The Unsuitablog

Big companies know they have to look good: that is why Corporate Social Responsibility — one of the most blatant misnomers of all time — was created. Produce a nice thick report saying all the good things you have done in the last financial year, and outlining all of the charitable giving, sustainability projects, improvements to your environmental and social impact and other great things you are planning and you have the means to pull the wool over the eyes of anyone who can’t be bothered to scrape off the surface veneer and look at what you really do as a company.

It is a truism that if a company is included in any of the major global stock indices like the Dow Jones Industrial Average or the FTSE-100 it will be unsustainable: that is, it has to have made a whacking great profit in the previous indexing period and, as such, will have to have made that profit at something else’s expense. If you want to make a profit out of oil, simply extract, refine and transport it at less than the amount someone is prepared to pay you for it — oil may be running out, but while people continue to burn it, and you have the means to produce it, you can still make a profit; if you want to make a profit out of retail, simply produce the goods and retail them at a cost less than you sell the product for — consumer goods may be selling slower, but while people still want to buy crap, and you have a million factory slaves working for you, you can still make a profit.

Basically, if you are a successful company, you will have got there by screwing either people, the planet, or more likely both.

But if you can produce some nice reports saying how responsible you are, you can still get to the top of a list of “Good Companies”, like the one published in The Observer this week.

In order to get into the Top 20, you will have to have been more than three-quarters perfect, according to the scoring system:

The idea is that the index should be helpful to investors who wish to hold shares in or deal with companies that try to make a positive contribution to society and follow good corporate governance practice.

Ethical investment is subjective – different people have different views on what they consider acceptable – and we do not make any judgment about the social usefulness or otherwise of particular industries. Some companies that would normally be excluded by ethical and green investment funds, because they operate in areas such as tobacco or arms, are included.

The maximum possible score is 100, with marks awarded on three main sets of criteria:

1 How companies report on their social and environmental risks and manage their impact – for instance, how they deal with workplace relations and environmental issues, and how well they perform in undertaking charity work. This accounts for 40 per cent of the overall score.

2 The quality of corporate governance. This includes the independence of the board, the quality of executive pay policies and the alignment of interests between executives and shareholders. This accounts for 30 per cent of the total score.

3 Sector issues – how companies address issues specific to their industry. For instance, food retailers are graded on responsible sourcing of products, labelling and sustainability; for a power company, these would include progress towards a lower-carbon portfolio. This accounts for 30 per cent of the total score.

The main source for the assessments is companies’ own reporting.

Surely this kind of system wouldn’t encourage companies to be a little flexible with the truth, would it? Take a look at the list of companies and see whether any of them strike you as rather less than good:

1 Scottish & South’n Energy 93.40
2 Kingfisher 87.05
3 BT Group 86.64
4 Mondi 85.94
5 Royal & Sun Alliance 83.00
6 Shaftesbury 82.82
7 Vodafone 81.50
8 Mouchel 81.27
9 Aviva 80.42
10 Johnson Matthey 79.89
11 Rolls-Royce 79.58
12 GKN 78.41
13 Smith & Nephew 77.28
14 BG Group 77.16
15 Hammerson 77.07
16 Tui Travel 76.89
17 Bhp Billiton 76.82
18 Marks & Spencer 76.61
19 Interserve 76.59
20 Atkins 76.41

You will probably not have heard of all of them, but I bet you have heard of, say Rolls-Royce (who produce engines for civilian and military aircraft), BG Group (whose entire business depends on people burning fossil fuels), Atkins (advisors to road builders, oil companies and the military) and our good friend BHP Billiton, who have pride of place on The Unsuitablog as uber-greenwashers.

Among the other companies are a military helicopter firm, a number of large-scale retail and business property developers, an air travel company and a company that specialise in selling cheap mass-produced goods.

Lists like this are a travesty — they seem to exist solely to pump up the appalling reputations of undeserving businesses who, in a time when the commerce boom is deflating should really be questioning their very existence. Or perhaps it’s people like us who should start learning to reject the very foundations of a society that considers a multi-billion dollar company to be “good”.