Relationship between the Content of CSR Reports and Codes of Ethics with Green Rankings for Companies in the Energy Sector

• In Event: Public Interest

Abstract

The energy sector has faced greater scrutiny by the government and consumers in recent years. The federal government has enacted a number of laws that penalize companies whose activities are not environmentally friendly, reflect a lack of sensitivity to social welfare issues, or exhibit a pattern of unethical behavior. In addition, consumers mistrust and protest against companies that are guilty of these activities. As a result, many companies are increasingly giving serious thought to and committing resources toward “going green.” This study investigates the relationship between key terms used in business codes of ethics and in CSR reports with a company’s green ranking for Fortune 500 companies in the energy sector.

Newsweek’s 2012 green rankings for companies in the energy sector were compared with ratings that are derived in this study based on companies’ uses of key terms in business codes of ethics and in CSR reports. The ratings derived in this study are intended to evaluate the extent to which each company communicates its emphasis on business ethics and CSR. To evaluate codes of ethics, word searches of three terms: “integrity,” “objectivity,” and “honesty” were counted by electronic means. For each company, the frequencies for all three terms were combined to produce a code of ethics total. To evaluate the CSR reports word searches for the words “environment,” “community,” and “economy” were performed for each company. The frequency of the use of each term was recorded, and combined frequencies were used to develop a CSR total. The codes of ethics and the CSR totals were then compared to Newsweek’s 2012 green rankings.

The results show that a negative correlation exists between the number of key words used in business codes of ethics and the company’s green ranking. That is, the higher the frequency of uses of key ethics words in business codes of ethics, the worse the green ranking is for the company. No correlation was found between frequency of use of key words CSR totals and a company’s green ranking. There are certain limitations to these findings, as additional or alternative words company might better communicate a company’s activities related to going green. Further research may shed further light on the importance of key words in gauging the content communicated within codes of ethics or in CSR reports.

Authors

• James H Thompson, Central Washington University

• Bryan Betts, Central Washington University

• Feitong LIu, Central Washington University

• Shannon McGowan, Central Washington University