The Ethical Company Organisation

THE ETHICAL COMPANY ORGANISATION

Setting the benchmark for corporate social responsibility

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Environment

The Environment is one of the three main overarching categories of our research. Here we look at everything from a companies environmental impact, their latest environmental report, relationship with genetically modified crops, non-organic farming and even nuclear power.

Environmental Report

The quality of a company’s environmental reporting can say a lot about its ethical standards. As such reports become more commonplace it is getting easier to rate companies on their code of ethics and their efforts toward corporate social responsibility: a good report will contain fixed targets as opposed to vague statements of intent.

Companies which fail to publish a report get a bottom rating; companies with inadequate reports get a middle rating. To earn the top rating the report must be dated within the last two years and must set concrete and company-wide performance targets; it also has to demonstrate an understanding of the company’s main impacts. Many of the corporations that have attracted most criticism have actually produced exemplary environmental reports.

Exception is made for small companies without the resources to publish an elaborate annual report (i.e. companies whose turnover is less than £2 million a year). Companies which were launched with the aim of helping people, animals or the environment are rewarded with a middle rating but must have some sort of environmental policy or report to earn a top ethical rating. These include businesses that provide fair trade, organic, vegetarian, cruelty-free or environmentally-friendly alternatives. (This is for tables which have been updated from 2010 onwards).

Nuclear Power

Nuclear power is a target for social and environmental campaigners for two main reasons: its link to the production of nuclear weapons and the pollutant properties of radioactive waste. Nuclear waste remains dangerous for 250,000 years, and this greatly increases the security problem attached to its potential for use in nuclear weapons. The nuclear industry argues that, as an electricity generator which does not produce greenhouse gases, it should have a role in combating climate change. However, environmental campaigners would prefer to support a sustainable future through energy conservation and the development of ‘cleaner’ power sources such as sun, wind and wave power.

Some nuclear industry specialists are also involved in the production of goods and these are reflected in our research. A bottom rating indicates the company is involved in the design, construction or operation of nuclear power stations, radioactive waste handling and/or the mining, processing or reprocessing of uranium. It also may indicate the production of other nuclear-related equipment, such as monitoring facilities.

Genetic Modification (GM)

No one really knows the possible effects of GM food on our health and the environment and the public and certain NGOs are therefore anxious about their use. Releasing genetically altered organisms into the environment could disrupt ecosystems, and genetically modified crops have been proved to be more harmful to many groups of wildlife than their conventional equivalent.

New 2004 EU regulations for the labelling of genetically modified foods and feed require that all food products that make direct use of GMOs at any point in their production are subjected to labeling requirements, regardless of whether or not GMO content is detectable in the end product. GMO content that is below the prescribed threshold remains unlabelled, as long as it is due to an unintentional and technically unavoidable mixture. The threshold only applies to GMO content that has been authorized in the EU, and therefore is considered safe. (Source: GM Compass).

Within our food and drink research a bottom ethical rating indicates that the company uses GM ingredients in any of their products. A middle rating is given to companies which do not have a stated policy on their website regarding the use of foods or ingredients which contain GMO’s in their products but where no negative records were found, or, in the case of supermarkets, where the company does not expressly rule out ingredients derived from animals fed on GM crops in their own brand products. The top ethical rating is awarded to companies which clearly state that they do not use GM ingredients in their products (and, for supermarkets, ingredients derived from animals fed on GM crops).

When rating cafes, the top ethical rating is awarded if no criticisms relating to genetic modification have been found. For supermarkets, the top ethical rating is given if no own brand products contain GM ingredients or ingredients derived from animals fed on GM crops; the middle ethical rating indicates that no own brand product contains GM ingredients.

Within Ethical Health & Beauty, the bottom ethical rating is given to companies involved in the non-medical genetic modification of plants or animals or to companies that use GM in their products.

Organic

Non-organic farming reduces biodiversity, encourages irreversible soil erosion and generates run-off that is awash with harmful chemicals. Organic produce is grown or made without the use of synthetic fertilisers, pesticides, herbicides, fungicides and other man made ‘inputs’.

Within our Ethical Food & Drink and Ethical Health & Beauty research, a top rating indicates that one or more of the company’s food or drink products or personal care products respectively is approved by the Soil Association (www.soilassociation.org) or another organic certification body.

When researching High Street Fashion a company only gets the top ethical rating if they sell one or more own brand product lines made of organic material.

Within our cafés research, the top ethical rating indicates that only organic coffee is served; the middle ethical rating indicates that some organic products are available; the bottom ethical rating indicates that no organic products are sold at all.

For supermarkets, the top ethical rating is given to those companies that have the widest range of own-brand organic products (i.e. over 100 product ranges). The bottom ethical rating indicates that no own-brand organic products are sold. (This is for tables which have been updated from 2010 onwards).

Energy Saving Recommended

The Energy Saving Recommended logo was established by the Energy Saving Trust (www.est.org.uk) and guarantees a high standard of energy efficiency. The logo appears on a wide range of household appliances, including fridges, freezers, dishwashers, washing machines, tumble dryers, light bulbs, light fittings, gas boilers and heating controls. A green circle indicates that one or more of the company’s products is recommended by the Energy Saving Trust.

European Eco-label

Products that bear the EU Eco-label flower have passed a number of criteria relating to the environment and performance. The scheme covers everything from paints to tissues to computers, but remains very muchin a nascent state in the UK. A green circle indicates that one or more of the company’s products bears the Eco-label.

TCO

This category only applies to office products. TCO Development sets the world’s toughest standard for environmental and employee-friendly office equipment. To earn the TCO badge each product has to pass at least 50 tests relating to  emission levels, energy consumption, ergonomic design and ecological soundness. A top rating indicates that one or more of the company’s products is approved by TCO Development.

Ecolabels

An Ecolabel certification shows that a product or service is produced with less impact on the environment and can help people make informed choices. Some labels look at the overall environmental impact of a product or service from its inception to final disposal (life cycle assessment) whilst other labels only focus on certain environmental aspects.

Manufacturers can also produce their own labels to show that the product meets internal standard set by the company. A top ethical rating indicates that one or more of the company’s products (within the product sector being researched) bear a Type I Ecolabel (as defined by the International Organisation for Standardization) such as TCO Development, Blue Angel, Nordic Swan, the EU Ecolabel (Eco Flower), Japan’s Eco Mark, etc. Type I labels ensure that the product or service meets strict environmental standards based on life cycle considerations and are awarded and monitored by an independent third party. Companies with products bearing only the Energy Star label receive a middle ethical rating because this label only certifies energy consumption.

Rainforest Timber

This category only applies to our research on ethical furniture. The logging of rainforest timber results in the destruction of biodiversity and the oppression of the indigenous people who live there. The Forest Stewardship Council (FSC) operates the only system of forest certification recognised by NGOs. The top ethical rating is given to companies that only sell garden furniture derived from FSC forests or from forests working towards FSC certification; the bottom ethical rating is given to companies who source less than 50 per cent of their garden furniture from FSC sources or from forests working towards FSC certification.

Environmental Destruction

This category only applies to Ethical Money research and to our research on Cars. The bottom ethical rating represents involvement in a project in the last five years that has drawn widespread criticism from environmental NGOs and campaigners.

Renewables

This category only applies to our research on petrol stations. The top ethical rating indicates that the company is investing a significant proportion of its net income (about 5 per cent) into renewable energy. The middle ethical rating shows that the company has put some investment into renewables; companies who have not invested at all receive the bottom ethical rating.

CARBON Performance

Working with an excellent organisation called Brand Emissions we are beginning to publish carbon emission data for many of the UK’s brands. Brand Emissions gives the best scores to brands which are actively reducing their emissions or already have relatively low emissions or have ambitious targets to reduce emissions further and publish the evidence necessary to verify these facts.

Energy Mix

Since 2002 under the Renewables Obligation schemes for England, Scotland and Northern Ireland, energy companies have been required to source an increasing proportion of their energy from renewable sources. The minimum requirement for 2011/12 was 12% (5.5% for Northern Ireland whose order came into effect in April 2005). These schemes were introduced by the Department of Trade and Industry, the Scottish Executive and the Department of Enterprise, Trade and Investment respectively and are administered by the Gas and Electricity Markets Authority (whose day to day functions are performed by Ofgem).

The top ethical rating indicates that over 50% of the company’s energy is generated only from renewable sources. The middle rating indicates that the company generates more than 12% (or 5.5% for companies operating in Northern Ireland) of its energy from renewable sources. Companies that do not reach the minimum target are given a bottom rating.