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Methodology
ICValue Methodology
ICValue’s proprietary methods build up to a company
score in 12 coordinated steps, all facilitated by our unique
combination of environmental science, software applications
and modeling, information synthesis training and quality assurance.
Business Sectors
1) Business Sectors to be reviewed are chosen based on scope
of the sector’s environmental footprint, either in resources
used (as in forest & paper), or in emissions and wastes
(as in electricity generation), or in long-term environmental
risks (as with the financing of suburban sprawl).
Regions
2) Regions to be focused on are selected on the basis of large-scale
economic, industrial and cultural predisposition, such as
is seen in the Great Lakes Basin, in the Mid-Atlantic-Chesapeake
Bay, in New England, and other areas of the USA. For the present,
our emphasis is on regions where the general public has shown
a positive appreciation for healthy ecosystems and sustainability.
Company selections
3) Company selections within a sector and region are based
on three operational criteria: (i) The potential for significant
environmental impact in the region, where through a number
of major facilities (drawing on the facilities reported to
the US EPA TRI data base, or equivalent level of business
registrations); (ii) A financial performance measure in which
net loss averaged over two years is not larger than 10% of
net sales; and (iii) Not more than 6 companies per sector-region,
of which only one is headquartered outside the U.S.
Data Sources
4) Data Sources are drawn principally from each company’s
environmental or sustainability reports, which, when supported
by third-party audits, are coming to be seen as equivalent
to a company’s annual financial report to shareholders
and to the public. When company sources are not available,
data are drawn from government agencies, other NGOs, and from
review of compilations of press reports.
Indicators
5) 160 Indicators are recognized as providing the most basic
information about a company’s practices and performance.
Many indicators express the presence (or absence) of certain
management practices, specific data reports, time-trend outcomes,
and environmental audit results, considered in sets of up
to four indicators for each of the 50 standard metrics.
Metrics
6) 50 Metrics (measure outcomes) have been differentiated,
two to seven for each of 15 performance criteria (see Criteria
& Metrics). The 50 metrics allow quantification of
all important elements of environmental impact, risk abatement
or conservation of ecosystems services, ranging from management
systems, to transparency and water, air, land, energy, biodiversity
and human health conservation. Each metric score ranges from
0 (least) to 2 (highest) with a neutral mid-range of 1.
Customized Software
7) Customized Software for scoring and reporting has been
developed from a combination of Access and Excel, to allow
rapid recording of indicator results and their integration
into a metric score. A 40-page guidebook directs all staff
analysts in determining what information input leads to specific
scoring outcomes. All results are brought together in the
Access-based indicator summary page, which then builds toward
an Excel-based data report.
Criteria Score
8) Criteria Score is the sum of all the scores of the individual
metrics (up to seven) that comprise the criterion (see Criteria
& Metrics link for full definitions of the 15 criteria
making up overall environmental performance). Five to 10 percent
of all scores are repeated by a different staff analyst to
maintain a quality assurance process.
Weighting
9) Weighting should, in principle, treat the 50 metrics equally,
but some business sectors have land management that affects
biodiversity while other sectors do not, some sectors have
toxic emissions and others do not, and so forth. Accordingly,
when equal weighting of metrics would require data that are
unavailable, such needs are avoided by a shift in weighting
to zero for these metrics, while increasing the weight for
the metrics that are important for that sector. Some shifts
in weight may only be a subtle increase or decrease (see the
weights shown in the Data Appendix provided with each region
or company report).
Criteria Cluster Score
10) Criteria Cluster Score allows a simple aggregating of
somewhat related criteria (for example, “water”,
and the “watershed management” that affects water
supplies). Eight such clusters are described in the attached
link, Criteria Clusters.
The performance of each company is scored and evaluated in
the company report (see the Pilot
Case) using results for each of the eight clusters of
criteria.
Company Total Score
11) Company Total Score will always range between 0 and 100
(after considering re-weighting for any criterion deleted
from certain sectors). These scores allow for nine simple
letter ratings, AAA to C (see the
ICValue Scores link), conveying
a composite of total performance in all of the areas covered
by ICValue metrics. A plus (+) or minus (-) is added to show
relative positioning of the company score within these major
rating categories.
Sector Average Score
12) Sector Average Score defines the average performance of
all the companies reviewed for a specific sector in a region.
This local averaging allows companies to be rated in comparison
to local competition for recognition of environmental accomplishments.
Very many companies are found to perform near (above or below)
the mid-range (leading to a sector average that is a little
better than the mid-range of 50). Some companies do very well
in the region, however, and are recognized in ICValue’s
top category as “Conservation Asset Builders”.
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