By Samantha Buechner and Michael Ellis
November 3, 2011
On October 17, Newsweek released its third annual US and global Green Rankings. With a more durable methodology than in prior years, the rankings are beginning to influence corporate behavior and disclosure.
There are a couple of issues with the rankings that Newsweek should address, however, regarding a false sense of accuracy and cross-industry comparisons. These issues are not unique to Newsweek's rankings. Yet with the broadest exposure to consumers among sustainability rankings, improvements by Newsweek would improve other rankings too.
Newsweek's methodology, supported by detailed analysis from research partners Trucost and Sustainalytics, is described here in detail. In brief, the ultimate "green score" used to determine rankings for 500 U.S. and 500 global companies comprises a weighted average of environmental impact, environmental management, and disclosure scores.
Last year, Newsweek reported its green score to four significant figures (e.g., 76.24). This year, just three (e.g., 76.2). Without reporting error, though, even three significant figures implies that there is a meaningful difference between Intel and Adobe, for example, whose scores differ by a tenth of a point.
Among other estimates, Trucost assigns a dollar value to the potential cost to society of damage to the environment from each company's practices. Attempting to do so is worthwhile but not possible to a high degree of certainty. The reported scores do not adequately reflect the compounding effect of multiple
Full article: GreenBiz