How much of a company’s Reputation is related to its social responsibility initiatives?

Here’s a new take on screening for Socially Responsible Investing.   Boston College (see our Useful Links) and Reputation Institute released a survey of the 150 largest corporations in terms of people’s perceptions of them, rather than what these firms actually did to improve their Corporate Social Responsibility (CSR) (e.g., improving governance).  Quite an interesting take on Do what I say, not what I do.  The theory goes, when companies do good, the word eventually gets out, and reputation eventually rises.

Hence, investors could search for top rankings in Boston College’s Corporate Social Responsibility Index.  Leading the list (Top 10) are:  Johnson & Johnson, Walt Disney Co., Kraft Foods, PepsiCo, Hershey, and SC Johnson (maker of Windex, and biologically friendly versions thereof).  Browsing through the top 50, it appears these are indeed potential SRI candidates.  (The exception is SC Johnson, as it is private.)

Missing from the list are Monsanto, BP (British Petroleum) Wal-Mart, and other controversial firms.  To Wal-Mart’s credit, the company’s rapidly changing its ways for the better !   Curiously, Green Mountain Coffee Roasters made it to the list (#15) even though the company is small relative to its blue-chip peers in the survey.  Further, it is currently under an SEC investigation over its inventory accounting with a key vendor.  It’ll be interesting to see how that investigation, and results thereof, affect its ranking.

While I do think this type of list that examines CSR is interesting, as it’s showing another angle to CSR, I still favor direct measures such as those tabulated by CR Magazine, or Fortune’s Best Places to Work for list.  Further, I do worry whether the results of this ranking of Reputation can be manipulated via a corporation’s heavy ad spending, etc.  Lastly, individual/industry rankings could be volatile depending on the ebb & flows of headline news (e.g., ah, those “evil banks”).  Hint, Hint:  notice few banks have made this year’s list !

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