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Wednesday, December 2, 2009

Sustainability Rankings by Industry Sector – Any Better ?

I have written previously about ranking programs and commented that I put more value behind rankings for a particular theme or a particular sector, where the comparison is more likely to be apples with apples and the vagaries of weighting factors are at least somewhat lessened.

Two sector rankings have been brought to my attention recently. I will cover one today (TBR) and one later this week (M&E) when I have collected my thoughts on it.

TBR’s Sustainability Index Benchmark Report looks at the ICT sector. TBR’s scope for sustainability is environmental issues. You can see that Dell, came first followed by BT, IBM, HP, Intel and Nokia.

A comparison with Newsweek’s rankings is possible, although only partial as Newsweek only covers US companies. In Newsweek’s ranking of 500 companies, HP comes first, Dell second, Intel fourth and IBM fifth. It is notable that these ICT sector companies are all clustered in the Newsweek ranking although the order is different.

I see weightings as having a significant impact on ranking even in TBR’s sector specific comparison. For example, how do you rank the relative importance of recycling equipment for BT, which is predominantly a networked services company, with Dell, which sells hardware products in boxes as its core business? (If this sounds like hard feeling’s that we are not #1, it isn’t meant to, I am more than happy that we are well recognized in the rankings).

I suspect that with only a couple of months between the surveys, the different positions between TBR and Newsweek are more likely to be reflecting weighting and methodology rather than performance, so I have to say I remain what I hope is a healthy skeptic on the exact order of rankings, but a supportive of the underlying objective and continued improvement to methodologies.

More to come later this week on M&E rankings in the oil and gas services sector.


  1. Thanks Kevin,
    I do keep up with your postings and appreciate your position in this recent blog. My only additional observation would be something that I would ask you to consider going forward as environmental metrics evolve. Financial metrics as currently established, have become accepted as a method to evaluate a company’s business performance but they are one time were un-refined in comparison to where they are today. I see TBR and other firms that are investigating environmental metrics as on a leading edge of a methodology that will need to evolve in a similar manor. In some respects, environmental metrics are even more difficult as some of their value deals with public benefits rather than strictly private benefits as with financial metrics. The scoring (weighting) of any benchmark is subjective, however TBR sought out guidance from a variety of stakeholders to shape the weightings to within a reasonable tolerance of industry values at that time of the research. The results of the benchmarking are a blunt instrument, but one that does reveal some interesting discoveries.

  2. Thanks Brad,

    Prompted by your comment, I re-read my post and I didn't do justice to the comprehensive nature of the metrics and analysis that I know from our earlier conversation, went into your work. I also welcome that TBR's report does not mix subjective perception with objective measures, in the way that Newsweek's ranking does with their 'Reputation Score'.

    I will continue to struggle with how we reconcile the weightings issue, but I support the objective of rankings completely. If we were to wait for the perfect ranking system we would have nothing. What we have, although not perfect, is far better than that and gets better with each new iteration.