Inside Newsweek's New Green Corporate Rankings
Newsweek Magazine recently published the results of a year-and-a-half-long project to rank the environmental performance, achievements, and reputation of the S&P 500 - the 500 largest publicly held companies traded on the New York Stock Exchange or NASDAQ.
As published by GreenBiz.com on September 21, 2009
By Joel Makower
Today, Newsweek magazine unveils its first annual Green Rankings, the fruits of a near-Herculean endeavor: rating and ranking the environmental performance, achievements, and reputation of the S&P 500. The list, published today in a 12-page special section in the magazine as well as online, is the culmination of an 18-month journey.
The resulting rankings are straightforward, almost elegant, but it wasn't a straight or easy path. Like most such rankings, they're imperfect. They'll likely be challenged and debated, especially by some of the lower-ranking companies, not to mention the activist/blogosphere community. But it may well be the best effort yet to rigorously and comprehensively assess the mainstream corporate marketplace — at least in the U.S.
Over the past week, I've spoken with the creators of the rankings to understand the story behind this effort: their methodology as well as the challenges they faced, and how they faced them. As the creator of the annual State of Green Business report, I know these challenges well: creating a defensible, easy-to-understand set of metrics on business and the environment in a world in which data can be sketchy, inconsistent, or simply nonexistent.
First, the basics. The Newsweek rankings assess the S&P 500 -- the 500 largest publicly held companies that trade on either the New York Stock Exchange or NASDAQ, the two largest American stock markets -- on three metrics:
• an "environmental impact score," based on more than 700 metrics, compiled by Trucost, a leading provider of data and analysis on company emissions and natural resource use;
• a "green policies score," an analysis of corporate policies and initiatives by KLD Research & Analytics, one of the pioneers in socially responsible investing research; and
• a "reputation survey score" resulting from a survey of CEOs, corporate environmental officers, and academics conducted by CorporateRegister.com, an online directory of company-issued CSR, sustainability, and environment reports from around the world.
Each company's score, and thus its ranking, was based on a weighted average of those three components: 45 percent for the impact score, 45 percent for the policies score, and 10 percent for the reputation score.
The overall winner: Hewlett Packard, which edged out its rival Dell for the number-one spot. Rounding out the top 10 after Dell were Johnson & Johnson, Intel, IBM, State Street, Nike, Bristol-Myers Squibb, Applied Materials, and Starbucks.
The bottom 10 companies -- those ranked 491 through 500 -- are FirstEnergy, Southern, Bunge, American Electric Power, Ameren, Consol Energy, ConAgra Foods, Allegheny Energy, NRG Energy, and . . . in last place: Peabody Energy.