By CSRwire contributing writer Bill Baue

What is transparency worth when it comes to corporate social responsibility (CSR)? Everything, according to The CRO (Corporate Responsibility Officer), which recently released its annual list of the 100 Best Corporate Citizens. Since the list's founding a decade ago by Marjorie Kelly (now of Corporation 20/20) under the Business Ethics brand based on KLD Research & Analytics' proprietary environmental, social, and governance (ESG) research, the methodology behind the list has shifted to prioritize transparency. Now, the list is based entirely on publicly available data using best-in-class ESG research from IW Financial.

CSRwire members placing high on the list include IBM (the top information technology company, and third overall), Johnson Controls (22nd), Gap Inc. (first in the retail sector, and 24th overall), and Becton, Dickinson (97th).

Of course, transparency is highly valued in the CSR world, though it sometimes monkey-wrenches attempts to rate and rank CSR performance. Oekom, the Munich-based socially responsible investing (SRI) research firm, downgraded companies for failing to respond to its questionnaires, and struggled for years with the irony that a company could perform well in CSR yet get low ranking because it lacked response capacity. (The firm eventually shifted to conducting "outside" ratings based on public information before conducting "inside" ratings based on requested info.)

The CRO's shift to rating solely on public information has met criticism for the opposite dynamic -- that companies can conceal poor CSR performance, or get a pat on the back for disclosing poor CSR performance. The SRI community is currently engaged with the Securities and Exchange Commission and the Financial Accounting Standards Board over lax corporate disclosure rules for social and environmental issues, even when they have financially material impacts. In other words, regulations currently allow companies to withhold significant social and environmental liabilities -- and The CRO methodology, which is based solely on publicly available information, could highly rank a company with concealed social and environmental risks.

"A company can be a major polluter, for example, but because it publicly acknowledges it and is 'working on it,' it moves way up on the list," points out Michael Kramer, director of social research at Natural Investments, a SRI financial advisory firm. Kramer also critiques The CRO’s shift from including smaller companies, where much CSR innovation seeds. "With their move to only large-cap companies last year, gone are companies like Green Mountain Coffee Roasters (the winner in 2007), Timberland, Herman Miller, Dell, Gaiam, Pitney Bowes, Heartland Financial, Ecolab, McGraw-Hill, Whole Foods, and Salesforce.com. In fact, only 21 companies on the 2007 list made the 2008 list, giving the concept of portfolio turnover entirely new meaning."

Kramer (who wrote his critique before the 2009 list was released) contrasts this with names on the 2008 list: Raytheon, PG&E, El Paso, Freeport-McMoran Copper & Gold, ITT, Lockheed Martin, Corrections Corporation of America, GM, and Dow. "While there's no perfect rating process," he concludes, "when a methodology becomes so radically different from its predecessor while maintaining the same title, and the new standards force 4 out of 5 former winners off the list and replaces them with seriously questionable members, the credibility of the rating system is undermined."

Chris MacDonald of BusinessEthicsBlog.com questions The CRO’s own transparency, asking for disclosure of this year’s methodology. "The methodology will be published, along with the feature story, in the CRO issue and subsequently posted online," The CRO responded.

Disclosure: CSRwire contributing writer Bill Baue has written articles for The CRO as well as Business Ethics.

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