Ratings, ratings everywhere

March 28, 2011

It seems everywhere you turn there is another entity rating companies on their corporate responsibility. Companies are increasingly asked to fill out surveys to help various organizations score companies against each other. It would be easy for corporate responsibility practitioners to spend all their time on surveys. But this isn’t realistic nor is this a good use of time. Practitioners need to work on other things like guiding strategy, setting targets, measuring progress, and working with the rest of the business to actually conceive and implement new corporate responsibility initiatives.

Some of the companies we work with think that the number of ratings is getting out of hand. Few companies really want to respond to all the survey requests. But they also find themselves afraid not to respond to an information request because of the perceived potential for negative publicity from poor performance on any rating.

So how should a corporate responsibility department handle the myriad of survey requests?

1. Prioritize. Accept that you can’t respond to all the requests. Identify a small number of ratings that you can realistically manage. Select those ratings that are both credible and relevant to your company so your efforts yield the most benefit.

2. Respond appropriately. Apply the right level of effort for the importance of the rating to your company. Some surveys may require significant work, while others may simply need references to specific URLs for your corporate responsibility report. Additionally, remember that not all ratings protect confidential information equally. So know with which groups you can and will share confidential information and which responses will be limited to only publically available information.

3. Engage. Some rating organizations are willing to engage with companies about their methodology. Engagement may be a phone call with an analyst to receive some high-level guidance about how to reply to a survey. Other rating entities may invite companies to meet to discuss pros and cons of the methodology. You may also be able to meet individually with some rating organizations.

4. Educate internally. Often people in a company whom are removed from the details of ratings express concern when the company performs below expectations on a given rating. While many of these ratings do receive some sort of publicity – albeit often obscure – many of a company’s key external stakeholders will have a sense of what ratings to take note of and what ratings to ignore. Additionally even those ratings that you have prioritized as important have imperfect methodologies and methodologies that change each year. So take time to educate internal stakeholders about the real story of ratings.

5. Put your program first. It is easy for a company to find itself pursuing a better position year after year. This pursuit comes with a risk that the rankings, not best practice, are what drive a company’s corporate responsibility program. Over time ratings, especially the credible ones, will recognize that a company’s corporate responsibility lacks teeth. So keep to the basics – know and manage your key impacts, set targets – preferably stretch – measure performance, engage stakeholders, and communicate transparently.
Developing a plan to navigate ratings will provide the more value to your company. Plus it will help reduce the feeling of being overwhelmed.

Megan DeYoung is Director of Corporate Citizenship’s US practice with more than 12 years of corporate responsibility experience. Prior to joining the company, Megan worked for PricewaterhouseCoopers’ Sustainability, Ethics, Compliance and Risk practice and for global non-profit Population Services International. Megan has worked with companies in many sectors including consumer products, alcoholic beverages, pharmaceutical and health care, packaging and publishing. Megan has a MBA and MS in Natural Resources and Environment from the University of Michigan. Megan was a primary author of Grocery Manufacturers Association Overview of Industry Financial Performance and Trends.

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