Posted by: Dace Kavasa | 4 July 2010

Ranking companies in Latvia – Sustainability Index or “Ilgtspējas indekss”

We started our blog with a statement that „CSR Rankings Are a Good Start”. And shortly after that  – 27 April 2010 – the first results of 2009 Latvian sustainability index were presented. See more at www.ilgtspejasindekss.lv

A national index made for the companies in Latvia. Top 500 companies were invited to participate, but in principle any commercial organisation could (and did) take part. Index is designed around 5 sections:

1)      Company profile & strategy

2)      Market relations

3)      Society

4)      Environment

5)      Labour market

An excellent starting point to rise awareness on CSR issues and initiate company thinking around CSR. With just over 100 questions, the Index covers key CSR themes, putting weight more on labour market and environment and less on the other three points.

One of the elements of this Index is creating some competition between companies. The individual results are not made public by the Index managers, but it is up to the participants to decide how they use the data. Nevertheless, the companies are ranked in 4 categories: platinum, gold, silver and bronze.  27 April results placed companies in Silver and Bronze categories.

More details you can find on the index website, but what are the consequences?

On the positive side – it has caused the CSR landscape in Latvia to move slightly. Many realised that what they thought was „business as usual” is actually part of being socially responsible and by putting only 15% weight of results on the „society” with even less weight on charity within it, one of the „myths” of the CSR – that it is about giving back to society in one or another form of charity action – does not necessarily mean one is responsible, or even less so – sustainable.

The rating creates competition. Yes, it is good – competitors looking at the results and at least starting to think – does it mean our competitors are doing something better, does it affect our financial baseline data? I hope the companies do. Especially those who fell outside the 4 categories.

Nevertheless  – the „rating” nature of the Index also poses a risk that some may enter the process just for PR sake, making ad hock documents and information channels where they can gain some points, without really looking at the essence of how CSR can contribute to the strategy and long-term development of the company. Being a sceptic on post soviet mentality I tend to think that too many will be doing this as part of the „tick in the box”.  Or maybe I am just too sceptical? A quick search on the web has led me to think that participating companies have not used the gained status on PR. So, the ranking has not been as risky as I may think. Or – maybe there is just too little knowledge on how to use  the results for promotion of own business. Or, maybe I just need to put my skepticism to rest.

To give a true picture we will have to wait for assessment of status of companies in 2011. One could say, 2010 served as baseline to measure progress against.  There are a couple of months to go though and companies who take the index  and CSR impact seriously still can take action for longer term impact!

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