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.
