CSR Ratings – Are Four Lists Better Than Three?

Some days, it seems that there are more rating lists on corporate responsibility out there than we can count. (For an example, check out Dave Stangis’ blog post a few days ago on the latest Harris Interactive Reputation list.) That’s why it’s helpful when you can get a nice roll-up of a number of the lists out there like the report put out yesterday by an organization called Net Impact, 2008 Net Impact Company Ratings.

The report lists 250 companies that appear across a handful of major CSR “best of” lists like the CRO’s 100 Best Corporate Citizens List and two major socially responsible investor indexes produced by mutual fund companies Calvert and Domini. The Net Impact report can serve as a guide for Net Impact members, primarily students and alumni of leading MBA programs interested in finding jobs with “socially responsible” employers. If you’ve never heard about Net Impact – you should check them out. I’m personally a big fan – I love going to their annual conference and seeing a sea of 1,000+ MBA students passionate about corporate responsibility. And over the past few years Intel’s had teams of Net Impact members prepare the assurance statement of our CSR report and we’ve attended events at business school chapters and at local professional chapters like the new one that just got started in Phoenix. We even have Net Impact members as our new summer interns (and one’s an accomplished blogger, so watch out for his posts coming soon to this blog….)

But I digress – back to the report and the question of lists. So, what does it really mean to be on these lists? Does it make us more socially responsible to be on four lists instead of three?

The answer depends on which lists you’re looking at and what you do with the lists.

For a bit of background, in my pre-Intel life, I ran a research organization that did CSR research and rated and ranked companies. So, needless to say it’s very interesting to now look at these lists from “the other side” – as one of the companies being rated. One question I would inevitably always get from my investor clients was, “Tell me which are the best companies or who are the ‘greenest’ companies.” My usual initial response was, “there’s no such thing as a perfect company and it all depends on your social investment criteria.” Because there are so many variables and the fact that there is inherent subjectivity in the term “environmentally responsible,” companies can drop on and off your list depending on where you draw the line.

Last week, one of our executives asked, ‘what did Texas Instruments do to get on the top of such-and-such list? What are they doing that we aren’t?’ I rattled off some of the things that I know they’ve done over the years – but there wasn’t one easy answer I could give him. Texas Instruments executives might even ask the same thing about the lists Intel is on that they don’t even appear on. That’s because each list has a specific universe of companies it’s using as a starting point, uses a different set of criteria, and applies different research methodologies to analyze the corporate responsibility records of companies (i.e. using company provided data, third-party information, broad-based surveys of business executives.) One list is not necessarily better than another, but if you ask different questions, you’ll get different answers.

That’s why I always like to look across a lot of lists – similar to how the Net Impact report is laid out – and dig into them to understand why we’re on one vs. another. Now, I’d be lying if I said I don’t get excited and feel extra proud to be a part of this company when we get named to a top spot on an individual list. But ultimately, it’s the big picture across all of these lists that’s the most helpful – the common areas where we get ranked high or the common areas where we score lower that give us the best information about how we’re doing relative to our peers, where we can improve our own performance, and what the new emerging issues outside groups are looking at when they rate companies. I also think it’s beneficial and ultimately makes these lists more useful for users – whether it’s investors, job-seeking MBA students, consumers or the companies being rated – when the raters and rankers clearly explain their methodology – this allows the users of the lists to really know what is being measured and provides companies with actual data they can use to improve their performance – which in my mind is the main benefit of having these lists in the first place.