We’re approaching corporate AGM season. It’s an inspiring time of year. As the birds begin nesting and the spring flowers bloom, countless annual reports with pictures of smiling children and windmills will be printed on glossy recycled paper, reminding us all of the ability of companies to pretend that they care about something other than making money.

Cynical? Well maybe, but having read through annual reports of some of the most polluting companies on earth, it w0uld be naieve not to be cynical about the extent of corporate greenwashing.

To help separate the wheat from the chaff, we thankfully have a range of corporate sustainability rating services that ruthlessly probe into the inner workings of even the most byzantine corporate behemoth to reveal ‘true sustainability’ to hapless investors. What’s more, there are so many sustainability awards now that nearly every company is guaranteed to win a prize. It’s good for business, good for the ratings agencies, and good for the environment. Surely?

There are so many awards and sustainability ratings that it is getting to the point that we need a rating system to rate the rating systems. An award winning award. Great. That should clear things up.

I started to wonder about the value of sustainability ratings when looking through the annual reports of Australia’s major banks. Last year, ANZ won the Dow Jones Sustainability Index (DJSI) award for the world’s most sustainable bank, right around the time they were signing off on a loan to refurbish one of Australia’s most polluting coal power stations.

Luckily for ANZ, the Dow Jones Sustainability Index only really looks at the process that companies go through in making its decisions – not what the actual outcomes are. Processes are clear cut and easy to benchmark. Real world impacts are messy – often literally so.

But what does it mean for the Dow Jones Sustainability Index to give their ‘best of category’ sustainability award to a bank that, until late last year was openly bragging on it’s website about being the biggest financer to the Australian coal industry? Surely climate change ranks pretty highly in their sustainability criteria?

In all likelihood, DJSI probably didn’t know about ANZ’s role as the biggest financer of coal in Australia. Now that they do, it will be interesting to see how ANZ rates when Dow Jones release their 2011 results in September. But it raises a much bigger question about the whole system of sustainability ratings.

My own view is that process based standards are misleading and that if ratings are to have any value they need to look at the real world. It is preposterous for a coal power station or coal mining company to win a sustainability award, regardless of much paper they recycle or how many trees they plant. They are fundamentally and inherently unsustainable industries and should be recognized as such. Likewise for banks, they need to be judged on their actual loan book, not just their operations or internal processes.

Otherwise, it all just smacks of greenwash.