Index Ranks Consumer Perception and Investment Analyst Perspectives Against Companies’ Sustainability and Corporate Responsibility Efforts
Microsoft Corporation, Whole Food Market, Inc. and Kellogg’s Grab Top Spots
HARLEYSVILLE, PA, March 19, 2007 — The Natural Marketing Institute (NMI) today released a ranking of the fifty most environmentally and socially responsible companies that is for the first time based on both a consumer perspective and investment analyst ratings of corporate sustainability and responsibility.
Developed and marketed by NMI, a leading health, wellness and sustainability market research and consulting firm, The LOHAS Index™ reveals that consumers are harsher critics of companies' sustainability practices than the analyst community, and often are misinformed or unaware about a company's corporate social responsibility (CSR) programs.
"More than ever, consumers are eager to learn about a company’s CSR practices," said Steve French, NMI managing partner. "We were astonished at the size of the disconnect between those companies who operationally rated well with the analysts but received low scores based on consumers’ perceptions. Organizations need to provide more effective messaging to communicate CSR programs to consumers – focusing on the benefits of CSR – which have been proven to provide higher levels of return on investment in the form of brand loyalty, purchase intent and decreased price sensitivity.”
The fifty companies in the LOHAS Index were selected from the Russell 3000®, a stock index consisting of the 3,000 largest publicly traded U.S. companies, representing about 98 percent capitalization of the entire U.S. stock market. Following are the top ten companies in The LOHAS Index that are doing well in terms of doing a good job of both incorporating CSR in their operations as well as communicating it to consumers:
1. Microsoft Corporation (MSFT: Nasdaq)
2. Whole Foods Market, Inc. (WFMI: Nasdaq)
3. Kellogg Company (K: NYSE)
4. McDonald's Corporation (MCD: NYSE)
5. The Home Depot, Inc. (HD: NYSE)
6. The Walt Disney Company (DIS: NYSE)
7. United Parcel Service, Inc. (UPS: NYSE)
8. The Coca-Cola Company (KO: NYSE)
9. Starbuck's Corporation (SBUX: Nasdaq)
10. PepsiCo, Inc. (PEP: NYSE)
The LOHAS Index measures CSR performance through consumer perception of sustainability and investor analysis of actual sustainability across seven criteria, including: community, corporate governance, diversity, employee relations, environment, human rights and product. The LOHAS Index can be used to identify strategies for companies to better align their CSR programs with their respective marketing and consumer outreach efforts.
Companies are listed in The LOHAS Index based on their composite score. A company’s rank on the Index is a function of both a financial analyst rating and consumer perception. Those companies ranking at the top of the list are generally doing a good job of both acting sustainably and communicating their sustainability efforts effectively. Companies falling in the middle of the Index are under-performing their higher-ranked peers either in actual sustainability efforts or in communication of those efforts. Finally, those companies at the bottom of the Index might benefit from improving their actual performance as well as what they communicate to consumers.
Company Selection: NMI started with the Russell 3000® and then identified 75 of the largest, publicly traded, U.S. based companies that also are widely recognized by consumers. NMI focused on companies, not brands, as the same granularity of data is not available for brands. It chose large companies to increase the reliability of the data. Therefore, the results of The LOHAS Index are intended to be illustrative examples of the largest and most recognized companies, though not an exhaustive view of all companies.
Consumer Perspective: NMI recently queried 1,000 U.S. adults within its LOHAS Consumer Trends Database™ (LCTD), which is representative of the U.S. adult population and matched to U.S. Census demographics, about how responsible they perceive each company to be with regard to the environment, the communities in which it works, and its employees. A 3-point scale was used (very responsible, somewhat responsible, and not at all responsible), and respondents were also given the option of saying they are not familiar with the company, or they are not familiar with the social responsibility of the company. The result is the percentage of consumers who state that each company was very/somewhat responsible, based as a percentage on the number of respondents who were familiar (in general) with the company.
Investor Standpoint: Independent investment research firm KLD Research & Analytics’ PASS™ (Portfolio Advisor’s Screening Service) database provided the investor data for this analysis. PASS provides environmental, social, and governance research on corporations. KLD continuously updates company information using data from public documents, non-governmental agencies, government agencies, press searches, trade journals, industry and regional publications, and direct contact with the companies. The full scope includes analysis of more than 280 data points.
Ranked Scores: NMI created a weighted model of the eight variables, including the seven KLD criteria plus the normalized LCTD score. The final score was calculated by multiplying each of the eight criteria by the criteria’s respective weight, and then adding those scores together. This created a ranked list of the 75 companies included in this analysis, of which the top 50 comprise The LOHAS Index™.
The Natural Marketing Institute is a strategic consulting, market research and business development company specializing in the health, wellness, and sustainability marketplace. Its capabilities focus on the well-being of people and products, and the environmentally and socially responsible sustainability of the planet. For more information on The LOHAS Index and NMI, visit www.LOHASIndex.com or www.NMIsolutions.com.
LOHAS is an acronym that stands for Lifestyles Of Health And Sustainability. LOHAS consumers are a segment of the population, roughly 1 in 6 U.S. consumers (or 35 million U.S. adults), with strong environmental and social values, and who base many of their purchase decisions accordingly. LOHAS consumers are used to predict upcoming trends in the market and are the portion of the population that have been identified as the “key influencers.”
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