Nearly 60 organizations now formally assess the social and environmental performance of companies.
The Bertelsmann Foundation, a German social welfare research
organization, has identified 58 rating organizations worldwide that
‘measure corporate sustainability or CSR’, and says the market is
maturing after several years of ‘lively’ expansion. Recent mergers and
acquisitions in the sector can be taken as ‘a reliable hint that [the]
market is transforming into more established structures’, it says.
There is no estimate given of the overall value of the market.
The foundation believes the field is now at a point where ‘even
conventional investment research and credit ratings have become aware
of CSR rating schemes and [are] making efforts to integrate them into
their standard researches and credit rating schemes’. The review does
not include Standard & Poor’s, Moody’s and Fitch Ratings, the three
biggest international rating agencies, because they are not yet
sufficiently active in the field, although CoreRatings, which is
majority-owned by Fitch Ratings’ owner Fimilac and is thought to be the
only CSR rating agency in which any of the three have an interest, is
covered.
Most of the agencies are commercial bodies such as oekem and Covalence
or in-house research departments at banks but some are non-profit
groups, such as Co-op America.
Who is who in corporate social responsibility rating
found ‘a high degree of individuality’ among models used by agencies to
measure sustainability, in contrast to credit rating in general, where
there is a ‘strong consensus’ on what metrics to use. It says this is
unsurprising as many of the issues covered are intangible and not
easily measured. Almost all the rating agencies refer to international
standards and conventions such as the OECD Guidelines for Multinational
Enterprises.
Most take a best-in-class approach when assessing large listed
companies. Private companies and small and medium-sized publicly owned
businesses ‘remain largely unexplored’, mainly because there is little
demand for such information from institutional investors, who are the
agencies’ main clients.
The agencies are mostly in Europe and have between ten and 15 staff,
but some have up to 70. Several work in loose alliances to offer a
global service and a range of products.
Antoine Mach, head of direction and research at Geneva-based Covalence,
told EP: ‘The CSR rating market is maturing … but we can expect more
growth, considering the [increasing] use of such ratings by financial
analysts and asset managers. While the niche market is maturing, the
integration of intangible measures into the financial tools used by
institutional investors is at an early stage.’ He added that
‘methodological improvements’ would be needed to satisfy mainstream
customers.
Nine new rating bodies have emerged in the past two years, mostly small
start-up businesses. Others have left the market, among them
Ecobalance and the Humanix Ethical Index, both based in Sweden.
