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Reports 27 Nov 2012

Rate the Raters: Phase Five

The Company Perspective, The Investor View and The Raters Response

By Michael Sadowski

In May of 2010, we launched a multi-phase research program entitled Rate the Raters, which aimed to shed light on the universe of corporate sustainability ratings and to influence and improve their quality and transparency.

There remain a number of important, unanswered questions, around how ratings are being used by sustainability professionals and investors.

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In the fourth phase of Rate the Raters we put forth our vision for ratings in the future, which called for competition on analysis rather than data collection, greater focus on material issues and impacts, and improved transparency.

A year on we believe there remain a number of important, unanswered questions, for example around how ratings are being used by sustainability professionals and investors, and we embarked on a new fifth phase to explore these issues. This has resulted in four deliverables:

Polling the Experts

A GlobeScan / SustainAbility survey of how sustainability experts view and use corporate sustainability ratings. Similar to a survey that we conducted in 2010, we polled 850 people from over 70 countries, across multiple sectors, who have worked on sustainability matters for at least three years (in fact, over 60% of these respondents have 10 or more years of sustainability experience).

Download survey

The Company Perspective

We spoke with individuals responsible for managing the ratings process within 30 global companies and asked them the following questions:

  • Which ratings, rankings and indices do you prioritize and why?
  • How has your approach to managing ratings evolved over last five years?
  • How do you use ratings in your work?
  • How do you get value from ratings?
  • What and how do you communicate about ratings to your non-sustainability
  • How could ratings create more value for your work?

We present the highlights of our conversations in this paper.

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The Investor View

We set out to better understand the perspectives of mainstream analysts and portfolio managers on ESG issues and ratings. Through a survey and one-on-one interviews, we sought the views of investors who don’t specifically focus on socially responsible investment, believing that if we are to make progress on the issues we care about – climate change, poverty, health, etc. – we must work harder to engage this group, which by one recent estimate represents 89% of the assets in the US.

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The Raters Response

In this final piece we published the responses from a number of sustainability raters to a questionnaire we posed to them. We did this to promote greater transparency and to provide users – companies, investors and others – a better understanding of how these ratings work. SustainAbility has not edited or evaluated the content of these documents. Instead, we want our readers to use this information, and the methodology we developed in Phase Three, to form their own opinions. We want to hear from readers on the good practices that should be disseminated and opportunities for further improvement.

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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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