioritizing ratings:

1. Transparency.  Their methods, criteria, and decision-making should be public. Any commercial relationships between the rater and the firms on its list should be clearly disclosed as well.
2. Consistency.  While evaluation criteria continue to evolve, the rating should have some constancy year-over-year.  The criteria should also be applied evenly to all companies in the rated universe.
3. Relevance.  A list should relate to your company’s industry, brand or strategy.
4. Acceptance.  Pay more attention to lists that have broad acceptance and/or use widely accepted criteria like the Global Reporting Initiative.
5. Prediction.  The most effective rating systems will predict future performance.  This is the “holy grail” and will likely remain elusive for at least another 10-15 years.  To be predictive a rating needs to incorporate a full business cycle’s worth of data, typically 30+ years.  No rating system that I know of has been around that long.

What do you think? Are these the right criteria for evaluating information requests? When it comes to the flood of sustainability surveys, what is your strategy for responding? Which do you respond to? Why?

Richard Crespin is the Executive Director of the Corporate Responsibility Officers Association and chair of the upcoming COMMIT! Forum on Sept. 26-27 in New York. To participate in the conversation about the “New Rules for Disclosure” visit http://www.commitforum.com/index.php/agenda/. 

Entry filed under: Corporate Social Responsibility, EHS Management, Emerging Issues, Environment, Sustainability, Uncategorized, Wall Street. Tags: COMMIT! Forum, corporate ethics, corporate social respponsibility, corporate transparency, ehs metrics, ehs reporting, environmental social and governance, ESG metrics, ESG rankings, ESG ratings, ESG research, esg surveys, Global Reporting Initiative, GRI, Sustainability Metrics, sustainability ratings, Sustainability Reporting, sustasinability rankings, the Commit Forum.