Monday, October 18, 2010

Green Rankings & Grade Inflation

Newsweek just released its green rankings for 2010 for the top 500 US based companies, as well as a global 100.

Dell placed first of the US based companies, and IBM topped the global rankings. Each received a 100. Maybe it's just me, but I think the esteemed panel was a pretty easy grader. And as an educator, I understand how pernicious easy grading can be. Grade inflation may make people feel good in the short term, but the lack of rigor impacts society in the long run. I hate to break it to you, but just as we don't all have above average students in our classrooms or above average drivers on our roads, we don't have above average sustainability efforts in our large corporations.

I understand that the methodology means the "100" is relative to others in their industry, but it still carries a connotation of A+. And I don't think any of these companies deserve an A+. If you take a look at Dell or IBM sustainability reports, you will see that they realize they have significant impacts on our planet, and much to work on. The problem with grading relative to others is that you end up with a "queen of the pigs" syndrome. Too often it selects the outstanding example of mediocrity.

There is no doubt that Dell and IBM are leaders in our current economic system which has recently emphasized reducing impact on the environment and being more socially responsible. But these companies are in no sense regenerative. They are still working on reducing negative impacts on existing ecosystems and communities, not recreating systems that will have positive impacts.* Doing less evil, while laudatory, doesn't earn a 100 in my view.

Instead, I'd ask "would the world be better off if this company made and sold even more of their stuff?" This query goes more to the essence of the business. Its reason for being. Perhaps Dell and IBM really do create high net value across their product offerings of disposable computers and consulting services. But companies whose core essence is "doing good" should rank higher. Those that provide environmental benefits such as cleaner air, purer water, or healthier ecosytems, or provide societal benefits such as education, health services, or ecofriendly energy. Those who truly have cradle to cradle supply chains, where their "waste is food." These are the ones for which I can answer "Yes, if they were more successful, the world would be better off." To my mind, there are no A+ companies under my scheme either, but I think it is a more useful question than comparing relative "green-ness." I don't give an A+ for good answers to the wrong question.

Perhaps I am quibbling over the A+ issue, and instead the focus should be on the bottom of the class. Some of the food processing and utility companies there, such as Monsanto, ADM, Duke and Edison, continue to underwhelm. These seem to be the trouble makers every year. Maybe Obama should start a "No Company Left Behind" policy for these poor performers. Others might argue that they should be put on probation, or expelled. And what about Peabody Energy? It seems like they never even came to school. I wonder if they think their absence was excused?

I tried to go back and look online at the 2009 Newsweek rankings, but interestingly, they all now link to the 2010 rankings (I do see they have maintained ranking Wal-mart above Whole Foods, which created a lot of controversy last year). I think I have a hard copy at home, and will take a look. My guess is that a lot has changed... which makes one wonder how sustainable one's sustainability ranking really is. I wonder how last year's "top ranked" companies feel? Has their performance slipped, or did the grading system change?**

So, kudos to Newsweek for tackling what is a slippery problem. They worked with experts at TruCost, and had a strong panel of advisors. But grade inflation seems to be a problem that is being felt outside of our schools, and I think it may be even more dangerous here.

A planet is a terrible thing to waste.
* I realize that relative to current competitors, it might be more eco-positive to buy a Dell computer compared to a competitive product. But the business model is still based on obsolesence and me replacing my computer every 2-3 years, rather than providing me with eco-effective/efficient computing services.

** For a more sanguine (and detailed analysis), check out Joel Makower's blog on the rankings.

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