The PSI 3.00 Scoring System

Intent scoring criteria

Intent category measures the coverage and company’s involvement in general environmental or social issues. The criteria of scoring topics in intent category are a discussion and an example of an initiative or action taken by the reporting company.

Reporting scoring criteria

Environmental reporting scores indicate transparency in publicly discussing the company’s dealing with environmental issues independent of success in making improvements. The maximum score for each topic in the reporting category is five points.

In this category, the depth of reporting is categorized into qualitative and quantitative elements.

The three levels of reporting qualitative topics are:

1. Discussion of the topic (1.66 points)

2. Initiative or action taken by the company on the topic (1.66 points)

3. Demonstration of an external context that shows how performance relates to that of peer companies, to that of industry standards,  or demonstrates recognition from third parties (1.66 points)

The five levels for quantitative topics are:

1. A discussion on the topic (1 point)

2. An external context (1 point)

3. One or more explicit numerical goals (1 point)

4. At least one previous measure of performance for the topic (1 point)

5. More than one previous measure of performance for the topic (1 point)

In the social reporting category, there are a series of human rights topics that are given full credit (5 points)  if they are mentioned.

Performance Scoring Criteria

In this scoring period, we give a maximum of two points for performance. Topics analyzed in the reporting and performance categories are identical, however the performance scores is derived from different criteria.

For quantitative topics, when the current performance is superior to that previously reported, we give one point. We give another point when the current performance is better than the industry average. Another point is awarded if the latest numerical value of the quantitative performance is above the mean value of all of the performance values we have for the particular sector analyzed. In other words, individual companies cannot be scored fully independent of data from other companies in the sector.

For qualitative topics, we give one point for an external context and another point for an indication of improvement from the previous report or year. We assign full credit for reports mentioning human rights topics.

In the social performance category on human rights two points is given  if they are mentioned.

What do the scores mean?

We normalize all the scores to the potential maximum score. Scores of subsets of the overall score are also normalized to their potential maxima.

The letter grades (A+, A, A-, B+, etc.), however, are normalized to the highest scoring company in the sector, in the same sector.

Companies with scores in the highest 4% get A+ and any in the bottom 4% get F. We assign these by dividing the maximum PSI score obtained in the sector into 12 equal parts then rounding fractional score up or down. This means that A+ and F are under-represented compared the other grades. The same technique applies to the separate categories of environmental and social scores. Thus, we grade on the curve. We assume that the highest score obtained in the sector and any scores near it represent the state of the art for that sector and deserve an A+.

Additional Information on the PSI Scoring System:

The PSI Scoring System

The Pacific Sustainability Index (PSI) uses two systematic questionnaires to analyze the quality of the sustainability reporting—a base questionnaire for reports across sectors and a sector-specific questionnaire for companies within the same sector. The selection of questions is based on and periodically adjusted to the most frequently-mentioned topics in over 900 corporate sustainability reports analyzed from 2002 through 2007 at the Roberts Environmental Center.

The Roberts Environmental Center

The Roberts Environmental Center is an environmental research institute at Claremont McKenna College (CMC). Its mission is to provide students of all the colleges with a comprehensive and realistic understanding of today’s environmental issues and the ways in which they are being and can be resolved, and to identify, publicize, and encourage policies and practices that achieve economic and social goals in the most environmentally benign and protective manner. The Center is funded by an endowment from George R. Roberts (Founding Partner of Kohlberg Kravis Roberts Co. and CMC alumnus), other grants, and gifts, and is staffed by faculty and students from the Claremont Colleges.

Our Goals

The philosophy of the PSI is described in detail in our book, Clean, Green, and Read All Over published by and available from the American Society for Quality Press*. The selection of PSI topics is constantly adapted to include topics discussed in the world’s best sustainability reports, raising the bar for better sustainability reporting in the future. We also encourage all of our readers to contact us for consultation on better sustainability reporting or for recruiting our student analysts who often look for corporate summer internships and post-graduation positions in environmental education or environmental communications.

Methodology

Our analysts download relevant English web pages from the main corporate website for analysis. Our scoring excludes data independently stored outside the main corporate web site. When a corporate subsidiary has its own sustainability reporting, partial credit is given to the parent company when a direct link is provided in the main corporate web site. We archive these web pages as a PDF files. Our analysts use a keyword search function to search reporting of a specific topic and based on their findings, they fill out a PSI scoring sheet (http://www.roberts.cmc.edu/PSI/scoringsheet.asp), and track the coverage and depths of different sustainability issues mentioned in all online materials.

Scores and ranks

When they are finished scoring, the analysts enter their scoring results into the PSI database. The PSI database calculates scores and publishes them on the Center’s website. This sector report provides an in-depth analysis on sustainability reporting of the largest, but not more than 30, companies of the sector, as listed in the latest Fortune Global 500 and 1000 lists. Prior to publishing our sector report, we notify and encourage companies analyzed to provide feedback and additional new online materials, which often improve their scores.

*http://www.qualitypress.asq.org/perl/catalog.cgi?item=H1145