In search of excellence in corporate sustainability ratings

The Global Initiative for Sustainability Ratings (GISR) announced this week the Beta Version of a set of core principles as part of an international effort to drive excellence in corporate sustainability ratings, rankings and indices.

GISR is a global non-profit initiative aimed at moving markets to the advantage of corporate sustainability leaders.  It was launched with the aim of accrediting other sustainability ratings, rankings or indices to apply its standard for measuring excellence in corporate sustainability performance. It will not rate companies on sustainability.

Currently, more than 100 ratings, ranking and indices are evaluating the performance of more than 10,000 companies. They are using more than 2,000 indicators of corporate sustainability performance. “This abundance of sustainability information may seem to be a boon to investors”, but it produces more noise and confusion than real benefits, said Mindy Lubber, president of Ceres, who announced the GISR . “In the same year, companies that score high on one rating system may score low on others, often confounding investors, confusing companies and constraining ratings’ potential to move markets towards more sustainable outcomes.”

To address this challenge, GISR aims to accelerate the integration of environmental, social and governance (ESG) issues and indicators in investment decision-making. It will do so by building a new standard that equips investors, companies and other stakeholders with the tools to recognize true excellence in corporate sustainability. “GISR’s goal is to create a benchmark of excellence that will bolster investor confidence in sustainability ratings and increase their uptake,” said Mark Tulay, GISR Program Director.

A multi-stakeholder initiative with involvement from investors, companies and non-governmental organizations (NGOs), GISR’s standard development process includes three components: Principles, Issues and Indicators. The Principles, announced today, identify the core attributes of a ratings framework applicable to all sustainability ratings, rankings and indices.

The Beta Version of the 12 Principles includes: Transparency, Impartiality, Continuous Improvement, Inclusiveness, Assurability, Materiality, Comprehensiveness, Sustainability Context, Long-Term Horizon, Value Chain, Balance and Comparability. The public comment period will be open from June 1 – July 31, 2013. The Principles may be found at www.ratesustainability.org.

Tags: CSR, ratings, sustainability