Reputation rater rates poorly

Friday 12th November 2004 1 Comment

The logo of RepuTex, the Australian outfit that this week bestowed unrequested "social responsibility ratings" on 20 New Zealand companies, resembles the whirlpool that forms when you pull out the bath plug.

Shoeshine suspects it's intended to suggest subliminally what will happen to the reputations of firms that won't play RepuTex's game.

But judging by the tactics used in the inaugural New Zealand exercise and the quality of the "research," RepuTex should be looking to its own good name.

Some of the ratings are just ludicrous.

For example, Nuplex Industries finds itself in the category "materials and paper and forest products".

Along with Fonterra, Affco and Alliance Group, it cops the lowest rating handed out to a New Zealand company, a "very low" C+.

One reason given is "the nature of the company's business (specialist waste collection, treatment and recycling) indicates that it has a high environmental footprint".

Really? The activities referred to are those of the Environmental Services division, which accounts for just 4% of Nuplex's revenue.

Having confused a minor activity with the whole of the company's business, RepuTex's "analysts" don't even seem able to distinguish between a problem and a solution.

Surely a business that specialises in the safe collection, treatment and recycling of hazardous waste from industry and from the medical and quarantine sectors deserves the highest of environmental accolades.

If RepuTex wants to worry about Nuplex it should look at the other 96% of its business making resins, specialty raw materials for manufacturing, and specialty construction products.

RepuTex complains Nuplex "doesn't release comprehensive information about its environmental policies, management systems and performance into the public domain".

How comprehensive do they want it? Three pages of the annual report are devoted to environmental reporting.

These detail exhaustive independent audits and millions of dollars worth of investment in reducing inputs, avoiding undesirable outputs, and environmental safeguarding.
But these count for nothing in the ratings.

Another organisation that seems a little hard done by is ACC.

RepuTex says "with the exception of a few strategies in place to reduce its office based impacts" ACC "presents little information on how it manages its direct and indirect environmental impacts".

Oh dear. If this is the standard of analysis RepuTex achieves using public records it's unlikely too many companies are going to pay up for a "requested" report.

But such clownishness shouldn't stop firms from noting RepuTex's serious political agenda.

Take the Orwellian comment on Carter Holt Harvey: "The company does not appear to have developed a dedicated human rights policy framework, nor has it implemented procedures to develop human rights awareness within the workforce and supply chain."

Like ACC, Air New Zealand, Tenon and Mighty River Power, Fletcher Building gets demerit points for giving "no public commitment to international human rights instruments", as if a platitude in the annual report is going to have any effect on human rights abuses in Kraznuchystan.

Or take the blatant attempt to arm-twist Fisher & Paykel Appliances: "no strategies are available to suggest that FPA ... appraises socio-economic need in the community when enacting philanthropic initiatives."

The message is clear. Giving away your shareholders' money isn't enough. You won't get a good rating unless you do it the RepuTex way.

The most sinister aspect of the RepuTex exercise is its covertly coercive nature.

It can be no coincidence that in the 2003 Australian ratings of 100 companies, 22 of the 25 top-rated companies provided RepuTex with non-public information. In the bottom 25, just seven did.

In this week's New Zealand exercise, all five top-rated companies provided information. None of the bottom five did.

RepuTex will no doubt argue that's because companies that have good track records are more likely to be willing to take part than those with bad ones.

That may be true. But it doesn't follow that companies that don't take part necessarily have bad records and should have their names blackened as punishment.

For example, Fonterra came first last year in Massey University's corporate environment responsiveness survey and won a gong in Human Capital magazine's employer of choice awards.

But those cut no mustard with RepuTex, which gives the company a "low" rating for workplace practices and a "very low" for environmental impact.

Affco, NGC and other companies also get "very low" or "inadequate" ratings for their environmental impact simply because RepuTex couldn't find much information on the subject.

Giving a company a poor rating on that basis is like putting people who won't provide a report detailing why they are not a child molester on Deborah Coddington's paedophile register.

What is being rated is not the companies' environmental, social or workplace records but the amount of information they choose to publish.

Still, the approach seems to work. Fonterra says it will give RepuTex information next year.

Firms that take this line had better be ready to spend a lot more time and resources on their "non-financial reporting" activities.

Word has it John Fairfax Holdings will launch its own version of a rating system here in the next couple of years.

And it will probably pay to keep your head down.

Caltex Australia, whose chairman last year accused RepuTex of blackmail, this year fell from a "low" B to a "very low" C+.

Comments from our readers

On 13 December 2010 at 3:58 pm Jenny Maxwell said:

Yet more small minded Australian rubbish. I love how the Australians come into this country and seem to think that it is their country to manipulate. What business is it of theirs anyway? We (New Zealand) operate totally different to these over bearing bullies and slanderers and I think that it is about time that we told them to GO HOME. I have a very small freight business and would hate the thought of being tackled by these idiots. With all of the flying back and forth from NZ and the astronomical amounts of paper that these idiots have wasted, maybe they should be looking at their own carbon footprints.