Are you invested in a dirty company? If you work for the state of New York and plan to draw benefits from one of its pension funds, you might be.
“One aspect of Newsweek’s just-released rankings of 500 leading companies’ environmental policies and performance is to view the list from an investor perspective,” wrote Joel Makower, the editor of Greenbiz.com, in a post about the magazine’s classification effort.
One of things that Makower found while analyzing the rankings and other, publicly available data was that “the 50 largest investors in the companies receiving the lowest scores—those ranked 490 through 500 on Newsweek’s list—include three leading public employee pension funds as well as major mutual funds that hold millions of Americans’ retirement accounts.”
Makower’s piece is an excellent example of the strong, investigative follow-up story that can result from ambitious, data-driven news projects like Newsweek’s. As I pointed out in a review last week, its rankings aren’t perfect, but they are by far the most strategic attempt at such classification by any news outlet to date. What Newsweek’s rankings had that others didn’t was a well-planned, well-defined methodology for gauging companies’ environmental performance. The magazine spent over a year working on the project. But the real beauty of the robust list that resulted from that investment is that it’s a trailhead for journalists, not an endpoint.
With the rankings in hand, intrepid journalists from Newsweek or anywhere else can launch even deeper investigations into environmental performance within the business world. Makower’s work is a great example. Hopefully, it won’t be the only one.
Yes and No
Although I admire Newsweek for trying, and I agree that the list contains some very helpful information (depending on what question one is trying to answer), and I definitely agree with the point being made (here) about investment, I'd like to make another point for people to be aware of when focusing on certain companies and industry sectors in the list, in comparison to others.
The list is fundamentally (and dramatically) flawed when it comes to comparing certain specific industry sectors to others, and when comparing some companies within those sectors to each other.
In particular, it's flawed when it comes to understanding and comparing oil and gas companies to other sectors and companies. Period.
I know this is a rather large complaint and claim. I'd be happy to explain it. And I'd like to do so, if anyone cares about whether the list is accurate or about how to understand and compare oil and gas companies to companies in other sectors. I do have a relevant background: I was second in my class of chemical engineers at Berkeley. I've worked in research and engineering for a major oil company. (I had offers from Exxon, Shell, and Chevron.) Later, I got my MBA at Harvard, as a Baker Scholar. And I've been a consultant with McKinsey and Company.
Just as one example of the problems, do you see how most major utilities are WAY DOWN the list, even as ExxonMobil is much higher, at 395 (even though that itself is not a very good spot)? Do you know WHY? How does the explanation relate to the matter of central concern today, i.e., greenhouse gases? Is the list really comparing apples to apples, or has it managed to compare marbles to watermelons? And how so, analytically speaking?
Curtis, I'd be happy to explain the problemS (there are more than one) if you and people are interested. Indeed, I'd be happy to explain them to the Newsweek folks. Just let me know. Thanks!
Be Well,
Jeff
#1 Posted by Jeff Huggins, CJR on Mon 28 Sep 2009 at 05:20 PM