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When Pigs Fly: Halliburton Makes the Dow Jones Sustainability Index

RP Siegel | Friday September 24th, 2010 | 15 Comments

When we think of companies that stand out as role models of exceptionally responsible behavior in the realm of sustainability, Halliburton is hardly one of the first to spring to mind. Which is why I was a little surprised to learn that “the company we love to hate” was just named to the Dow Jones Sustainability Index (DJSI) as both a North American and a World leader. This means that they were considered to be in the top 10% among companies in the oil field services sector.

Though the circumstances seem somewhat dubious, the selection was made, according to DJSI, based on “thorough analysis of corporate economic, environmental and social performance, assessing issues such as corporate governance, risk management, branding, climate change mitigation, supply chain standards and labor practices.” The DJSI focuses on how a company recognizes the risks and opportunities arising from sustainability issues in its business strategy as well as the company’s economic, environmental and social impacts.

Halliburton was selected as one of seven world leaders and two North American leaders out of forty companies that applied, winning best in class for Human Capital Development, Standards for Suppliers, Corporate Governance, and Customer Relationship Management. These rankings were apparently enough to overcome lower scores in the environmental and social categories.

There is a bit of an irony here, in that Halliburton’s addition to the index fills a vacancy that occurred when BP was removed based on an “extraordinary events” clause in the index guidelines.  According to a DJSI press release back in June, “The extent of the oil-spill catastrophe in the Gulf of Mexico and its foreseeable long-term effects on the environment and the local population — in addition to the economic effects and the long-term damage to the reputation of the company — were included in the analysis leading up to BP’s removal.”

Meanwhile, Halliburton is clearly implicated as a contributor to the Deepwater Horizon disaster. The extent of their responsibility is still pending a complete investigation. BP leaders are claiming that Halliburton played a significant role, particularly in their efforts to seal the Macondo well with cement which did not hold. But for whatever reason, DJSI saw fit to give them the benefit of the doubt on this.

Perhaps even more ironic is the fact that Corexit dispersant manufacturer Nalco, was also named to the list.

It makes you wonder if they had had the list back in 1984, whether Union Carbide would have been named to it with special recognition.

I visited Halliburton’s web site to check out their most recent sustainability report. I had to go back to 2008, since for some reason they did not show one for last year. In the report they disclose the fact that the last time they were assessed by DJSI, they were judged below average in the following categories:

  • Codes of Conduct/Corruption/Bribery
  • Releases to the Environment
  • Operational Eco-Efficiency
  • Stakeholder Engagement

They were not included in the index that year.

This is the point in the story where I put up my hands and say, “really folks, I’m not making this up.” Check the links. This really happened.

And if this all seems rather Orwellian to you, well then, welcome to my world.

RP Siegel is co-author of the sustainability thriller Vapor Trails, about an oil company and their impact.

Follow RP Siegel on Twitter.


▼▼▼      15 Comments     ▼▼▼

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  • Jen Boynton

    Great post RP. This is pretty unbelievable.

  • http://www.GreenBusinessOwner.com Scott Cooney

    Well I’ve officially lost all respect for the Dow Jones organization. A few years ago Duke Energy made the list despite being one of the top 3 carbon emitters in the country, because they were ‘talking’ about energy efficiency. Guess I should have just called it a day back then. Halliburton, more than any other company I can imagine, deserves to be on the Dow Jones Malfeasance Index.

    Thanks for the great article, RP.

  • Mark Holliday

    Wow. The credibility gap is becoming a chasm!

  • http://www.ecostrategygroup.com KJ Janowski

    This is a great example of why readers should understand what these ratings systems really mean before taking them at face value. Sustainability doesn’t mean the same thing to everyone. SAM rates companies for the DJSI and uses publicly available information as well as a questionnaire. The weighting of environmental and social factors is shown here http://bit.ly/c81UmE. You can see that environmental factors get 3% of the weight (and then some for specific industry weightings). Social factors get ~22% of the weight (plus some depending on industry factors). SAM doesn’t make its questionnaires widely available but the 2009 sample questionnaire had 46 questions on it and only about 5 of those had to do with environmental or social responsibility. What they’re assessing is the sustainability of the business itself which has more to do with financial and governance factors than with environmental and social factors – at least as Dow Jones and SAM seem to see it.

    • L Carter

      Thank you for pointing out the obvious, sustainability does not equate to environmental friendliness. We’re talking big companies involved in petrol processing. The processes, no matter how refined, will always be messy and not enviornmentally friendly. That’s at least in the terms of the eco-environmental friendly groups who want zero environmental impact. If we want zero environmental impact then we need to simply remove humans from the equation. And, that is not going to happen without a major environmental disaster – Armageddon. So we are here for the long run. We can always improve and that is exactly what large successful companies do. Whether it’s BP, Halliburton or other. There growth and prosperity generally translates to growth for the community/world at large.

  • Jennifer Elder

    Truly disheartening. Apparently the guru’s at DJSI need to require independent assurance of the reporting.

  • http://www.effectpartners.com Todd Troha

    I find it rather unbelievable that there is an “oil field services sector” (technically Oil Equipment and Services) that is being rated in a sustainability index at all. What’s next? Realizing that there is a continumum in every sector, we should give ourselves permission to clearly state that there are some sectors that flat-out aren’t sustainable.

  • http://www.kiwano.ca Sofia Ribeiro

    I completely agree with Scott. It’s becoming harder and harder to believe in these indexes.

  • http://www.sustaincom.org Don Carli

    There is nothing even remotely “Orwellian” about it. Inclusion in the DJSI Indexes has never meant that an included industry or company is sustainable or without problems.

    It was designed to include and encourage continuous triple bottom line performance improvement among companies, a dynamic that Dow Jones Sustainability Index Advisory Board member John Elkington described in his seminal 1997 book “Cannibals with Forks.”

    Some may not agree with the “best-in-class” sectoral approach or the weighting given to the various factors employed to qualify the companies included in the DJSI Indexes, but they should realize that the rubric employed is inclusive and quantitative by design.

    The DJSI indexes were intentionally designed to encourage “virtuous competition” by including problematic industry sectors and companies that might fail to pass the binary moral or ethical screens typically employed by “socially responsible” funds.

    Knowledgeable investors understand that the DJSI Indexes are not designed to create Kosher pigs, rather they were designed to encourage companies toward increased transparency and provide market-based incentives for them to continuously improve their triple bottom line performance.

    Rather than questioning why Halliburton or Nalco are in the DJSI Indexes you should be asking how and why they and other “problematic” companies should compete for inclusion and raise the bar for the entire sector’s sustainability.

    • http://www.triplepundit.com/author/bob-siegel/ RP Siegel

      Believe me, Don, having spent many years in corporate America, reaching into the upper levels of the F500, I understand the importance of metrics. In fact, I often decried the fact that the smartest guys in the room were not the ones creating the metrics, but were, rather, the ones gaming them for personal gain or to get onto certain lists. At the end of the day, the outcomes need to stand up to a test of reasonableness. This one clearly doesn’t. This suggests to me that the metrics need to be re-examined.

  • http://www.gina-mariecheeseman.com Gina-Marie Cheeseman

    I, too, have lost respect for the Dow Jones organization!!!!

  • steve

    I believe that Unilever also tried the same stunt last year to get in DJSI.

  • Javier

    This is one more of the reasons why DJSI is losing its credibility, this year when SAM published the results (two weeks ago or so) it was surpring to see how it was possible that all the companies had the same rating in eco-effiency as last year. The consultancy firm I work for phoned SAM asking for the reason and they said that they had no time to check the responses!!!! so they have given the same grades. Come on!!!! how can you trust that people!!

  • http://www.facebook.com/people/Thad-Daly/100001352598528 Thad Daly

     “exceptionally responsible behavior”  Does this also apply to “TriplePundit”? If so why the picture of Cheney on the Halliburton icon? He resigned from Halliburton 12 yrs ago,didn’t you read about it? He has had no connection or dealings with Halliburton since.

  • http://www.facebook.com/people/Thad-Daly/100001352598528 Thad Daly

    Oh forgot to mention the Halliburton that some fixated people love to hate was Halliburton-KBR the construction subsidiary that cease to exist 4 yrs ago when Halliburton dumped,, sold off, got rid of at a loss.because ofmismanagement and corruption.