As the number and variety of ratings proliferate, it has become less and less clear what these ratings are actually telling us. What does it mean to be the ‘greenest company’ or the ‘most sustainable company’?

For us, it boils down to trust. Do we, as consumers, investors and citizens, trust that these companies are acting in our collective best interest? Do we believe that a company will give due consideration to environmental and social impacts when making decisions? So we have constructed the Tomorrow’s Value Rating, our own sustainability rating, around this basic premise: let’s look through the ‘window of disclosure’ and assess these companies to see if we should trust them. The companies we assessed are the companies being held up as ‘green’, ‘ethical’, ‘sustainable’, etc by other ratings. Can we trust them to deliver on the implicit promise of these labels?

We trust companies that integrate and manage sustainability issues in the same manner as they do core business aspects. That is: a strong strategic plan and management approach to all of the relevant environmental and socio-economic aspects faced by the company. We assess this strength through:

• governance structures
• management across the entire value chain of the company
• a systematic approach to innovation
• a pervasive commitment to generating value from engagement of stakeholders.

The 2011 Tomorrow’s Value Rating (TVR) is complete, and the companies we trust most are Campbell’s, Danone, General Electric, Glaxosmithkline, HP, Intel, Nestlé, Nike, Panasonic, Siemens and Unilever. To acknowledge that these are companies we trust to ‘deliver the goods’ over the next decade – i.e. they are good investments in sustainability – we have banded them together as ‘Aaa’.

There are several characteristics of a trustworthy company highlighted by the TVR and shared by our Aaa-rated companies:

• These companies not only recognise and manage sustainability risks, they embrace them and derive new cost and revenue opportunities from them.
• They do not shy away from the ‘sticky issues’. Too often companies will repackage their normal and existing business practices in a ‘green light’ while ignoring the challenging and disagreeable issues.
• They all have strong evidence that the messages on sustainability espoused by the company leadership has been ‘taken up’ and acted upon by the company as a whole.
• They all have a deep commitment and embedded processes to create innovative products that have a better environmental or social ‘profile’. This might be products that use less energy/resources to produce, have lower environmental impacts at the end of life or are more accessible to disadvantaged people and communities.
• They all are working to control environmental and social risks in the supply chain. All have good practice policies, standards, contracts and auditing in place to control the key supply chain risks. Many are also developing innovative ways to collaborate with suppliers to generate new economic models and incentives for better practice.
• They all discuss stakeholders as an enormous source of value to the company and they have distinct mechanisms to gather and weigh that feedback at key decision-making points within the company. Certainly traditional stakeholders such as customers and investors as sources of revenue and capital, but also regulators, advocacy and pressure groups and academia are discussed as sources of new ideas and better means to solve the most tenacious challenges that they face.

There are also some companies listed among the most sustainable that we do not yet trust. That is not to say that they aren’t doing good things. Vestas Wind Systems is a producer of wind turbines. American Express has a vast commitment to community investment and philanthropy. But this is the Tomorrow’s Value Rating, and trust is measured based on the presence of those systems and procedures that ensure the company will make the ‘right choice’ on a consistent basis, and across all issues, in the future. For those companies at the bottom of the TVR, they are doing a lot of things right, but they are not disclosing the robust strategic and management approach of the leaders.

The corollary is also true. Our most trusted companies will mess up. They will make the occasional poor decision and they will hurt people and the environment through their actions. We don’t trust them to be perfect and there are many decisions where ‘the right choice’ is unclear. But these companies demonstrate that they take sustainability issues into meaningful consideration and act appropriately in response. It is that commitment that we trust to deliver tomorrow’s value.

This article first appeared on The Guardian Sustainable Business website

 Results of Tomorrow's Value Rating 2011