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Reports 5 Oct 2010

Rate the Raters: Phase Two

Taking Inventory of the Ratings Universe

By Michael Sadowski

“Sustainability indexes lack own transparency”

Reuters, September 2010

“When Pigs Fly: Halliburton Makes the Dow Jones Sustainability Index”

RP Siegel, Triple Pundit, September 2010

We’ve seen headlines like these before. In what has become a seasonal occurrence, the release of a new or updated rating of corporate sustainability performance is followed in many quarters by disbelief – even dismay – that some raters are themselves inscrutable and that companies some consider pariahs have been ranked among those deemed most sustainable.

Familiar as this pattern is, with the autumn 2010 release of phase two of our Rate the Raters research program occurring amidst a series of major ratings announcements (from the Carbon Disclosure Project, Dow Jones Sustainability Indices, FTSE4Good, Newsweek and others), there seems to be greater interest and angst than normal among both rated companies and others working on the sustainability agenda.

On the corporate side, some companies may be hitting a boiling point fueled by the effort required to keep track of and respond to the constantly growing number of ratings. Perhaps for others it is the opacity of the ratings organizations’ methodologies and listing/de-listing processes. But we think there is something more profound taking place: ratings are being taken more seriously as they go mainstream. And, as they come to matter more to more stakeholders, the spotlight shines brighter on ratings – and the organizations which create and promote them.

With that in mind, phase two of Rate the Raters is designed to illuminate the breadth and depth of the ratings universe. SustainAbility inventoried over 100 ratings and their attributes, surveyed a global group of sustainability experts on their perceptions of ratings, and analyzed the results.

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Rate the Raters

Rate the Raters attempts to better understand the universe of external sustainability ratings and to influence and improve the quality and transparency of such ratings.

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