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Our Insights 1 Mar 2011

Reflections on Rate the Raters, Phase Three

By Michael Sadowski

One week after the launch of Rate the Raters phase three, we wanted to share some of the feedback and reactions we’ve received, and also solicit your opinions on the key questions we have going into phase four.

First the feedback and reactions

We’ve heard from a number of organizations behind the ratings in our selection and they have generally been positive on our findings. Nearly all have expressed interest in SustainAbility’s feedback on their ratings, which is a welcome response as we launched Rate the Raters with the intent to help improve the state of the ratings agenda.

Some raters have raised sincere questions about how they might address the recommendations we made. For example, several investor-focused raters cited the difficulty in ‘focusing on the future’ and ‘getting cozier with companies’, especially when their investor clients want them to provide coverage on ever-larger universes of companies (thus, raters are forced to go broader and more shallow than they would like).

We’ve heard from a few raters about how our report could have better delineated between ’private’ and ‘public’ ratings in terms of expectations for transparency on methodology and results. That is, raters who serve investors (e.g. DJSI, Vigeo) have greater ‘license’ to be discreet than raters who serve the general public (e.g. CR Magazine, Global 100).

During a webinar organized by Canadian Business for Social Responsibility for roughly 50 of their member companies, we learned that the ratings frenzy has not hit Canada the same way it has in the US, at least in terms of the number of ratings requests. Companies also indicated openness to raters providing products and services with conditions (including transparency).

And we received our share of good and sensational media coverage – for example, we did not “slam ratings” as one publication put it. In fact, we went out of our way to capture key insights and good practices across the 21 ratings in our selection.

And now to ask for your opinions on the key questions we will grapple with in phase four…

In our work on phases one through three, we came away with a number of fundamental questions/dilemmas, answers to which we believe will shape the future of sustainability ratings:

  • What is the ‘right’ funding model for sustainability ratings to ensure their objectivity and own sustainability? The predominant model for ratings today is ‘client pays’, but as we point out above, that may not translate to strong ratings in all cases.
  • Can raters also be consultants or service / product providers? If so, under what conditions?
  • How can raters provide greater details on their approach and results to companies and clients without giving away commercial secrets? As mentioned above, some think private and public ratings might need to be treated differently.
  • Could the major raters agree on a core set of standard criteria and format (to reduce survey fatigue), then compete/differentiate themselves only on a smaller set of future-oriented criteria?
  • What might a universal quality standard look like for ratings? Could more ratings espouse the sort of principles and commitments that underlie the CSRR-QS standard we describe in our report?

Please share your thoughts on these questions on this webpage, our Facebook page or on our Twitter feed. And thanks in advance for your good thinking!

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