The Best of the Best in Corporate Responsibility

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March/April, 2011; Source: Corporate Responsibility Magazine | David Letterman has a top 10 list, college football has a top 25 poll, and there is a top 40 countdown of pop music; we love “top” lists. In corporate social responsibility, Corporate Responsibility Magazine publishes an annual list of the “100 Best Corporate Citizens” (PDF) based on a detailed ranking methodology (PDF) applied to all corporations on the Russell 1000.

(The Russell 1000 Index is a stock market index that represents the highest-ranking 1,000 stocks in the Russell 3000 Index, which measures the performance of 3,000 publicly held US companies based on total market capitalization, which represents approximately 98 percent of the investable US market.)

Does it matter to Johnson Controls that it ranked first in overall corporate citizenship? Or to IBM that it ranked first in both “environment” and “climate change”? What about to Ford Motor that it ranked first in human rights, or to Citigroup which ranked first in “employee relations”, and to Spectra Energy which topped the list in “philanthropy”?

How important is it that 3M (6th), Dell (47th), Johnson & Johnson (20th), JP Morgan Chase (54th), and Occidental Petroleum (38th) were “yellow-carded” by CR for having suffered some self-induced reputational damage or that Allergan, Exxon-Mobil, and Pfizer were “red-carded” and kicked off the list?

CR says that the list regularly encounters critics from the left and the right. Channeling economist Milton Friedman, conservatives charge that corporate responsibility pressures simply distract corporations from their one and only responsibility, to make and increase profits (consistent with what is legally permissible corporate behavior). CR believes that this list isn’t about “making” profits, but “sustaining” profitability, an attribute of good corporate citizens (the CR methodology includes profitability as one of its six categories of metrics).

CR finds the corporations’ weakest performance overall is around transparency and disclosure, calling the performance of the Russell 1000 on this criterion, “pathetic,” and observing that the bottom 250 disclose just about nothing. CR believes that its list actually promotes transparency and suggests that its critics suffer from “an implicit misanthropy,” essentially distrusting the importance of rating corporations based on how they deal with people—and how people deal with them.

But what about the critique from the left? CR isn’t specific about its contents. Perhaps it is the inclusion of corporations such as Exxon Mobil on the list, which even CR admits should have been kicked off the 2010 list rather than waiting until 2011. What do you think about the list? Are you a critic? Or do you applaud the effort?—Rick Cohen

  • Lou Lazarus

    Hi Rick, I think you might enjoy this blog on the topic of CR rankings. It is from IBM’s vp of corporate citizenship. His blog picks up on your topic and then goes on to suggest some ways to improve CR rankings.

  • rick cohen

    Lou: Thanks for the link.