The Good Reputation Guide of Australia's top 100 companies -- a rating of corporate social responsibility -- used to appear in the major newspapers until the company that developed the research tool, Reputation Measurement, recently re-named and re-launched it.
Under the new name RepuTex, Reputation Measurement now sells its wares to Australia's top corporations. If the rating of corporate social responsibility in the RepuTex guide is anywhere near as bad as the Good Reputation Guide was, my advice to corporate Australia is, do not buy it. Save yourself $25,000 -- the cost of accessing the detailed rating results -- and stick to your business.
The Good Reputation Index which supplies the data for the guide, is an exercise by Non-Government Organisations -- politely labelled "community stakeholders and experts" -- to impose minority political agendas on corporations. The Index seeks to measure the ability of the top corporations to manage those activities "which directly contribute to their reputations as socially responsible organisations". In fact, the Index does no such thing. It begins with preferred definitions of goodness and expands these, for example by measuring financial performance, to capture the whole reputation of a corporation and labelling the result "social responsibility".
Westpac was ranked number one on the Index in 2002. It rated well in every category. By contrast, Flight Centre was ranked number one on financial performance, but 47 overall. It was in the doldrums in every other category, including being ranked 99 on environment. On the surface this seems very strange, given that Flight Centre manages shop front travel agencies! At Flight Centre's AGM on 31 October 2002, the managing director announced a 37 per cent increase in profit on the previous year. Was this achieved in some socially unacceptable way?
Not at all, but according to one executive, Flight Centre simply declined to fill out the survey. The company was punished with zero ratings in most categories where objective evidence, like profits or worker or customer satisfaction, was not required.
Each NGO submits a separate questionnaire to reflect its interests. Greenpeace actually awards a negative mark for not responding to a question. Furthermore it states: "If we are unable to verify your response, we will default your response to a 'don't know', which will be marked and downgraded accordingly." In establishing the Index, Reputation Measurement argued that "[i]nvestors and consumers are increasingly making decisions based on longer-term issues linked to a company's capacity to contribute to a sustainable future for all." In other words, the Reputation Index is an instrument for advancing a number of political agendas: corporate social responsibility, stakeholder capitalism, and sustainability.
Five corporations -- Western Power, Sigma, Tattersall's, Mitsubishi, and Boral -- rose between 40 and 60 places in the ranking between 2001 and 2002. Pretty impressive! Four corporations -- Telstra, Fosters, Telecom NZ, and Goodman Fielder -- slid between 40 and 60 places. Pretty dismal! How did they achieve these feats? I contacted each company was contacted for their answer and in each case was the same. No-one changed the way they conducted their business. Those that responded to the survey were rewarded with good marks, those that did not, were punished with zeros.
Measuring corporate performance is important. But the relevance of information will depend on the relationship between the corporation and the inquirer. The investor will want to know about returns and good financial management. The worker will want to know about pay and conditions. The supplier will want to know about contract details and timeliness of payment. The consumer will want to know about products and services, their price, availability and quality, and guarantees sold with the product. The local community will want to know about the impact on their amenity. A myriad of government authorities will want to know about all of these things and more. Governments will establish rules from time to time that will apply to all corporations which will include requirements to disclose certain information.
Beyond those requirements, and the many that arise from contractual obligations and in the course of building relations with any groups a corporation chooses, there is little point to the social responsibility-as-reputation measurement exercise. No one changed their behaviour, no one much took any notice, but those corporations that did choose the method to enhance their competitive edge should ponder the climate of regulation they help encourage. The message to CEOs is clear, do not be afraid, just say no to the "pretend" corporate regulators.
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