The annual Newsweek Green Rankings, which have become perhaps the most anticipated green ratings in the world, are published this morning, bringing a new methodology to bear, and bringing a few surprises with it.
IBM has moved into the top spot from its third place finish last year, while Hewlett-Packard stays in second place. Dell moves down the list to fifth place after last year's third place rank, and Sprint moves up to third from sixth place last year.
Newsweek's list this year looks not just at the 500 largest U.S. companies, but the 500 largest in the world; German reinsurance firm Munich Re has earned the title of the world's greenest company.
In an article introducing the winners, Newsweek editor Ian Yarrett explains why each firm took the top spot on its respective lists:
IBM, in the No. 1 spot on the U.S. list, has been measuring, managing, and voluntarily reporting on its environmental impact for more than 20 years. It says it has conserved 5.4 million kilowatt-hours of electricity over that time, cutting its CO₂ emissions and saving the company more than $400 million in the process. Energy efficiency and conservation is a "business no-brainer," says Wayne Balta, a vice president who oversees sustainability at IBM. But the company has extended its eco-savvy far beyond its own operations -- for instance, providing software that helps customers identify energy-saving efficiencies at an office campus.
With no manufacturing operations and only a limited supply chain, banks and insurance companies tend to be relatively low impact, and Munich Re, a German reinsurance company, came in first on the global list. But a high ranking isn't a given for financial firms. Some of their investment portfolios include companies that have environmentally damaging activities, such as coal mining or gas drilling. For the first time this year, the rankings took those risks fully into account, consistent with the latest Greenhouse Gas Protocol standard. That is partly why companies like T. Rowe Price (No. 500 in the U.S.) didn't rank higher.
The rankings also highlight which sectors are performing best -- as with Munich Re, companies in finance and technology are predominant at the top of both lists; in eighth place, Office Depot is the only retailer -- and the only firm not in technology, communications or healthcare -- to make the top 10. Staples, the other big office supply retailer in the U.S., is the next retail firm on the list, in 17th place.
Globally, the list is even more skewed away from manufacturing and heavy industry: Walmart de Mexico, with its 14th place rank, is the first firm not in tech or finance to make the list.
It's important to note that Newsweek undertook a major shift in its procedures for this year's list; swapping out reputational metrics for transparency metrics in its rankings.
As GreenBiz.com executive editor Joel Makower writes in his analysis of the list:
What's changed? Newsweek — which itself went through two management handoffs during 2010, ultimately merging with the news and opinion website The Daily Beast — revamped its methodology. Specifically:
- MSCI, a provider of decision support tools to investment institutions, opted out of the 2011 rankings after participating the first two years. It was replaced by Sustainalytics, bringing a new set of criteria and analysis to the rankings.
- This year's disclosure score replaced a "reputation survey score" used during the two previous years, which was based on an opinion survey of corporate social-responsibility professionals, academics, and other environmental experts. That means this year's analysis is largely devoid of thought-leader opinion about companies, focusing instead on more tangible measures of performance.
- This year's overall "green scores" are displayed as an absolute number rather than a relative one. In the past, the top company received a score of 100, with all other companies' scores shown relative to that. Now, the green score is a raw score. Under the new methodology, a rating of 100 would apply only to a company that received a perfect score. This year, the green score for IBM, which topped the 2011 U.S. rankings, was 82.5%.
- The global rankings were expanded from 100 companies to 500. That dramatically affected some companies' rankings, since they are now competing on a much larger, more diverse playing field.
True, most of these technical details will matter primarily to sustainability geeks -- socially responsible investors and analysts, and the like. And, of course, to the companies themselves.
Also among the notable findings in this year's report are the least-green companies. The bottom of the list is not made up of resource-intensive firms that are trying their best to overcome the demands of their industries, but rather companies that simply haven't put the effort in to measure, manage and reduce their impacts.
In the U.S., the bottom seven companies are: Ameren Corp., Archer Daniels Midland, Consol Energy Inc., INVESCO Ltd., Monsanto Co., Blackrock Inc., and T. Rowe Price Group.
Globally, the lowest-ranking firms are: Bunge Ltd. (U.S.), Eurasian Natural Resources Corp. (U.K.), Archer Daniels Midland (U.S.), Monsanto Co. (U.S.), NTPC Ltd. (India), Coal India Ltd. (India), and Wilmar International (Singapore).
The top- and bottom-10 companies in both the U.S. and global Newsweek Green Rankings are below; full details are available at Newsweek.com/green.