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gisr

ESG Ratings Standard Open for Public Comment

gisrA public comment period is now open to review a set of core principles for a global environmental, social and governance ratings standard developed by the Global Initiative for Sustainability Ratings.

The GISR, a coalition formed in 2011 by Ceres and Tellus Institute, has modeled its rating system on the Global Reporting Initiative, which has become the global standard used by thousands of companies worldwide for corporate reporting on environmental, social and economic performance. A number of companies including AMD, ConAgra Foods, Deloitte, Intel, McDonald’s, P&G, Siemens and UPS are partners in the GISR.

GISR will not rate companies. Instead, it will accredit other sustainability ratings, rankings or indices to apply its standard for measuring excellence in sustainability performance, the organization says.

The GISR standard will be made up of three components: principles, issues and indicators. The 12 principles, which are the core attributes of the ratings framework, have been developed into a beta version and are open for public review through July 31.

GISR will then assess and integrate comments into a version 1.0 of principles, which are scheduled for release in the third quarter of 2013. GISR will then design and release a beta version of the principles accreditation program for public comment by the fourth quarter of 2013. Beta versions and drafts of the other two components, issues and indicators, will follow in 2014 and 2015.

The two founding organizations aim for the GISR system to be embedded in the listing requirements of stock markets, disclosure requirements of securities regulation, contractual relationships between asset owners and managers, and government procurement programs worth hundreds of billions of dollars.

There are currently more than 100 ratings, ranking and indices evaluating the performance of more than 10,000 companies worldwide, GISR says. These companies are using more than 2,000 indicators of corporate sustainability performance, which cause confusion and make it difficult for investors to accurately assess a company’s ESG policies and milestones, GISR says.

 

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One thought on “ESG Ratings Standard Open for Public Comment

  1. The article refers to the “standard” being published, this is merely a descriptive of a proposed standard.Apart from that a few instant questions are:

    1) This document refers to a standard, in fact this proposed code of practice cannot be described as a standard for many reasons but mainly because the norms and rules of a standard are not present, this SRI/CSR Industry continues to conflate, codes of practice, protocols, agreements, principles etc as standards, they are not. GRI itself is not a standard.
    2) Assurers, aggregators, etc are not standard setters.
    3) The code fails to define sustainability in terms that related to this code and therefore without definition and context there can be no standard
    4) The code descriptive consistently uses the word should instead of shall, as does the GRI itself, therefore there is no enforceability, as a real standard there should be rigour enforced by the term, “shall”.
    5) There is no Third Party Verification of fact, therefore no transparency and therefore no real enforceability
    6) There has been no comprehensive GAP analysis
    7) Much is made of the word “accreditation”, however, this code is not an accreditable standard, therefore accreditation can only be provided outside the norms and rules of ISEAL ( lack of, transparency, rigour and process)
    8) Any and all factors required for this code to be termed as a( private) standard under ISO rules, and therefore to comply with WTO rules are absent.
    9) The actual “standard” should be made available for public comment not the descriptive.
    10) It is highly questionable if this proposed “standard” is legal in terms of the legal requirements of WTO. Without ISO compliance the “standard” will act as a significant technical barrier to trade. It would be deemed that the majority of the founders and influencers have a parallel agenda and therefore under ISO/WTO rules are conflicted.
    11) This code relates solely to listed companies due to its reliance upon Corporate Annual Reports and GRI Reporting procedures. Therefore it by definition excludes non listed companies which excludes the bulk of SMEs which account for some 90% of the entire GDP of the UK and 90% of the employers.
    12) Adoption by Regulators as a standard and requirement is unlikely in its present, ( illegal?) form
    13) The “standard” is based upon non verified self-disclosure and not fit, (or safe) for purpose in Investment markets if adopted as any kind of benchmark
    14) The descriptive refers to “indicators” not hard proven metrics, far too loose for investment purposes
    15) A serious flaw is that by being based upon self-disclosure and non verified information it is then published over 12 months after the risk is present, ( legal question as to Fiduciary duty)
    16) A standard in the context of this code must have predictive abilities, this code has none.

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