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Business.2010 newsletter: Agribusiness

Volume 3, Issue 2 - February 2008: Agribusiness

Tracking the ethical reputation of companies

Political science teaches that modern society is heterogeneous, pluralistic and diverse. We experienced this complexity when founding, in 2001, Covalence to assess the ethical performance of multinational companies. This proved an extremely challenging task, as diversity can be found legitimately at two levels: that of setting criteria and that of evaluating practices.

Biodiversity in the news
Social diversity is found when analyzing the treatment of biodiversity by specialized agencies, as I had the opportunity of stating during the High-Level Conference on Business & Biodiversity in Lisbon (1). How do Socially Responsible Investing (SRI) indices and rating agencies deal with biodiversity? It is clearly an important matter, as out of the 10 indices or agencies I analyzed in preparing for this conference (2), 8 include biodiversity in their indicators. Moreover, there are many differences in the way biodiversity is treated. The concept may appear as a single criterion, be embedded within a larger sustainability criterion, or cited in company profiles or stories about leaders. Biodiversity criteria can also be general or sector specific”.

At Covalence, we track the ethical reputation of multinationals by gathering, coding and quantifying online information. We have extracted data which include the word “biodiversity” and found over 730 news items, two thirds of which had a positive orientation regarding named companies. Biodiversity is a ‘CSR-friendly’ topic. Criteria registering the most positive biodiversity data were: environmental impact of production, sponsorship, social stability (community affairs) and information to consumers. Major negative criteria included: intellectual property rights (and biopiracy); environmental impacts of production; cultural issues; and product environmental risk (for instance GMOs). Sectors showing the most negative data are Chemicals and Pharmaceuticals, while Mining & Metals, Oil & Gas and Food & Beverages register the most positive results.

How should governments encourage further action on biodiversity from companies? The Global Reporting Initiative (3) offers a good framework for reporting. In our view, the topic of biodiversity is so complex that it would not fit into a one-size-fits-all policy carrying content-related obligations: it seems very difficult to set standard quantitative targets to be reached by various companies among different sectors. A more realistic approach would be to increase biodiversity reporting obligations. We suggest that companies be obliged to publish a progress report every year, while remaining free to define its content, in line with the UN Global Compact example (promoting business action on human rights, the environment, labour and anti-corruption). This flexible approach would reward the most active companies and stimulate others to move on.

See graph

Antoine Mach is Director, Covalence.
(1) Countdown 2010 Business and Biodiversity
(2) Asset4, Calvert, Dow Jones Sustainability Indexes, Eiris, FTSE4Good Index Series, Innovest, Jantzi Social Index, KLD Indexes, SiRI Company, Vigeo
(3) Global Reporting Initiative (GRI)