Friday, March 30, 2018

Benchmarking Against Companies Judged to have good Sustainability Management – Part 2

In the previous blog, I provided the results of what I consider to be a content (textual) analysis of the latest annual reports of 12 chemical companies.  These 12 companies are on the Dow Jones Sustainability Indices (DJSIs) based on an evaluation of their economic, environmental, and social performance.

My assumptions in this content analysis is that certain words used in the annual reports would be indicative of the interest of the company in what those words represent – namely a company’s propensity for sustainability practices.  The words used in the analysis are:

code of conduct
human rights

(In the previous blog, I state how I did the content analysis.)

As a follow-up to the previous blog, I selected 10 chemical companies not on the DJSIs to do the same content analysis on those 10 companies that I did on the 12 companies listed in the previous blog.  These 10 companies are:

Johnson Matthey

I was interested in doing this to determine if the content analysis might indicate a higher propensity for sustainability practices for the companies on the DJSIs compared to companies not on the DJSIs. 

For the 12 companies on the DJSIs, words in the above table appear an average 63 times in the annual reports.   For the 10 companies not on DJSIs, the words appear an average 43 times, 33% less often.   I think this 33% is significant – it suggests that based on annual reports, the 12 companies have a higher propensity for sustainability practices than the 10 companies.

While analyzing the annual reports for the 12 chemical companies listed in the previous blog and the 10 companies listed in this blog, the annual reports for the European chemical companies impressed me more than the reports for the American companies with respect to an emphasis on sustainability.  

So, I separately compared the word averages of the 13 European reports to the 4 American reports and found that words used to reflect sustainability practices appear an average of 64 times in the European reports versus 13 times in the American reports.

I believe these are significant differences (64 versus 13) and reflect social and institutional differences between Europe and America with respect to issues of sustainability.

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