reports that showcase companies’ social and
The Ratings Game
environmental good deeds. Of the 250 largest multina-
tional corporations, 64% published CSR reports in 2005,
either within their annual report or, for most, in separate
sustainability reports – supporting a new cottage indus-
Measuring and publicizing social performance is a po-
try of report writers.
tentially powerful way to in uence corporate behavior –
Such publications rarely offer a coherent framework
assuming that the ratings are consistently measured and
for CSR activities, let alone a strategic one. Instead, they accurately re ect corporate social impact. Unfortunately,
aggregate anecdotes about uncoordinated initiatives to
neither condition holds true in the current profusion of
demonstrate a company’s social sensitivity. What these
reports leave out is often as telling as what they include.
The criteria used in the rankings var y widely. The Dow
Reductions in pollution, waste, carbon emissions, or en-
Jones Sustainability Index, for example, includes aspects
ergy use, for example, may be documented for specific
of economic performance in its evaluation. It weights cus-
divisions or regions but not for the company as a whole.
tomer service almost 50
more heavily than corporate
Philanthropic initiatives are typically described in terms
citizenship. The equally prominent FTSE4Good Index, by
of dollars or volunteer hours spent but almost never in
contrast, contains no measures of economic performance
terms of impact. Forward-looking commitments to reach
or customer service at all. Even when criteria happen to be
explicit performance targets are even rarer.
the same, they are invariably weighted differently in the
This proliferation of CSR reports has been paralleled
by growth in CSR ratings and rankings. While rigorous
Beyond the choice of criteria and their weightings lies
and reliable ratings might constructively in uence...
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