CSR Deep Dive: Becton Dickinson

After writing my recent posts about changes in CSR rankings, I thought it would be interesting to publish a case study looking at Becton Dickinson, a long-time CSR darling which recently experienced some negative publicity surrounding its ethical practices.  BD earns consistent acknowledgement in many of the CSR rankings I have discussed in this blog over the past year, which is particularly notable for a company with a minimal name in consumer consciousness (many of the other consistent winners are companies like HP, Dell, GE, and Intel).  In light of this, I was curious to understand how has its perceived ethical breaches have (or have not) been factored into some of the top CSR rankings.

Let’s start by establishing what Becton Dickinson is.  Google Finance describes its major business as follows:

Becton, Dickinson and Company (BD) is a medical technology company engaged principally in the development, manufacture and sale of a range of medical supplies, devices, instrument systems and reagents used by healthcare institutions, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. BD’s operations consist of three business segments: BD Medical, BD Diagnostics and BD Biosciences. On November 19, 2009, BD acquired 100% of HandyLab, Inc. (HandyLab), a company that develops and manufactures molecular diagnostic assays and automation platforms.

From a financial perspective, there is evidence that BD is a good buy, at least if you consider Warren Buffett to be the oracle of smart investment decisions.  Yet from an ethical perspective, there are questions to be asked.  A recent article published in Washington Monthly exposes anti-competition questions faced by BD and its industry.  According to the article, the company, which controls 70% of the syringe market, has been facing challenges from the U.S. Justice Department since 1960 for “price fixing, buying up patents to kill its rivals’ innovations, and forcing hospitals to buy its syringes to get other essential supplies, some of which were only produced by BD.”  The article goes on to describe the stronghold large medical device companies like BD have over nearly every hospital in the nation.

Not surprisingly, BD’s most recent sustainability report offers up its own framing of what makes it a CSR leader.  The company outlines a corporate purpose of “helping all people live healthy lives” by “reducing the spread of infection for healthcare workers and patients”, “advancing global health” through improved immunization and diagnostics, “enhancing therapy” by working with partners in pharma and biotech, and “improving disease management.”  And while compliance and ethics falls within the scope of the CSR issues it frames for itself, its treatment of its overall ethical philosophy remains non-specific.

Apparently, BD’s most recent CSR report does the job, at least in the eyes of some of the CSR rankings groups.  Becton Dickinson fares well in Ethisphere’s Most Ethical Companies as well as in the most recent lists produced by Newsweek and DJSI, but fails to make it into the most recent Corporate Knights and RiskMetrics Group rankings or the most recent CRO.

So why does Becton Dickinson make it into some CSR rankings but not others?  While it would be most helpful to hear insight from the ESG ratings groups producing the rankings, I will offer a guess in hopes that my hypothesis will be challenged.  I would venture that BD’s success in the rankings can be attributed to a combination of how significantly ethics is weighted in each ranking and what criteria each ratings group uses to evaluate this factor.  But while the former of these two criteria is shared openly in the CSR rankings methodology overviews published by each company, the latter is rarely if ever described for the public to understand, making it impossible for me to interpret the results properly.  So, CSR rankings firms, it’s on you.  Is my guess correct, or are there other factors at work here?

Photo credit: joeflintham