Archive for the ‘awards’ Category

Global 100: Sustainably Misleading

Corporate Knights continues to mislead. Once again they’ve issued a list of the world’s “most sustainable” corporations — the Global 100 — and once again the metrics they’ve used have surprisingly little to do with what most of us mean by the word “sustainability.”

First, let’s get one thing out of the way. The organization is right to defend the fact that there are oil companies (including Enbridge, for example) and other producers of “sin” products on their list. There’s nothing in principle that says an oil company can’t, in some useful sense, be sustainable. And even if you think the fact that a company like Enbridge should be docked points because oil is a non-renewable resource, it still is a useful and interesting exercise to look at which oil companies (for example) are leading the field in terms of sustainability. So, CK is right to defend itself in this regard.

No, the problem with the Global 100 is not that they give kudos to a few unpopular companies. The real problem lies in the criteria used to measure what they refer to as “sustainability.”

Here are the 12 “key performance indicators” that get a company onto the Global 100:

  • Energy productivity;
  • Carbon productivity;
  • Water productivity
  • Waste productivity
  • Innovation Capacity
  • Percentage Tax Paid
  • CEO to average employee pay
  • Pension fund status
  • Safety performance
  • Employee turnover
  • Leadership diversity
  • Clean capitalism pay link.

These are essentially the same criteria they used (and which I critiqued) last year. The only difference is that they’ve added the bit about “Pension Fund Status,” the relevance of which may already have you wondering.

Hopefully the problem with those criteria is clear to most of you: only the first four — the first third of the criteria — actually have something to do with what most of us mean by “sustainability.” The rest are important issues, to be sure, but not relevant to the question of sustainable use of resources, or to the notion of sustainable economic growth that is compatible with environmental conservation.

Many will surely defend these criteria, and will tell me that I’m working with too narrow a conception of sustainability. Sustainability, they may say, isn’t just a narrow environmental concept. It’s about the whole People-Planet-Profits nexus. Well, certainly you can draw a diagram with boxes and arrows that shows connections of various kinds between those three. But to say that the three are one is to make so many undefended ethical, conceptual, and factual assumptions that the only result must be unnecessary confusion.

No, the Global 100 really isn’t a sustainability index, at least in the way that word is used by normal folks. It’s a complex index of sustainability, fairness, and a bunch of other positive stuff. And if you’re interested in all that stuff, why not just say so? Why bury it in a word that most people take to mean something else entirely?

The kicker, in terms of misleading language, here, is the tag-line that completes the title of the Corporate Knights list: “The Global 100: World Leaders in Clean Capitalism.” The problem here is that “Clean Capitalism” is a term Corporate Knights uses to describe what others might refer to as “conscious” capitalism, or perhaps “corporate social responsiblity.” But when most of us hear “clean,” we think “not dirty,” or “not polluting.” The implication, here, whether intended or not, is that the firms on this list are clean ones, firms unlike the dirty, polluting, earth-pillaging firms of the past.

Now, it would be one thing if Corporate Knights wanted to turn the word “sustainability” (or “clean”) into a technical term, a term of art with a special meaning for experts in the field. But that’s not what’s going on. Instead, they’re turning the word into a brand, a buzzword, and it’s a buzzword with which 100 companies are today adorning press releases. A hundred firms are today bragging about being sustainable, and are doing so with Corporate Knights’ endorsement. But “sustainable,” here, simply does not mean what you think it means.

Feeding the Hand that Bites You

Two stories surfaced this week about companies faced with handing out prizes to businesses whose interests were contrary to their own.

One company graciously gave credit where credit was due. The other declined to do so. Is it ethical to decline to feed the hand that bites you?

The company that declined to recognize another’s achievements was CBS, which forced subsidiary CNET to alter the results of the ‘Best of CES‘ award it gives out after the annual consumer electronics show. CNET’s editors had intended to give top honours to the Dish Network’s “Hopper”, a set-top box that allows viewers to skip commercials. As reported here, CBS has been in a legal battle with the Dish Network over the Hopper, which CBS sees as threatening its stream of ad revenue. The CBS v. Dish lawsuit was cited by CBS as the reason for withdrawing the Hopper from consideration for the CNET award.

And on the other hand: the company that went ahead and gave an award to a competitor was USA Today. The newspaper, you see, had run a contest to reward excellence in print advertising. And the winner, ironically, was Google — the search giant that is cited as one of the key reasons why print advertising is on the decline.

Because both US Today and CNET are media outlets, the most obvious question here has to do with editorial independence. Media companies are in a special situation, ethically. Most of them need to earn a living, but most of them also proclaim a public-service mission, and along with that mission goes a commitment to journalistic independence. Of course, giving out awards is closer to a news outlet’s editorial function, and editorial content has never been as cleanly divorced from commercial concerns as pure news is supposed to be. But if awards handed out by media outlets are to mean anything, they need to remain pretty independent, and meddling by a parent company is bound to cast doubt on editorial independence pretty generally. CBS’s meddling in the CNET’s award has already led one reporter, Greg Sandoval, to resign.

Setting aside the media ethics angle, we might appeal to basic principles of fairness. If you hold a contest, then all eligible contestants deserve a fair shake. If you don’t want to allow your enemies to compete, it’s probably fair if you state that transparently up front. But, other things being equal, everyone deserves an equitable opportunity to compete and win. That’s basic ethics.

Then again, it’s worth reminding ourselves that business is fundamentally adversarial, and the rules that apply in adversarial domains just aren’t going to be the same as those that apply in cozier sorts of interaction. So, in the present case, we might say that the need to observe basic fairness in the treatment of contestants is legitimately overridden by the right not to harm your own interests by advertising a competitor’s product.

But the right to protect your company’s interests needs to be balanced against the kind of signal you send when you take a stand or announce a policy in this regard. What has CBS told us about itself as a company? What kind of outfit has USA Today shown itself to be? This isn’t just a matter of PR; it’s a matter of who CBS and USA Today are as companies. In many respects, you are what you are perceived to be, and what you are perceived to be reflects the actions you take in public.

Sustainability Isn’t Everything

The word “sustainability” doesn’t just refer to everything good. If it did, we wouldn’t need the word “sustainability” at all; we would just use the word “good.”

I’m just a small-town philosopher who likes words to mean what they mean. That’s why I got cranky when I saw the new Global 100 Ranking, which is ostensibly a sustainability ranking. (See my blog posting here.) Why cranky? Because over half of the criteria used to arrive at that ranking have nothing to do with what I — and, I suspect, most people — think of when they hear the word “sustainability.”

But let’s set aside the fact that this usage is potentially misleading; words evolve, and maybe the public will catch up with the Global 100 in its broad understanding of the term “sustainability.” Does this new, revised meaning of “sustainability” make sense?

Let’s start with the word “sustainable.” Well, standard dictionary definitions suggest that it means something like, “Able to be maintained at a certain rate or level.” OK, good. That’s a positive thing, right? But wait. No one cares about corporate sustainability in that sense, with the possible exception of certain narrow-minded shareholders. We want businesses that are more than merely capable of being maintained. We want businesses that are worthy of being maintained.

So sustainability needs some normative content. It needs some goodness baked in.

In this regard, the touchstone is the U.N.’s Brundtland Commission. In 1987, the Brundtland Commission asserted that “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” And ever since then, at very least, the words “sustainable” and “sustainability” have had very significant environmental overtones. OK, good. Here, “sustainability” is being used to indicate some plainly good things: environmental sustainability isn’t the only good thing in the world, but it’s definitely a good thing from a social point of view, embodying not just the value of the natural environment but also a sense of intergenerational justice.

But some people (including the people behind the Global 100) want to expand the term “sustainability” to include other, non-environmental dimensions. From a certain point of view, this makes sense: other things required to allow a company to “sustain” operations. But then further problems arise.

Note that when we expand “sustainability” this way, a subtle bit of sleight-of-hand takes place. Previously, we were talking about business operations that were environmentally sustainable. Now, we’ve switched to sustainable organizations. What does it take to sustain an organization? Lots of things, and not all of them are good. And being sustainable isn’t, in itself, a good thing. The tobacco industry has lasted for centuries, leaving millions of dead bodies in its wake. Very, very sustainable. But bad.

As noted above, we don’t generally care whether companies can stay in business. We want them to merit staying in business. And if the companies on the Global 100 merit staying in business, why not just say so?

In the end, I guess my point really is that environmental sustainability is important all on its own, and doesn’t need to be fluffed up with issues like workplace safety or leadership diversity or CEO pay; and issues like workplace safety and leadership diversity and CEO pay are too important to stuff into the simple concept of sustainability.

100 Most Influential People in Business Ethics, 2010

For the third year in a row, I’ve been honoured by Ethisphere Magazine as one of the “100 Most Influential People in Business Ethics.” I was recognized in the category of “Thought Leadership.”

Once again, I’m humbled but also encouraged that my 5 years’ worth of blogging is seen as having some impact on the world, however indirect.

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