For the third year in a row, Report on Business magazine has joined with Jantzi Research Inc. to rank companies that operate in Canada on the basis of their corporate social responsibility performance. Jantzi is one of Canada's leading authorities on social investment and CSR issues. The firm also provides a full range of research and consulting services to institutional clients and financial professionals.
This year, we focus on just five industries—big retail chains, shoe and clothing manufacturers and stores, food producers, fast food chains, and food and drug stores—rather than on a broad range of sectors, as we've done in previous years. Our aim is to provide greater detail on the industries we examine, and each year we will profile five different sectors. This year's companies were selected based on their size and their importance to investors and consumers. Some companies, such as Mountain Equipment Co-op, are included because of their reputation as CSR leaders.
Jantzi starts by compiling information from public documents, government and NGO sources, media reports and correspondence with key stakeholders. Each company also receives a questionnaire about its CSR practices.
Some well-known companies are not included—for example, Burger King and the Overwaitea Foods supermarket chain. Without a company's co-operation, there isn't enough information in the public domain to fairly compare it with its peers. Few private companies are ranked because most are unwilling to disclose their social and environmental data.
In the case of international companies whose Canadian operations are closely linked to their corporate parents, our evaluation is based on the parent's performance. For these companies, Jantzi relies on information provided by its partners in the SiRi Network, a group of 11 socially responsible investment research firms in Europe, North America and Australia.
Companies are evaluated and scored in six key areas: community and society, corporate governance, impact on customers, treatment of employees, the environment and human rights. Jantzi translates the combined scores into a letter grade that is meant to convey the overall impact of a company's social and environmental practices on employees, consumers, investors and communities, as well as the company's success in tackling ongoing CSR issues. The scoring criteria are weighted differently for each sector, but the letter grades give some indication of a company's performance relative to those in other sectors. Companies in the same sector with the same letter grade are ranked by their underlying numeric score.
BIG RETAIL
1. Mountain Equipment Co-op B+
(Vancouver)
Revenue: $178.4 million
Scores well above its peer group across the board, and its co-operative membership structure encourages employee and customer involvement. Also the only Canadian retailer that is a participant in the Fair Labor Association, a non-profit coalition that works to improve labour standards and working conditions worldwide.
Bragging rights: MEC is committed to generating zero waste in its operations. In 2004, it diverted about 76% of waste from its stores that would otherwise have gone to landfill.
2. Ikea B
(Sweden)
Revenue: 14.8 billion euros
The furniture giant aims to reduce greenhouse gas emissions, seeks alternatives to potentially harmful substances and promotes sustainable forestry. Like other big-box retailers, however, Ikea has faced significant community opposition to traffic near its stores.
Bragging rights: Family-friendly Ikea offers progressive work-life balance incentives for working mothers and child care for customers.
3. Hudson's Bay Co. B-
(Toronto)
Revenue: $7.1 billion
HBC's chains include the Bay, Zellers, Home Outfitters, Fields and Designer Depot. HBC ranks high for employee benefits and has made efforts at ethical sourcing, but its recent endorsement of the China Code of Conduct has been criticized.
Bragging rights: HBC has cut energy use by pumping in water from Lake Ontario to cool its Toronto head office and flagship store.
4. The Home Depot C+
(U.S.)
Revenue: $73.1 billion (U.S.)
Home Depot has innovative policies and programs to manage product safety and to treat customers fairly. But it has faced several workforce discrimination lawsuits in the U.S. Executive pay is also high--U.S. CEO Robert Nardelli's 2004 compensation of $30.5 million (U.S.) was the highest among the retailers we surveyed.
Bragging rights: Home Depot's community initiatives, particularly projects to build housing for the underprivileged, are supported by employee volunteer programs. In Canada, the chain's Team Depot donated more than 400,000 hours in 2003.
