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Dishing the dirt on environmental league tables
11 June 2008
Every other week a league table of green companies seems to drop in our in-trays, but does a good rating in these charts reflect anything more than effective public relations? To delve deeper into the subject, we've taken a look at one recent offering: Business in the Community's Environment Index 2007, which was published at the end of May.
What is it?
BITC's Environment Index is part of its long-running Corporate Responsibility (CR) Index. This benchmarking exercise was started in 2002 and claims to be the UK's leading benchmark of responsible business. It assesses businesses on how responsible business strategy is integrated into their ongoing business practice, including environmental impact, supply chain management and the well-being of workers and customers. UK-listed companies as well as international firms with a significant presence here are invited to join the assessment, and the final top 100 list is published in the Sunday Times.
Who's in it?
Not all companies have their performance listed publicly and some use it more as a benchmarking exercise to see how they compare against their peers. Of those that do allow their results to be published, the top 100 companies are divided into Platinum (95 per cent and above), Gold (90-94 per cent), Silver (80-89 per cent) and Bronze (70-79 per cent).
Some of the environmental class leaders are familiar faces, such as Co-operative Financial Services for its leadership in managing climate change and Scottish Power, which is one of the world's largest renewable energy companies. But others in the platinum section, such as global mining conglomerates Rio Tinto, food and personal products manufacturer Unilever, and energy giant and nuclear fan EDF Energy look to be less comfortable environmental bed fellows.
How come?
Rio Tinto is hailed as a pioneer in conservation, biodiversity, climate change and water and energy use. But it has also been repeatedly criticised for its human rights and environmental record in mining projects like the one in Madagascar, which threatens to destroy a unique environment. One of Rio Tinto's main contributions to the climate change debate appears to be is its extensive backing for carbon capture technology for coal-fired power stations. It's hardly surprising that Rio Tinto is backing this controversial technology, given that it currently mines some 155m tonnes of coal annually.
Unilever too has had run-ins with environmental campaigners -- there was the mercury pollution incident in India in 2001, for instance. The corporation is, however, working to address some of these black marks at a strategic level. In the wake of the Greenpeace campaign against companies using palm oil in their products, Unilever agreed to use only palm oil certified as sustainable by 2015.
EDF Energy has also featured in some less attractive lists, such as WWF's thirty dirtiest power stations. And it has come in for criticism for dumping nuclear waste on its own doorstep, which Greenpeace says is leaking into the water table and poisoning French farms.
Why are they in the index?
For better or worse, multinationals have become major forces in international business. The problem with such massive organisations is that the headquarters and the local operating companies may not always have the same attitude to the environment. Multinationals are often criticised that they have much lower standards abroad than they do in their home countries where regulation is much harder. That means it's nearly inevitable that some dirt can be found on even the best-intentioned companies.
What's valuable in these indexes is that they look at whether companies are tracking their transgressions and putting them right. Mining group BHP Billiton, for example, tracks and publishes all of its environmental transgressions and fines.
According to this year's BITC environmental index, businesses have significantly stepped up their environmental activities. Ninety per cent of companies now actively measure their climate change impact, and have measures in place to reduce them. Water consumption has emerged as an important reporting area with 81 per cent of businesses having a strategy to measure and reduce water consumption, compared to just three per cent in 2006.
Environmental measures and targets are also being enforced beyond the companies themselves, with 90 per cent of them extending standards to suppliers and business partners. BITC stresses that its Environmental Index is more than just PR, and around 20 per cent of the entries are verified by independent auditors Arthur D Little. Disclosure is the first step in making an environmental difference, and while some of these companies may be doing too little, they are at least making their progress in making their targets public.