Green Ratings — a Deficit
Not sure if you were sent this article about “green” rankings….based on another article in MITSloan Management Review by Auden Schendler and Michael Toffel (you have to sign in to get the article). It is definitely worth reading but the central premise is that many of the environmental ratings focus on the wrong criteria, namely failing to incorporate advocacy activities that influence environmental regulation. What the article says is that environmental ratings should also include whether a company’s political actions support or undermine climate action. From a reputational point of view, these sentences stood out:
Third party corporate responsibility ratings matter. They help consumers vote with their wallets, aid job seekers with employment decisions, affect employee morale, guide socially responsible investors and pension funds and generate good — or bad — PR for businesses. Research has shown that poorly rated firms respond by improving their performance.
We work with companies on rankings of all sorts. And these “green” ratings are very sought after. There is no perfect scorecard that I know about and yes, companies can game the system even when they don’t deserve the reputation burnishing. What else is new? But winning them is important to reputation-buidling of credentials in the environmental space. And for those companies that are not truly green today, these environmental scorecards push them to do better and that’s what counts in my book. I often tell companies to go ahead and apply for Best Place to Work awards because it gets the CEO involved and gets leadership focused on one day being among the chosen few. Even if you don’t win, you usually can get your scores to determine what you need to do better. The same goes for climate change. If you don’t win, that’s okay. Try again next year.
The article rightfully says that these rating systems should factor in other criteria such as political contributions, CEO advocacy and NGO relations. True. And they also rightfully say that these rating systems could benefit us all by spurring corporate activism “to solve one of the world’s most pressing problems.” True. But we should recognize how far we have come already. I remember when there was no such thing as “green” ratings. As it’s been said, we’ve come a long way baby.