Madeline Ravich's posts on Justmeans

Is Walmart a CSR Leader?

Madeline Ravich — Thu, 30 Sep 2010 13:32:23 GMT

I can't count the number of CSR conferences at which having a speaker from Walmart's sustainability group is treated as a coup. To be fair, there is no question that the company has been innovative and progressive in its CSR, or at least in its environmental sustainability initiatives. Its approaches to reducing its footprint can fairly be characterized as bold, innovative, and cutting edge.But looking back at the CSR rankings discussed in this blog, only the 2010 CRO ranking and the 2009 Newsweek Green Ranking recognize Walmart as a CSR leader. Even the Global 1000 published by CRD Analytics on Justmeans limits its recognition to the company to Wal-Mart de Mexico (2009 rank: 503, 2008 rank: 863) and does not recognize the U.S. base company at all. All this despite bold commitments from the company to "be supplied 100 percent by renewable energy, "create zero waste", and "sell products that sustain people and the environment." And all this despite the company's powerful tactic of convening Sustainable Value Networks that convene "leaders from [Walmart], supplier companies, academia, government, and non-governmental organizations (NGOs.) " to identify solutions that are as good for the environment as they are for Walmart's bottom line.So why is Walmart failing to gain recognition in rankings and sustainability indexes? Is Walmart's workers' poor reputation in the area of workers' rights tarnishing its corporate social responsibility reputation? Perhaps, but I have an alternate proposal for what we are seeing. If you read the Climate Leaders post I published this morning, you will notice that Walmart isn't signed up for the program. This decision to not participate in programs designed for the corporate masses is not uncharacteristic for Walmart, which has demonstrated a proclivity for playing by its own rules. In short, CSR rankings may be punishing Walmart for failing to join already established initiatives or fill out information for their rankings. Or they may be penalizing the company for not furnishing the information they request of companies when compiling the data for their analyses.The question remains: does Walmart's omission from the lion's share of CSR rankings say more about the rankings assessing its performance or about the company itself? And if you believe the latter, what is your interpretation of why Walmart is failing to make the cut-off to be recognized as a CSR leader? I would welcome comments or questions on this topic.Photo credit: mjb84

The Demise of the EPA's Climate Leaders: Implications for CSR

Madeline Ravich — Thu, 30 Sep 2010 11:01:41 GMT

This week, the EPA announced its plans to "transition" its Climate Leaders program, through which "participating companies commit to reduce their impact on the global environment by completing a corporate-wide inventory of their greenhouse gas emissions based on a quality management system, setting aggressive reduction goals, and annually reporting their progress to EPA." Apparently, the EPA feels that there are now a sufficient number of alternatives for companies interested in achieving the goals that Climate Leaders had previously helped them achieve. At least, that is how the agency describes its reasoning for the decision.So who will be affected by the program cuts? I looked through the Climate Leaders list to see who was on it, what types of commitments participants had published through the program, and how participating companies had fared in the various CSR rankings I have explored in this blog. The program seemed to either target or favor manufacturing, with 13% of participants listed as members of the materials manufacturing or commercial and machinery manufacturing industries.More interestingly, Climate Leaders fared with mixed results in the U.S.-focused CSR rankings. To illustrate, of the 186 Climate Leaders, only 41% and 42% of companies included in the CRO's 2010 list and Newsweek's 2009 Green Rankings respectively were Climate Leaders. In fact, 59% of companies explored in any one CSR ranking analyzed in this blog are not Climate Leaders. Clearly, being a Climate Leader is no prerequisite for admission into CSR rankings.From my perspective, it would be interesting to know how the companies who were recognized in CSR rankings without participating in Climate Leaders thought about the EPA's program. Were these companies nowhere close to meeting the standards for the program or did they simply not see a lot of benefit associated with the process of becoming Climate Leaders? Your interpretation will dictate whether you think that the program added value and the corresponding damage associated with cutting the program.In the interest of space, I will leave any further interpretation up to you, but will close with one possible way of viewing the data. Perhaps the mixed results in CSR rankings discussed in this blog indicate that Climate Leaders established achievable goals for companies striving to stay out in front of possible climate-related regulation without investing heavily in publicizing their CSR efforts. If that is the case, then the EPA Climate Leaders program may very well have done its job.Note: To access the data from the analysis, visithttp://manyeyes.alphaworks.ibm.com/manyeyes/datasets/analysis-of-us-epa-climate-leaders/versions/1.

Irony in CSR: Clorox Bleaches its Image

Madeline Ravich — Wed, 29 Sep 2010 10:59:42 GMT

Today a CSR press release in CSRWire caught my eye:OAKLAND, Calif., Sep. 29 /CSRwire/ - The Clorox Company today (CLX) launched a new corporate logo, marking the most dramatic change in its visual identity since 1957. Using an updated version of the company's iconic diamond mark, a brighter blue color and new accents of green, the logo better reflects the corporate brand today as it heads toward its centennial anniversary in 2013.The press release continued:"Our new logo better communicates what The Clorox Company stands for today," said Clorox Chairman and CEO Don Knauss. "We've kept visual elements that reflect our heritage but we emphasized our forward-thinking mindset and objective to achieve strong growth, drive innovation and focus on sustainability." The release caught attracted my attention for a couple of reasons. First, while logo redesigns seem to occur with some frequency, it is unusual to find them in a CSR publication. But more importantly, there is something funny about a company that has been accused of greenwashing focusing attention on something as cosmetic as a logo. Moreover, if logos can be changed once, they can be changed again in the future, begging the question of whether adoption of a new logo is sustainable in the first place. Is the new blue and green logo here to stay, or will it be nothing more than a faddish flash in the pan? And let's not ignore the irony of this announcement being issued by a company that manufactures cleaning products!Perhaps I am being overly harsh. After all, for all the greenwashing allegations that came out in 2008 when Clorox launched its Greenworks brand, its green product lines have done well in the green markets, obtaining "42 percent of the natural cleaner market within two years of introduction" according to an article published yesterday on Business Week.But can we assume that customers know best, or should we take the success of GreenWorks as a dangerous indicator that green consumers are sufficient nave to buy into marketing campaigns from the companies with the deepest pockets? After all, while a cursory search indicates that Greenworks scores fairly well in Good Guide, Clorox's regular product lines in the household cleaning category are neither the best nor the worst.Ultimately, it will be interesting to see whether the Clorox logo change draws any commentary. Two years ago, the internet was full of criticism of the company for trying to change its image. But if Clorox has done its market research properly, it probably has data to support that the public is ready to accept Clorox's new logo as an accurate reflection of its brand image.Photo credit: theimpulsivebuy

CSR Analysis: Transparency in Corporate Governance Rankings

Madeline Ravich — Mon, 27 Sep 2010 10:34:08 GMT

Last Friday, Ethicsblogger asked an interesting question about criteria for assessing governance in CSR reports:Do you know of a corporate ethics / csr ranking that gives attention to governance and lists specific criteria in that area? ThxRather than jump the gun, I offered to give it some thought and respond in a post early the following week, which is now.Before I offer an answer, I should say that I like this question a lot. Just last week, I had commented on the lack of transparency found in most CSR rankings, expressing frustration that the developers of such rankings typically refuse to be transparent about the metrics they use or the weights they assign to different criteria. Ethicsblogger's question offers an opportunity to test my point and determine whether my criticism has any merit.With this in mind, I decided to use this post as a forum for analyzing what the various CSR rankings I have explored in this blog say about how they evaluate the issue of corporate governance (please note that I see corporate ethics and corporate governance as slightly different, so chose to focus exclusively on governance for the sake of relative simplicity). For answers, I looked to the methodology section of each of their websites. I learned that most CSR rankings incorporate a "corporate governance" criterion but are vague in how they define it. To give a few examples, CRO and Ethisphere offer their own definitions and weights, while to my knowledge DJSI does not elaborate on what it encompasses within the category of governance. Corporate Knights does not incorporate any sort of broad governance evaluation, although it points out that its scores for leadership diversity and CEO-to-average-worker pay have some relevance to the subject.Now, it occurred to me that this lack of granularity might indicate that broad CSR rankings are not the best resource for people looking for rigorous evaluations of corporate governance. When I searched for governance rankings, I ended up instead finding myself redirected to websites for several leading governance research organizations like Institutional Shareholder Services (ISS), GovernanceMetrics International (GMI), the Corporate Library (TCL), and Audit Integrity. Of these four, only Audit Integrity publishesrankings, but although it describes a few criteria evaluated under the corporate governance category, a cursory look at its methodology section provides little additional granularity).For the sake of rigor, I should mention that I did find a couple of additional governance rankings, including a short list by IR Global Rankings and a 2009 "winners and losers" list by the Canadian Globe and Mail, but still wonder if the general lack of rankings from major governance groups begs the question of whether it makes sense to rank governance in the first place. After all, what would it mean to be the #1 company from a board governance perspective? In fact, a study published by Stanford's GSB investigates the same query about the validity of rating governance, indicating that this is not the first time such questions have been raised.Of course, this brings me back to a few questions about CSR rankings, which often do assign scores for corporate governance as part of their larger CSR ratings. How are the groups publishing these rankings evaluating corporate governance and how meaningful are their scores in this area? Without more transparency, it is hard to assess what these rankings actually tell us.So, ethicsblogger, I'd love to hear whether you are surprised by what I learned. Should we be seeing more transparency in governance rankings within the larger CSR rankings or, alternatively, more independent rankings focusing specifically on corporate governance? And more importantly, did I answer your question in the first place?Photo credit: SFO CP

Putting Hershey's CSR Report in Perspective

Madeline Ravich — Fri, 24 Sep 2010 08:56:48 GMT

Over the past week, I have seen a few blog posts about Hershey's first CSR report, which is hot off the presses. Not surprisingly, the viewpoints represented in these posts vary. For example, my Justmeans co-blogger Akhila Vijayaraghavan glows with praise, concluding her post by saying "With so many things going for them, the first CSR report sure is a sweet beginning for the Hershey company." But Elaine Cohen, who regularly critiques CSR reports, takes a different perspective, underscoring the tension between the report offered by Hershey and a reactionary report offered up by a group of highly critical NGO stakeholders. While Elaine is more balanced than critical, she does raise good questions about how meaningful Hershey's new report actually is.I happen to have some perspective on this issue because of a project I conducted in business school relating to the issue human rights abuses in cocoa supply chains. This is a juicy topic which has received significant attention over the years to the point that the leading cocoa companies have had to invest in substantial behind-the-scene efforts, if for no other reason than to keep governments and NGO groups at bay. But the types of issues under discussion--- especially the question of whether child labor is actually wrong in all situations--- are complicated and controversial to the point that cocoa companies have often held back in their public discussion in order to avoid the type of controversy they were trying to suppress in the first place. As a result, while significant funds have been invested in finding industry-wide solutions to these issues, the major cocoa companies have been selective in what they have chosen to discuss publicly in CSR reports. Perhaps part of the reason is that some of the most significant efforts mounted by the major confectionary companies cannot be presented as factors that differentiate their companies from their peers.While this is true across the board, it is also worth noting that Hershey, which is among the four leading chocolate companies, trails behind its competitors in talking about its CSR. What Akhila terms "a sweet beginning" could be seen as a token effort late in the game. After all, while competitors like Cadbury, Nestle, and Mars can be accused of being selective in what they have discussed publicly, they have in fact established traditions of publishing CSR reports and websites reflecting suites of CSR activities with some depth.Although there is much more to say about this issue and Hershey's new CSR report, I will stop here and conclude by asserting that meaningful commentaries on CSR reports require an understanding of the larger context within which the company operates. In fact, I would contend that the initiatives that an individual corporation are undertaking to improve its CSR profile are nearly impossible to evaluate in the absence of information about what peer corporations are doing to address the same CSR issues. But am I alone in holding this point of view?Photo credit: JavYliz

CALPERS and The Murky CSR Issue of Executive Pay

Madeline Ravich — Thu, 23 Sep 2010 13:54:35 GMT

This morning I read an AP piece in the Huffington Post about compensation at the pension fund CALPERS and thought it worthy of a special post on what I consider to be one of the murkier corners of CSR. Basically, the article described CALPERS officers walking away with bonuses despite the fund losing money this year. While balanced to a point, it would be more than possible to walk away from reading the AP article thinking that CALPERS was doing something egregious. As is often the case, however, the issue is less cut-and-dry than it may seem based on how the article was written.Backing up to offer some context for this discussion, the California pension fund CALPERS has long been on the forefront of CSR, incorporating ESG factors into how it invests the funds it guards on behalf of its state's employees. This makes today's article all the more notable for what on the surface could be perceived as hypocrisy coming from an organization which has historically placed strong emphasis on values-based investment.Hypocritical or not, executive pay is messy from a CSR standpoint, as I learned in an endowment course I took in business school. There are many ways to skin a cat, and likewise, there are many ways to look at what constitutes a sound approach to executive pay for endowments and pension funds. Here are a few conflicting takes that illustrate the wide range of perspectives that one could take on today's CALPERS article.The Time Horizon Debate*CALPERS did wrong. Its pension fund employees did well for themselves in the face of a really bad year for the people whose money they steard.*CALPERS did right. Pension fund employees need to be compensated for long-term results rather than short-term success. Therefore, because CALPERS has done well over a five-year time horizon, the bonus structures in place were appropriate.The Overall Performance vs. Benchmark Debate*CALPERS did wrong. Pension officers are hired to make money for the people whose investments they steward. Therefore, CALPERS failed the state's employees when it offered bonuses during a year when pension officers have lost a significant amount of their money.*CALPERS did right. Pension officers are hired to make sure that the money they guard for their investors performs better than it would in the hands of other investment managers. Therefore, CALPERS employees met expectations by staying consistent with benchmarks (it was a bad year for everybody!).The Incentive Debate*CALPERS did wrong. Pension funds should hire officers who are motivated by a sense of purpose rather than by fat bonuses.*CALPERS did right. Pension fund officers make sacrifices by choosing the public sector over the more lucrative private sector. Therefore, it would be impossible to hire good people without promising bonuses.What does all this have to do with CSR? For one thing, some might consider it fishy to see a pension fund that has argued for responsible executive pay being liberal with its own compensation. More broadly, however, I would argue that many of the issues at play in the pension fund compensation debate echo executive pay issues we see in the private sector. Indeed, when voting on bonus structures, boards often have to face similar pressures to balance the interests of stakeholders with a variety of perspectives. But is designing an executive pay policy somehow simpler in the private sector?Photo credit: renaissancechambara

Transparency in CSR Rankings

Madeline Ravich — Wed, 22 Sep 2010 14:52:25 GMT

I have started to perceive an inherent hypocrisy in CSR rankings surrounding the question of transparency. It's been bugging me, so I thought I'd write a blog post on the subject and see if it provokes any reaction from my readers.Here's the conflict as I see it. The very groups demanding transparency from the companies they are evaluating fall victim to the belief that they must guard the details of their methodologies to preserve their intellectual property. On one hand, they demand disclosure, claiming that transparency is fundamental to strong CSR, but on the other, they are extremely selective about how much information they disclose about their methodologies. In fact, even CSR rankings groups that publish their methodologies rarely offer up sufficient information to truly understand what differentiates their products from those of their competitors. Look back on my post about methodologies and you will see what I mean, or try looking directly at methodologies published by groups like CRO, Ethisphere, DJSI, and CRD Analytics, and see what questions remain unanswered for you.The reasons for this phenomenon are obvious. The competitive landscape for ESG ratings is composed primarily of for-profit companies and the crowded playing field has undergone significant consolidation over the past few years. These factors have contributed towards pressure on margins that make it difficult for ESG ratings groups to turn a profit. In such a competitive environment, CSR rankings group hold precious anything that differentiate them from their peers, making intellectual property the most precious of commodities. At the same time, these same firms depend on transparency since without disclosure of voluntary information, there would be no basis for their comparisons.All this makes sense in isolation, but how does it square with the shifts we see among the companies they are evaluating? In fact, it appears that major companies often perceive a benefit in disclosing more than their competitors. To do so indicates a confidence and a fearlessness that only a true industry leader could have. After all, the legal departments of these same corporations might contend that disclosure of any information beyond what is required by law exposes the company to possible lawsuits and other legal or regulatory action. Yet, clearly the companies faring well in CSR rankings that reward transparency see an advantage to placing disclosure above such fears.Yet at the same time that companies like Nike, Procter & Gamble, and Intel place CSR disclosure front and center, one could argue that they are able to do so because sharing ESG data does not compromise their core intellectual property. At the same time, Nike wouldn't necessarily tell you how it makes its shoes so comfortable--- to do so would make its brand vulnerable to imitation from cheaper competitors. Given this logic, can we rightly expect ESG ratings groups to put THEIR core intellectual property on the table for all to see?You could argue this point in a number of ways, but I would propose the following CSR rankings have little meaning without FULL transparency. After all, can we trust that a group too unstable to share how it evaluates a company is weighing ESG factors in a manner consistent with our goals or values?

CSR Deep Dive: Becton Dickinson

Madeline Ravich — Tue, 21 Sep 2010 11:44:10 GMT

After writing my recent posts about changes in CSR rankings, I thought it would be interesting to publish a case study looking at Becton Dickinson, a long-time CSR darling which recently experienced some negative publicity surrounding its ethical practices. BD earns consistent acknowledgement in many of the CSR rankings I have discussed in this blog over the past year, which is particularly notable for a company with a minimal name in consumer consciousness (many of the other consistent winners are companies like HP, Dell, GE, and Intel). In light of this, I was curious to understand how has its perceived ethical breaches have (or have not) been factored into some of the top CSR rankings.Let's start by establishing what Becton Dickinson is. Google Finance describes its major business as follows:Becton, Dickinson and Company (BD) is a medical technology company engaged principally in the development, manufacture and sale of a range of medical supplies, devices, instrument systems and reagents used by healthcare institutions, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. BD's operations consist of three business segments: BD Medical, BD Diagnostics and BD Biosciences. On November 19, 2009, BD acquired 100% of HandyLab, Inc. (HandyLab), a company that develops and manufactures molecular diagnostic assays and automation platforms.From a financial perspective, there is evidence that BD is a good buy, at least if you consider Warren Buffett to be the oracle of smart investment decisions. Yet from an ethical perspective, there are questions to be asked. A recent article published in Washington Monthly exposes anti-competition questions faced by BD and its industry. According to the article, the company, which controls 70% of the syringe market, has been facing challenges from the U.S. Justice Department since 1960 for "price fixing, buying up patents to kill its rivals' innovations, and forcing hospitals to buy its syringes to get other essential supplies, some of which were only produced by BD." The article goes on to describe the stronghold large medical device companies like BD have over nearly every hospital in the nation.Not surprisingly, BD's most recent sustainability report offers up its own framing of what makes it a CSR leader. The company outlines a corporate purpose of "helping all people live healthy lives" by "reducing the spread of infection for healthcare workers and patients", "advancing global health" through improved immunization and diagnostics, "enhancing therapy" by working with partners in pharma and biotech, and "improving disease management." And while compliance and ethics falls within the scope of the CSR issues it frames for itself, its treatment of its overall ethical philosophy remains non-specific.Apparently, BD's most recent CSR report does the job, at least in the eyes of some of the CSR rankings groups. Becton Dickinson fares well in Ethisphere's Most Ethical Companies as well as in the most recent lists produced by Newsweek and DJSI, but fails to make it into the most recent Corporate Knights and RiskMetrics Group rankings or the most recent CRO.So why does Becton Dickinson make it into some CSR rankings but not others? While it would be most helpful to hear insight from the ESG ratings groups producing the rankings, I will offer a guess in hopes that my hypothesis will be challenged. I would venture that BD's success in the rankings can be attributed to a combination of how significantly ethics is weighted in each ranking and what criteria each ratings group uses to evaluate this factor. But while the former of these two criteria is shared openly in the CSR rankings methodology overviews published by each company, the latter is rarely if ever described for the public to understand, making it impossible for me to interpret the results properly. So, CSR rankings firms, it's on you. Is my guess correct, or are there other factors at work here?Photo credit: joeflintham

Year-over-Year Changes in CSR Rankings

Madeline Ravich — Mon, 20 Sep 2010 14:37:53 GMT

In response to my recent post on CSR Rankings, Justmeans member JustJim asked the following:Since this is the first time this list has been made public (according to CSR Wire). is there analysis explaining major drops or gains for listed companies? It would helpful to understand the driving factors behind moving up or down the list.This is an excellent question and one deserving of comment from both CRD Analytics (the relatively new CSR rankings group that produced the CSR ranking published by Justmeans) and the larger ESG rating and ranking community including groups like CRO, Ethisphere, Corporate Knights, IW Financial, Sustainable Asset Management, and the various formerly independent ESG rating groups now falling under the MSCI umbrella (e.g. KLD, Innovest, etc). Indeed, while CSR ranking methodologies are often described as a response to the call for transparency), it is rarely if ever possible to figure out what drives changes in a company's ranking. In fact, for every year-over-year change in rank for a given company, possible reasons abound. Here are just a few scenarios that can come into play for an individual company:*The company in question changes its behavior with respect to major ESG factors considered in the ranking.*The company in question changes nothing about its CSR performance, but improves (or reduces) its disclosure of CSR data.*The company in question changes absolutely nothing, but shifts relative to other companies evaluated in the ranking.*The organization constructing the ranking changes its methodology, placing additional weight on certain topics or changing the way it rates specific factors.*The organization constructed the ranking leaves constant the weights it places on its selected CSR factors, but changes the weight it assigns to the sub-factors underlying those weights.*A company that previously failed to meet the minimum criteria to be included in the ranking qualifies for the first time and bumps the company in question up or down.These are only a few factors that can contribute to shifts in CSR rankings, and I'd be curious to hear what other considerations I have neglected here. Analysts, consider this an open invitation to comment on what has changed how your organization has rated companies from year-to-year. It would be interesting to hear thoughts from CSR practitioners outside the analyst community on feedback you have received about the rise or fall of companies you have worked with.

CSR Rankings Revisited... Again

Madeline Ravich — Fri, 17 Sep 2010 09:48:22 GMT

A new season, a new CSR ranking. The other day, Justmeans released its Global 1000, a list produced in conjunction with the relatively new ESG ratings firm CRD Analytics. As with the various CSR rankings we have explored in this blog in the past, the list contains many of the usual suspects. So what distinguishes this selection from those made by CRO, Ethisphere, Corporate Knights, legacy KLD and legacy Innovest products? And where methodologies aren't transparent, how far can we go in deducing how criteria for this list differs from other CSR rankings we have explored in the past?Let's start with the typical rankings comparison. The Global 1000 embraces some of the usual CSR darlings including Johnson Controls, HP, Procter & Gamble, Baxter, GE, Dell, Accenture, Intel, and Texas Instruments, as well as additional usual suspects like Agilent, Applied Materials, and Wisconsin Energy. In addition, it concurs with Newsweek and CRO (but nobody else) that Colgate-Palmolive, State Street, Citigroup, JP Morgan, Abbott, Bristol Myers Squibb, ITT, 3M, and IBM deserve recognition as well. The Global 1000 also agrees with Corporate Knights and RiskMetrics Group--- the two groups that also develop lists that are global rather than U.S.-focused--- that L'Oreal, Inditex, Diageo, Enbridge, Intesa Sanpaolo, Glaxosmithkline, Roche, Geberit, Siemens, SAP, and Iberdrola Renovables are worthy of a shout out.So much for lists. More interesting, however, is the Global 1000's heavy weighting towards certain sectors that seem to receive less recognition in the other ranking systems. Of the 43 companies in the Global 1000 NOT recognized by any of the other CSR rankings I examined, 18 were listed as companies within financials and an additional 5 in information technology. In fact, 26 of the Global 1000's top 100 were financials, 17 were IT companies, and 14 were in health care. Additional analysis will be required to verify whether this bias towards companies providing services rather than products is standard but my gut says it's not.But assuming this observation is on the mark, what does it say about the Global 1000 methodology, which is outlined in broad strokes only on the Justmeans website? Does it indicate an uncharacteristically high weight placed on some aspect of the financial dimension of the companies CRD Analytics is evaluating? Or is there some other factor at play in the weightings? Again, future CSR rankings posts are in order to answer these questions, so stay tuned!

CSR Question: Is Climate Change an Artificial Construct?

Madeline Ravich — Wed, 15 Sep 2010 12:07:00 GMT

As I contemplate the current state of CSR, I cannot help but wonder whether there are aspects of corporate social responsibility that play upon fears based in a distorted reality. As I contemplate this question, I can't help but think about the fact that when I was growing up in the 1980s, I was earnestly afraid that World War III would take place and destroy the world as I knew it. Years after the end of the Cold War, it seems silly to have worried about such a thing, yet I can't help but wonder if such fears are so natural that they exist in all of us and lie dormant until vehicles for expression surface.I am not a climate change denier in any way, yet I can't help but wonder if global warming has grown to inhabit a similar place in our psyche as nuclear holocaust once occupied. Will we one day look back on the current debate about climate change and wonder what all the fuss was about in the early part of the millennium? And will we start to look upon our current set of fears as not completely crazy, but certainly overblown or misplaced?If you are reading this post and are wondering what right-wing climate change skeptics have gotten to me, you may be surprised to learn that my doubts arise from conversations with friends deeply rooted in some of the leading environmental NGOs or finance firms specializing in carbon finance. As climate change legislation has withered and died, these former advocates of climate change are all independently raising questions about whether the wide umbrella of climate change will become replaced in short order by a suite of more concrete issues that can be resolved through technology that directly benefits the user as much as it benefits the planet as a whole.Will climate change seem like an artificial construct of another era once a decade or two have elapsed? Only time will tell, but it feels like science fiction to consider how the language of CSR might differ thirty years from now.Photo credit: Foxtongue

Craigslist: When CSR Isn't Straightforward

Madeline Ravich — Tue, 14 Sep 2010 09:23:49 GMT

Recently, I posted a piece questioning whether product safety can rightly be categorized under the CSR umbrella. While this is in no way an inappropriate question to ask, its significance pales in comparison to some of the broader challenges the CSR field is facing in today's economy. The article I posted the other day about BP and the Chilean miners illustrated how dire circumstances can push firms to broaden or shift the definition of corporate social responsibility, or at least give companies grounds to attempt to do so.Today I'd like to discuss how Craigslist is doing something similar (or, again, attempting to do so), reminding us that defining what CSR should mean for a specific type of company is not always as simple as choosing from the typical CSR laundry list of environment, working conditions, governance, and product safety. Like many internet companies, Craigslist has a fairly minimal footprint when it comes to these categories. It does not consume an extraordinary amount of energy, give off much in the way of pollution, have workers or supply chains filled with workers laboring under dangerous conditions, or even have the same complexity in governance that large publicly traded firms face.Nevertheless, current clashes with the government have demonstrated that Craigslist must resolve complicated questions about what it means to manage its websites in a socially responsible manner. The question at hand is whether it is wrong for Craigslist to allow "adult services" postings. The argument made by government is that these postings serve as a platform for facilitating dangerous activities like prostitution and trafficking, while the argument for company's traditional position is that censorship is wrong and that shutting down the adult services section of the website violates not only Craigslist's freedoms, but also the freedoms of its customers.Now, you may object to my summary of the situation on the grounds that Craigslist's position is less about liberties than about making money. The New York Times explained that Craigslist charges for adult services content and that its censorship argument is a front designed to protect one of the company's most valuable revenue streams. If this is your criticism of the argument, I'd encourage you to read arguments by scholars like HBS's Michael Porter and Yale's Dan Esty, who function as proponents of the companies-can-do-well-by-doing-good line of thought. Their advocacy for the triple bottom line principle takes as a given that good CSR involves measures that are financially advantageous for the firm. If you accept this philosophy, you necessarily allow for firms like Craigslist to make money while doing what they claim is right.The more interesting question, though, is whether we will allow conflicting positions about what constitutes CSR. The government's position in the Craigslist debate is that this is a product safety issue, which, as we discussed before, is not always defined as CSR. Can we allow companies to treat product safety as a CSR issue while also allowing an issue like censorship to on occasion creep into the CSR canon of issues?

CSR Database Review: CSRHub

Madeline Ravich — Wed, 08 Sep 2010 09:00:22 GMT

Shortly after my CSR databases blog post from the other day, I received an email from Cynthia Figge, a founder of CSRHub, asking me if I'd do a review of the beta version of their system. Always eager to share information about new CSR products on the market, here is what you can expect from this ambitious new product.CSRHub is an aggregator of data from the CSR universe. It boasts ratings for "5,000+ large publicly traded companies in more than 60 companies" aggregated from 80+ sources and "benchmarked "across 135 industries and by geography." The website offers several products. For free, a user can register to see and customize company scores across the categories of community, environment, employees, and governance, and has the ability to adjust the relative weights of these four issues to reflect how they weigh the value of these four categories (All scores are weighted and normalized to remove biases). For $10 a month, an individual can see more extensive information, including three sub-categories for each of the four categories available to registered users. For $50 a month, a corporation can do basically the same thing. Users can also purchase company reports summarizing data from individual ESG sources, meaning that for a few hundred dollars, you can buy a report on a single company based on data from either Asset4, IW Financial, Trucost, Vigeo, or GovernanceMetrics.CSRHub is still in beta form and will be for quite a while, so those who register now can become part of the feedback loop to refine what could be a very interesting product catering towards those impatient with the disparities between the various ESG groups evaluating the social responsibility of different companies within an industry. Like One Report, a product which offers companies the opportunity to respond to several ESG ratings companies without filling out multiple redundant forms, CSRHub offers one-stop-shopping to those interested in knowing how the lion's share of ESG ratings firms judge an individual company (note that not all ESG ratings groups are on board, at least yet). It also offers a mechanism for accessing individual reports on individual companies, a significant value for any individual or company that doesn't want to pay thousands of dollars for access to an individual database (to give an example, if the CSR director from Estee Lauder wants to know how her company stacks up against Revlon, Shiseido, and L'Oreal in the Asset4 database, she could purchase individual company reports summarizing Asset4 data at a few hundred dollars a pop, rather than pay thousands of dollars for access to the whole database).CSRHub is so new that it is hard to envision what it will look like once it is "complete". The site is slow and confusing to navigate, although I imagine those are kinks that will be resolved over time. More of an issue to me is that scores are not transparent, meaning that it is impossible to see what CSR factors or sources are rolled up in an overall aggregate score. In addition, while one of CSRHub's selling points is the opportunity to personalize weightings, it is impossible to focus the database on an individual score. This means that if I was an EHS officer interested exclusively in understanding my company's environmental profile, I could neither delve deep into the profile of my company with the level of granularity I tend to desire, nor could I look at my company's score without seeing it diluted at least to some extent by community and employee issues. Also, since summaries of company reports from individual ESG sources are not yet available, I could not yet evaluate how, for example, the Asset4 report for Walmart available through CSRHub would compare to what I would see if I worked directly in Asset4's system.As I suggested early in this review, CSRHub is an ambitious project with potential. Unlike some CSR databases available, it seems to respond to an actual demand, although by trying to be all things to all people, its developers will have quite a bit of work to do to get to the point that it satisfies the needs of any one type of user (despite wanting to cater towards businesses, its formatting suggests that it is actually better adapted to the needs of socially responsible investors). All in all, keep an eye on CSRHub, and if you have an opportunity to access it early on, don't shy away from becoming a test user for a CSR experiment with some real value.Photo credit: Velo Steve

BP's CSR Gets Perverted

Madeline Ravich — Tue, 07 Sep 2010 08:19:10 GMT

If you thought you clicked on this link to read about sex tapes, prostitutes, or anything else that crosses your mind when you hear the word perverted, I apologize for misleading you. This blog post is about perversion in the classic sense, and specifically what measures BP Plc is trying to take right now to change the public's perception of what corporate social responsibility means. It is also about the plight of CSR in a company that is --- or feels--- that it is in financial straights.Once upon a time, BP was the poster child for sustainability in big oil, rebranding itself around the slogan "Beyond Petroleum" and positioning itself as a leader in alternative energy solutions and a number of other bold CSR initiatives. How an oil spill changes everything. According to Thursday's New York Times:BP is warning Congress that if lawmakers pass legislation that bars the company from getting new offshore drilling permits, it may not have the money to pay for all the damages caused by its oil spill in the Gulf of Mexico.In short, BP is asking Congress to help it do right by those affected by its risky and irresponsible behavior by allowing it to forge ahead with the very activities that environmentalists have been rallying around for years. So much for "Beyond Petroleum".While BP's actions are in themselves deserving of comment, they are even more significant due to questions they raise about a larger issue. Just the other day, I read in Chris MacDonald's ethics blog about the question of whether the Chilean miners can and should be compensated for the time they are trapped. Or more accurately, whether the miners can be compensated at all given that the company they are working for may go bankrupt.The common thread here is the question of what corporate responsibility means for a company that is in jeopardy of going out of business (or more accurately for a company that claims it is in jeopardy of going out of business). Libertarians would argue that companies perform a service to society through their core activities, which means that intervening to prevent corporations from doing what they do best hurts society as a whole. In this same spirit, BP would like you to believe that circumstances have modified the very definition of what constitutes a CSR initiative for big oil and that its current responsibility is to make enough money --- through whatever means possible--- to survive long enough to pay its dues for the damage it has caused. Isn't that perverted?Photo credit: Noah Scalin

CSR Databases

Madeline Ravich — Wed, 01 Sep 2010 12:46:02 GMT

Since I began blogging for Justmeans last January, I have posted pieces about a number of CSR databases which I have found to be helpful and interesting. While no one database mentioned in this blog is without its faults (many can be criticized if nothing else for lack of completeness in the products and companies they review), each provides an excellent starting point for gaining insight into a specific aspect of corporate social responsibility. I thought it would be helpful to recap some of these information resources, so here goes:Product DatabasesGoodGuide: CSR product database designed to help users find "non-toxic, environmentally-friendly products from companies with good social and safety records." GoodGuide rates products in the personal care, food, household chemicals, and toys categories based on environmental impact, social impact, and "ingredients that raise a health concern". GoodGuide is available to users free-of-charge.Skin Deep: CSR database constructed as a "safety guide to cosmetics and personal care products brought to you by researchers at the Environmental Working Group." Categories of products rated in Skin Deep include makeup, skin, hair, eyes, nails, babies, oral care, and sun protection. Products are graded based on whether their ingredients are linked to cancer, developmental/reproductive toxicity, restrictions & warnings, allergies and immunotoxicity. Access to Skin Deep is available online free-of-charge.Energy Star: Provides information on products that "meet strict energy efficiency guidelines set by the US Environmental Protection Agency" and which as a result "help you save money on utility bills and protect the environment by reducing greenhouse gas emissions in the fight against climate change." Access to the Energy Star database is available online free-of-charge.Company DatabasesBankTrack: Bank database offering information about policies, "dodgy deals", and specific companies of concern funded by more than 75 major financial institutions around the world. Access to BankTrack is available to users free-of-charge.Carbon Disclosure Project: Online resource providing information about how corporations and organizations manage climate risk and opportunities. CDP is currently developing a second database focusing on water disclosure. Individual questionnaires can be read online with free registration.I recognize that this list is far from complete, and would encourage readers to write in with recommendations about product and company CSR databases that deserve recognition. What free databases do you look to as information resources on corporate social responsibility? And what types of information do you find most helpful in a CSR database?Photo credit: Extra Ketchup

BankTrack as a Resource for Understanding CSR in Banking

Madeline Ravich — Tue, 31 Aug 2010 22:21:46 GMT

Some of you may have seen today's New York Times story about the important CSR subject of environmental risk in banking. The article argued that banks like Wells Fargo, JP Morgan, Goldman Sachs, and Citigroup have become increasingly reluctant to lend to companies engaged in risky activities like mountaintop removal in coal-mining. Perhaps watchdog groups like Rainforest Action Network have done a pretty good job at making enough of a stink that banks are changing their ways. Or perhaps banks can no longer afford involvement in companies like Massey Energy, which have incurred significant expenses due to irresponsible practices.I would encourage anybody interested in getting a sense of what banks do and don't finance to visit BankTrack, "a global network of civil society organisations and individuals tracking the operations of the private financial sector." The database balances information about involvement with major CSR initiatives like the Global Reporting Initiative (GRI), Carbon Principles, Equator Principles, Carbon Disclosure Project (CDP), UN Global Compact, and Wolfsberg Principles with detail about "dodgy deals" involving financing of socially and environmentally problematic activities relating to cluster munitions, mining, nuclear, and the Tar Sands. The website also features information about companies that "require attention" from each bank. For example, HSBC may have one of the better track records when it comes to voluntary standards and commitments, but is no different from the other companies in the database in its involvement with controversial mining, forestry, dam, and oil and gas projects and its engagement with companies like Walmart, Textron, Vedanta, andFreeport McMoRan.Although BankTrack has its drawbacks (for example, it is difficult to quickly determine the status of deals cited from a number of years back), it provides an exceptional free entry point for people interested in familiarizing themselves with what CSR means (or doesn't mean) for some of the world's largest banks. Most importantly, it does so in a way that keeps the focus on the activities most material to banks, refusing to dilute the data it offers with information about the type of CSR initiatives which seem to have garnered criticism from people like Aneel Karnani.So does BankTrack provide insight into how banks are handling the types of CSR issues discussed in today's New York Times article? My only gripe is that it is sometimes difficult to gauge how a bank's involvement with a specific corporate social responsibility issue has evolved over time. Nevertheless, as far as free databases go, it is a remarkable starting point for anybody seeking to figure out want questions to ask about CSR at major banks.Photo credit: prayitno

The Case against the Case against Corporate Social Responsibility

Madeline Ravich — Tue, 31 Aug 2010 09:06:47 GMT

I would be remiss in not finishing out this month with a response to The Case against Corporate Social Responsibility, the WSJ piece by University of Michigan professor Aneel Karnani. For anybody who has not read it, you should, if no other reason than to revisit the usual arguments against CSR. These are not new, nor are they particularly novel or interesting, but the amount of attention garnered by Professor Karnani's article merits comment.To dissect the author's argument, imagine a Venn diagram where one circle represents things a company can do to make a profit and the other represents things a company can do that are good for society. It makes sense that a company would do the things that fall at the intersection of the two circles since there is no reason not to offer products and services that benefit society and the bottom line simultaneously. The problem emerges, however, when companies begin to take on activities that benefit society at the expense of the bottom line. A movement to this effect within a single company robs shareholders, and a societal shift towards companies doing things that are good for society but not the bottom line may give regulators the impression that they can step back and let companies do their own thing, and more generally cause society as a whole to overlook more effective solutions than companies can offer.Karnani's criticism treats corporate social responsibility as the part of the Venn diagram circle representing things benefiting society but not augmenting the bottom line and there are is a fundamental problem with this way of looking at the subject. But by focusing on this aspect of CSR, he ignores the mirror image of the diagram, which includes activities that benefit the corporation at the expense of society. While it is true that many CSR initiatives fail because unprofitable programs are likely to be eliminated as quickly as they are started, one bigger point is that CSR can also include the scaling back of activities that profit the corporation while hurting the company. While Karnani may concede this point subtly in passing, decisions NOT to do things that hurt society are arguably the most important part of CSR.Professor Karnani's piece has been compared in various blogs to Milton Friedman's famous 1970 NYT piece, The Social Responsibility of Business is to Increase its Profits. When I read Friedman's piece in business school, I objected to what I perceived to be an antiquated view of CSR which could be indulged because it was written before a significant amount had been written about CSR. But by 2010, shouldn't a professor at Michigan be able to offer a more well-rounded argument?Photo credit: Korean Resource Center

Does ShoreBank's Seizure Represent a Failure in CSR?

Madeline Ravich — Mon, 30 Aug 2010 15:41:11 GMT

On August 20th, CSR took a hit when the community development bank ShoreBank was closed by the FDIC. While the company is reopening under the name Urban Partnership Bank, it is unclear to what extent the new entity will embody the principles that had underscored ShoreBank's reputation as a pioneer in corporate social responsibility. This episode opens the door for some good conversation about whether banks formed around social missions can succeed in an economic climate where even less principled financial institutions are facing financial challenges.ShoreBank was founded in 1973 "to demonstrate that a regulated bank could be instrumental in revitalizing the communities being avoided by other financial institutions." Its website explains that in 2000, "ShoreBank expanded its focus to include environmental issues, believing that communities cannot achieve true prosperity without also attaining environmental well-being." In addition to being known for its affiliations with Obama, the bank was widely recognized for its innovative approach and lobbying on behalf of community development activities.It is interesting to think about ShoreBank juxtaposed with other banks that have failed within the past two years. ESG analysts have had a field day rubbing salt in the wounds of major banks that have gotten their just desserts after years of profiting off the backs of the poor. The premise is simple: that the more unsavory a bank's practices, the higher its exposure to risk. And wouldn't it be logical to assume that the converse is true--- that companies embracing ethical practices lower their risk and optimize their chances for success?Sadly, the ShoreBank seizure serves as a reminder that CSR doesn't always equate to low risk. If anything, ShoreBank was an example of an entity that took on significant risk to improve society. According to Socialfunds.com, its business model--- which relied on its ability to manage a portfolio of loans to entities that other banks would not have dared risk--- resulted in a default rate higher than what the bank could stomach, even despite the education program it had put in place that had previously kept its default rate below those of commercial banks.But are there other reasons that may have been overlooked? ShoreBank's efforts had been ambitious, including geographic expansion into several U.S. markets, support of Grameen Bank, and even involvement in environmental issues. Is it possible that mission creep got the better of a great institution? That a lack of focus prevented it from succeeding at what it initially had done so successfully?There will undoubtedly be people who suggest that ShoreBank's seizure bodes poorly for community development banks, and more broadly for corporate social responsibility in the banking industry. But before jumping to conclusions about what this means about CSR in banking, it would behoove us to consider whether other factors contributed to this situation.Photo credit: TheTruthAbout...

Is Product Safety a CSR Issue?

Madeline Ravich — Sun, 29 Aug 2010 09:30:27 GMT

In my response to my recent CSR piece about auto recalls, ethics blogger and professor Chris MacDonald posted the following comment:Recalls, it seems to me, have little to do with CSR but potentially plenty to do with ethics. I don't think it makes much sense to discuss basic product safety in terms of *social* responsibility. If so, then the term "CSR" really has lost all meaningFair enough, and if I were to weigh in personally, I would to some extent agree with this comment. But CSR is a field full of practitioners each with their own opinions, which is why I thought it would be helpful to find out whether major companies deemed successful in their CSR efforts had included safety as a category in their most recent CSR reports.For this exercise, I decided to look back at one of my previous CSR rankings posts, which compared best-of lists published by five major ESG analyst groups and magazines (Ethisphere, RiskMetrics Group, Corporate Knights, Newsweek, and CRO), and update it to include the latest CRO ranking. Of the six companies that made three of the five lists (no company was listed in all five CSR rankings), only one--- Procter & Gamble --- included product safety in the table of contents for their most recent reports or websites. The remaining group, which included HP, Johnson Controls, Nike, PG&E, and Starbucks, did not list product safety as a key priority, although many made some reference to the subject somewhere within the report itself.Now, I concede several points about this analysis. First, I recognize that my analysis of product safety within CSR reports does nothing to address the more specific question of whether recalls are commonly discussed in CSR reports (that would require a more time-consuming analysis). Second, six is a very small number of companies, and not necessarily representative of the larger CSR field. Third, it is worth noting that not all of the six companies I examined are manufacturers, which means that some may have excluded product safety simply because they have no product safety to measure. And fourth, it is possible that the CSR rankings I used to assemble this list skewed my results by discriminating against (or favoring?) companies with an unrepresentative approach to product safety within their CSR reports.One additional observation I made is that P&G refers to its most recent CSR publications as a sustainability report, as does Baxter, which is another company that treats product safety as a priority in its most recent report. I wonder if there is a connection between the language companies use to describe their CSR programs and the topics they include in their reports, but this is a topic too broad for this CSR post!Photo credit: underminingme

Ethical Consumption and the Debate over Locavore Math

Madeline Ravich — Fri, 27 Aug 2010 14:53:15 GMT

In an ethical consumption blog post from earlier this month, I weighed in with some thoughts on the pragmatism of the locavore movement. It turns out that I was in good company, as a debate about the movement has been raging since August 19th, when Stephen Budiansky published an Op-Ed in the New York Times criticizing the math behind the movement. His main argument: that food transportation represents a negligible fraction of the overall energy use quoted by proponents of local eating. In fact, according to Budiansky, 32% of energy use in our food system derives from home preparation and storage, and a large chunk of the remaining 68% represents the energy use required to grow the food itself.Not surprisingly, Grist had a field day responding to Budiansky's op-ed, assembling responses from farmers, locavore-related non-profits, and columnists and analysis specializing in food systems. Arguments embedded in these responses run the gamut. Here are a few samples of points made in the Grist responses in defense of the locavore movement:-Selling food in mass quantities means contamination in a batch can affect massive numbers of people.-Economic arguments about energy use in production don't take into account the spread of allergens and antibiotic-resistant bacteria from agribusiness.-Calculations like Budiansky's may not take into account economic distortions caused by perverse government subsidies.-We waste more energy throwing out food than transporting it.-Budiansky's calculations would look different if he took into account that the local food movement should more accurately be considered a regional food movement.-Local food is yummier.And here are a few more adding more fuel to the fires of criticism:-The economies of scale lost in farmers markets make buying locally a luxury that only the wealthier among us can afford.-Farmers need to make a living, and may have difficulty doing so if they limit their sales to a 250 mile radius.Notice that there are far more arguments against Budiansky's position than in favor of it. Does the fact that these ethical consumption pieces are critical of Budiansky's New York Times op-ed indicate that his point of view is truly flawed and partial? Or is the bias in these articles simply a reflection of Grist's sympathetic stance on the locavore movement? If only Cargill and Archer Daniels Midland would actively weigh in on these perspectives. Perhaps this is a future article for Justmeans' CSR section.Photo credit: Tanakawho