What's the greenest business?
Cross-posted from Climate Progress.
On Oct. 17, Newsweek will release its attention-getting rankings of the top “green” publicly traded global companies.
Last year, the magazine ranked Dell as No. 1. Dell is no slouch on operational greening: The company, along with Hewlett Packard, has led the tech industry in lifecycle stewardship, with a willingness to take back and recycle its old hardware, among many other progressive internal waste reduction measures. Dell also leads in the energy efficiency of its products.
But is Dell really the greenest company in the world? It depends on your criteria. The Newsweek analysis looks at operational issues like emissions of nine key greenhouse gases, water use, solid-waste disposal, and emissions that contribute to acid rain and smog. That’s good and important.
But if you read Climate Progress regularly, you know two things: First, that the scale of the climate problem (the response to which is what defines corporate sustainability today) is so large that voluntary corporate action won’t solve it. Second, you know that because of this, how companies operate is vastly less important than how they try to influence policy, policymakers, and public opinion. If the lobbying power of one company — Koch Industries, for example — can more or less single-handedly stop climate solutions, then what other companies do as climate activists is clearly critical.
The influence of the Koch brothers and other wealthy lobbyists and business owners was put in stark relief by Jane Mayer at the New Yorker last August and then again last week, when she exposed Art Pope’s successful purchasing of the North Carolina legislature. The work of Pope and the Kochs (now magnified by the passage of Citizens United) means corporate advocacy and activism (and the broader issue of money in politics) is the battlefield on which climate will be solved or ignored.
And so, it makes sense for Newsweek, and the roughly dozen or so other corporate rankings like the Dow Jones Sustainability Index, to include, and heavily weigh, advocacy or activism in their ranking methodology. I’ve just published a paper, “The Factor Environmental Ratings Miss,” that goes into detail on this topic with Mike Toffel of Harvard Business School, in this month’s Sloan Management Review. (That article is available free, but you need to sign up on the site). The article notes:
News Corporation’s climate change performance was recently rated AAA by one rating organization — yet Rolling Stone magazine named News Corp. CEO Rupert Murdoch No. 1 in its list of “politicians or execs blocking progress on global warming.”
Toffel, in other research, has shown that companies will respond to negative rankings, and improve their performance.
Another legendary tech company, Apple, which was admittedly late to the operational greening and product stewardship dance, ranked in at 65th in the Newsweek ratings last year. But Apple arguably did more to move the ball on climate change solutions than any other company last year, when it very publicly dropped out of the U.S. Chamber of Commerce in 2009 because of that organization’s strident criticism of plans to limit greenhouse gases. (The chamber, by the way, also supports the Keystone XL pipeline, which James Hansen has called “game over” for climate, if allowed by Obama.)
Where might Apple rank if this bold move were included in the rating criteria? And how might the tide of the climate battle change if increasingly visible corporate rankings appropriately valued activism?
Newsweek should take note. These are the forces that are truly driving sustainability.