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Redefining Value, Moving Markets: The Future of
Sustainability Ratings
The New Metrics of Sustainable Business 2013
Allen ...
Harnessing Sustainability Ratings
to
Move Markets
September 2013
3
“The great part of the
miseries of mankind are
brought upon them by false
estimates they have made of
the value of thing...
Peter Bakker
President, WBCSD; former CEO, TNT
4
“I am a capitalist…The mistake currently lies in
only expecting (and mana...
20 Years of Metrics
• More voluminous
– GISR data base: 1500+ indicators/500+ issues
– SASB: 900+ indicators; 500+ unique
...
Growing Evidence….
6
“ A good rule of thumb is that one negative story is the
equivalent of five positive stories. On the ...
Sustainability Information Value Chain
7
Standards Ecosystem
8
Identify
• GRI – Core universal and some sectoral indicator for sustainability reporting
• SASB – se...
About GISR
 Founders: The Global Initiative for Sustainability Ratings (GISR) is a joint
project of Ceres and Tellus Inst...
Selected GISR Partners
10
Companies Investors
Metanoia
Fund
NGOs & Foundations
Sponsors
What’s the problem?
 Corporate Sustainability (ESG) Ratings 2013
 Too many indicators
 Too many issues
 Too many surve...
12
Building the Standard:
Content and Accreditation Levels
Component 1: Principles
13
Process
 Assurability
 Continuous Improvement
 Impartiality
 Inclusiveness
 Transparency
C...
Example 1: A Balancing Act--
Transparency
14
 Companies: Essential for performance improvement
 Raters: IP is part of th...
Example 2: A Balancing Act –
Comprehensiveness and Sustainability
Context
15
X1
Baseline
year
Peer
comparison
Performance
...
State of Play – Credit Ratings
Number of Outstanding Credit Ratings by Category of Credit Rating
NRSRO Financial
Instituti...
Sustainability: Embedded in Business Risk Profile
S&P’s Corporate Ratings Methodology: Business and Financial Risk Matrix
...
Ratings 2020: Companies and Credit
18
Ratings
2013
STARTLINE
RATINGS2020FINISHLINE
Financial
Ratings
ESG
Ratings
Ratings
2...
Ratings 2020
19
RATINGS TODAY RATINGS 2020
Voluminous surveys burden
companies; underinvestment in
sustainability by inves...
20
An Invitation
21
 Support GISR’s Standard Development Activities
 Technical Committee, Expert Advisor Committee, feedbac...
Thank you
For more information:
www.ratesustainability.org
mark.tulay@ratesustainability.org
22
Redefining Value, Moving Markets: The Future of Sustainability Ratings
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Redefining Value, Moving Markets: The Future of Sustainability Ratings

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Allen White, Founder, Global Initiative for Sustainability Ratings (GISR)

With over 100 organizations working on some kind of sustainability performance rating or ranking, how can companies decide which one(s) to focus on, or manage against? What key underlying principles should high-quality assessment criteria follow, and how is 'rating the raters' likely to affect the perceived value of existing ratings and rankings? What else could be done to bring about further clarity and trustworthiness to said assessments?

Publié dans : Business, Économie & finance
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Redefining Value, Moving Markets: The Future of Sustainability Ratings

  1. 1. Redefining Value, Moving Markets: The Future of Sustainability Ratings The New Metrics of Sustainable Business 2013 Allen White, Global Initiative for Sustainability Ratings (GISR)
  2. 2. Harnessing Sustainability Ratings to Move Markets September 2013
  3. 3. 3 “The great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things.“ – Ben Franklin 1780
  4. 4. Peter Bakker President, WBCSD; former CEO, TNT 4 “I am a capitalist…The mistake currently lies in only expecting (and managing) a return on financial capital. Capitalism requires a new operating system and needs to be re-booted so that we expect and manage the return on financial, natural and social capital. Business as usual is not an option for a future- proofed economy in which nine billion people live well with the limits of the planet by mid-century.”
  5. 5. 20 Years of Metrics • More voluminous – GISR data base: 1500+ indicators/500+ issues – SASB: 900+ indicators; 500+ unique – GRI: G4: 29 issues/149 “disclosures”; sector research: 2800 indicators • More applications – SRI – Self Assessment – Stock Exchanges – Ratings: Sustainability and Credit …………………. More material? More impactful? 5
  6. 6. Growing Evidence…. 6 “ A good rule of thumb is that one negative story is the equivalent of five positive stories. On the upside, a positive ESG reputation adds an extra layer of protection—what we call an ESG halo. Companies with an ESG halo were shielded from a decline in stock price.” “ESG disclosure is valuable because it helps a company demonstrate that it is managing its risks and has a track record of paying attention to its ESG performance. Those that disclose more ESG information are more likely to enjoy a lower cost of capital…” - Deloitte Review, Issue 12, Dec. 2012, Dinah Koehler and Eric Hespenheide
  7. 7. Sustainability Information Value Chain 7
  8. 8. Standards Ecosystem 8 Identify • GRI – Core universal and some sectoral indicator for sustainability reporting • SASB – sector indicators for US SEC reporting • IIRC – A framework that blends financial and sustainability information rooted in “vital capitals:” Financial, human, intellectual, manufactured, natural, social Inform • GRI – Disclosure guidelines for stakeholders globally • SASB – Disclosures of sector-specific indicators “material” to SEC • IIRC – A framework for guiding companies on communicating how value is created preserved Evaluate • GISR – Standard comprising principles, issues and indicators for measuring corporate performance excellence
  9. 9. About GISR  Founders: The Global Initiative for Sustainability Ratings (GISR) is a joint project of Ceres and Tellus Institute — partners that founded the Global Reporting Initiative (GRI)  Vision: Redefining the definition and measurement of value companies create in a way that aligns with the global sustainability agenda  Mission: Create a world class corporate sustainability ratings standard as an instrument for embedding sustainability into the financial markets worldwide  Strategy: Steward a multi-stakeholder and global process comprising: investment managers, pension funds, companies, NGOs, accountancies, academics, governments and raters  Launch: June 2011  Role: A standard setter. GISR will not rate companies; its standard will be applied by existing and future ratings organizations 9
  10. 10. Selected GISR Partners 10 Companies Investors Metanoia Fund NGOs & Foundations Sponsors
  11. 11. What’s the problem?  Corporate Sustainability (ESG) Ratings 2013  Too many indicators  Too many issues  Too many surveys  Too much volatility  Too little transparency >>>Curbs utility, uptake, integration, and impact Opportunity—grow the supply, credibility and quantity of quality ratings; mainstream sustainability; move financial markets… 11
  12. 12. 12 Building the Standard: Content and Accreditation Levels
  13. 13. Component 1: Principles 13 Process  Assurability  Continuous Improvement  Impartiality  Inclusiveness  Transparency Content  Balance  Comparability  Comprehensiveness  Sustainability Context  Long-Term Horizon  Materiality  Value Chain Exposure Draft>>>Beta>>>Version 1.0: November 2013
  14. 14. Example 1: A Balancing Act-- Transparency 14  Companies: Essential for performance improvement  Raters: IP is part of the business model  Investors: Essential for informed choice and application Thus, transparency of what, to whom and in what form?
  15. 15. Example 2: A Balancing Act – Comprehensiveness and Sustainability Context 15 X1 Baseline year Peer comparison Performance Today 2 Company Goal 3 STARTLINE SUSTAINABILITYCONTEXT-FINISHLINE 4
  16. 16. State of Play – Credit Ratings Number of Outstanding Credit Ratings by Category of Credit Rating NRSRO Financial Institutions Insurance Companies Corporate Issuers Asset-Backed Securities Government Securities Total Ratings AM Best N/R 4,826 1,910 56 N/R 6,792 DBRS 21,695 151 4,037 9,889 15,798 51,570 EJR 101 51 962 13 9 1,136 Fitch 54,586 4,010 14,427 58,315 217,198 348,536 JCR 163 27 478 N/R 54 722 KBRA 16,127 52 1,001 40 58 17,278 Moody’s 56,486 3,953 30,439 93,913 814,087 998,878 Morningstar N/R N/R N/R 16,070 N/R 16,070 S&P 60,700 7,800 45,400 108,400 948,300 1,170,600 Total 209,858 20,870 98,654 286,696 1,995,504 2,611,582 16 Source: NRSRO Annual Certifications, 2011
  17. 17. Sustainability: Embedded in Business Risk Profile S&P’s Corporate Ratings Methodology: Business and Financial Risk Matrix Financial Risk Profile Business Risk Profile Minimal Modest Intermediate Significant Aggressive Highly Leveraged Excellent AAA/AA+ AA A A- BBB -- Strong AA A A- BBB BB BB- Satisfactory A- BBB+ BBB BB+ BB- B+ Fair -- BBB- BB+ BB BB- B Weak -- -- BB BB- B+ B- Vulnerable -- -- -- B+ B B- or below 17
  18. 18. Ratings 2020: Companies and Credit 18 Ratings 2013 STARTLINE RATINGS2020FINISHLINE Financial Ratings ESG Ratings Ratings 2020 Financial Ratings ESG Ratings Integrated Ratings
  19. 19. Ratings 2020 19 RATINGS TODAY RATINGS 2020 Voluminous surveys burden companies; underinvestment in sustainability by investors. Common survey for core information and accompanying supplements. Ratings harmonization without over-prescriptiveness. Lack of transparency impairs application to performance improvement and investor uptake Users’ Guide to Sustainability Ratings and GISR Principles enhance transparency, utility and value of ratings for financial markets Lack of materiality leads to information overload GISR standard drives convergence toward material issues and indicators Financial markets minimally integrate sustainability information GISR builds ratings credibility and spurs market expansion for high quality ratings
  20. 20. 20
  21. 21. An Invitation 21  Support GISR’s Standard Development Activities  Technical Committee, Expert Advisor Committee, feedback on public exposure and beta versions: www.ratesustainability.org  Join the Supporting Stakeholder Program  A growing multi-stakeholder network of supporters http://ratesustainability.org/get-involved/become-a-supporting- stakeholder/  Contact GISR to Explore Opportunities for Collaboration : http://ratesustainability.org/contact-gisr/
  22. 22. Thank you For more information: www.ratesustainability.org mark.tulay@ratesustainability.org 22

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