5 Quick Ways to Identify a Responsible Company

Last week GlobeScan published interesting findings from one of its latest surveys – “significant numbers of survey respondents around the world cannot or will not name a single socially responsible company when asked, and this proportion appears to be rising in many countries.”

This is a worldwide phenomenon in both developing and developed countries.  Large numbers of people can't name a socially responsible company. In India for example it’s 57 percent, while in the U.S., it’s 39 percent.

Should we be surprised? Not really. After all, how can the average person distinguish a ‘good’ company from a ‘bad’ one, especially with so much greenwashing going on? And furthermore – how can this person give a company thumbs up or thumbs down without analyzing its records, which is not very likely to happen?

So it got me wondering - is there a shortcut that will generate a valid answer in couple of minutes? That seems to be a much more reasonable time frame for such a search. While we can’t say the answer is positive for every company, we believe it’s doable and we’re here to help with 5 ways to identify if a company is responsible for the busy yet interested global citizen.

Before we start, here’s a tip – finding that a company is responsible through one of the offered methods might not be enough. If you want to be on the safe side try to get a positive reply from at least two of these resources.

1. B corporation – this is one of the best ways to identify a responsible company. If a company has a B certification it means that it completed the B Impact Assessment and earned a reviewed minimum score of 80 out of 200 points. In addition, this seal also means that the company has met the legal requirement for B Corp certification, i.e. amended its governing documents or adopted benefit corporation status to meet the legal requirement for certification for its state of incorporation and corporate structure.

What to do? Type a company’s name on the B Lab’s search page to figure out if it has a B Corp certification.

Pros:  easy to use, transparent (companies’ assessments are available on the website), third-party verification.

Cons: Only about 700 companies have this certification and most of them are in North America, so it is still a very limited method.

2. Sustainability and CDP reporting – reporting is a good indication for responsibility, whether it’s a sustainability report (especially if it is prepared in accordance with GRI guidelines) or report on their carbon, water or forests impacts to the CDP.

What to do? Search on the GRI database for the company. If you found it reported, check the grade level and look for the ‘plus,’ which indicates on external review and assurance. Look also at the CDP database for carbon, water and forests disclosure reports.

Pros:  easy to use, holistic, provides indication on the company’s level of transparency and engagement.

Cons: assuming that reporting by itself is an indication of responsibility is somewhat simplistic.

3. Rankings and indices – they can give you a good indication, especially the ones using a more holistic and credible methodology on which companies are leaders and which ones are laggards when it comes to CSR.

What to do? Look for the company you’re checking on rankings such as Global 100 or CRO’s 100 Best Corporate Citizens and indices such as Dow Jones Sustainability Index or FTS4Good Index Series.

Pros:  third party verification, (usually) provides an indication of the big picture rather than just one issue or two.

Cons: many times rankings are based on ‘best in class’ principle which can be misleading, it’s not easy to find companies on the indices.

4. CSR ratings – some companies do the hard work for you and provide CSR ratings and other relevant information. One of these service providers is for example CSRHub, which provides “access to corporate social responsibility and sustainability ratings and information on 7,000+ companies from 135 industries in 91 countries.”

What to do? Type a company’s name on the search box on the upper right side of the homepage. Then compare the company’s ratings on different categories (overall, community, employees, environment and governance) to ‘all company average’ ratings – here’s an example of Nike.

Pros:  easy to use, covers thousands of companies, you can see the resources used for the analysis.

Cons: most of comparative ratings as well as the detailed information is available only for registered users.

5. Shareholder resolutions – this is a good way to find out what shareholders think on the company’s responsibility. A company that is more responsible will have a smaller number of shareholder resolutions if at all, and will work together with its shareholders to find agreeable solutions to the issues that they bring up through the resolutions.

What to do? Use Ceres’ database to look for a specific company. One of the filters is a company filter enabling you to search by company. You can also click on the links on the ‘resolution summary’ column to get more details on the resolutions.

Pros:  easy to use, detailed, provides the shareholders’ perspective, good indication to see to what extent a company actually walks the talk.

Cons: limited to public companies, the database includes only 3 years, and you only learn on the company’s approach to specific issues, which makes it more difficult to see the whole picture.

Do you have more ideas? Feel free to comment and share!

[Image credit: olarte.ollie, Flickr Creative Commons]

Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the Parsons The New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.