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.
There are a dizzying number and variety of external ratings, rankings, indices and awards that seek to measure corporate sustainability performance. Stakeholders of all kinds – investors, consumers, employees, etc. – are increasingly relying on these ratings to help inform their decisions (to invest, purchase, work, etc.). Companies also rely on such ratings to gauge and validate their own sustainability efforts, with some even linking management performance evaluation and compensation to external ratings. These ratings, therefore, must be robust, accurate and credible.
“Ratings agencies have extended their grip and lulled investors and institutions into a false sense of security.”
Yet, similar to how investors have been lulled into a false sense of security by credit ratings agencies (as John Gapper opines), users of sustainability ratings may be getting lulled into the same state. Serious questions remain about the role and credibility of ratings. Who are these raters and how do they go about their research? How do they define “sustainability?” How do they determine and compare material issues across sectors? How transparent are they in their approach? And are they truly driving companies and society towards a more just and sustainable world?
To answer these questions, SustainAbility embarked upon the Rate the Raters research project from 2010 – 2012.