CSR Rating System
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The document discusses CSR rating systems. It provides information on different types of rating systems, including normative (customer-oriented) and descriptive (economic-oriented) ratings. It also discusses common characteristics of rating institutions such as their typical size, focus on large listed companies, and use of quantitative and qualitative methods. The document outlines elements that will comprise Iran's national CSR rating system, including its conceptual underpinnings, methodology, data collection and analysis process, and ensuring transparency.
CSR Rating System
- 2. In The Name of The Beneficent The Merciful
- 3. CSR Rating System Managing Director: Alireza Omidvar Corporate Governance and Responsibility Development Centre (CGRDC) By: Amir H. Rahdari
- 4. Rating • The process of ratingencompasses gathering data over these indicators andsynthesize itinto an overall rating based onwhich investors can make decisions andtakeactions. • Normative Rating(Customer- oriented) –deductive e.g.Hohenheim, Osservatorio FINETICA • Descriptive Rating (economic- oriented) • Depending upontheway rating systems are constructed, some utilizefilters topruneaway non- complying companies. These filters are usually oftwo types: • Exclusive social/environmental filters • financial filters after social/environmental filters • financial filtersbefore social/environmental filters The last two systems arecapital market-orientedsystems.
- 5. RatingsandNGOs Thefoundationofnon-financial informationanalysesinalmostallCSR ratingsystems isdirector indirectproduct ofNGOsideas. In most of rating systems, the final rating as to the rank of companies is made by a committee. However, in some of these institutions the carte blunche granted to these committees have been so extensive that the final resultstotally deviatedfromtheanalyses. Inoursystemwehavetwocorebodies: Researchunit–operationalandanalyticalrole Ratingcommittee –executiveandmonitoringrole
- 6. Riskassessment Thefocus hereison analyzinghowacompanydealswiththeenvironmentalandsocial risksitfaces.reductionof environmentalandsocialrisks Valueenhancement Thistypeof ratingsystem focuses oncorporatemanagementstrategiesandtheir orientationtowards sustainability Innovators/pioneers model Theirexcess returnsstemfrom the environmentalandeconomic opportunitiesthatarise from innovativeproductsor production processes. QualityManagement: Process elementssuchasstrategyandplanning,operationalimplementation,evaluation andreporting,aswellasestablishingstakeholderdialogue,playakeyrolehere. Commontypology ofCSRRating systems inthe world
- 7. Filters
- 8. Most commoncharacteristics of Rating institutions • Employees: 3-70 Mostcommon size10-15 • Focus: Largecompanies listedonSE (exception forSMEsDutch–British Kempen) • Method: Quantitative:Bloomberg Qualitative:DJSI Mixed:Asset4,Ethicalconsumer • Screening&Monitoring
- 9. Most commoncharacteristics Matrix of Rating institutions Extension Peripheral CSR rating Core CSR rating Solicitedrating commoninbanking industry e.g.CoreRating (mutual fund),many SwissBanks Stakeholdersand Institutional Investors coalition independent rating institutions e.g.Vigeo Unsolicitedrating Bloomberg system for security dealers in the capital markets MostlyNGOs CorporateKnight (UK) Both/neither GMI Ethibel,Co-opAmerica, ECRA,Veite E.Capital (Italy), SERM (UK) Disclaimer:Any other use ofthis matrix other thanlearning isrestricted.
- 10. Most popular: Best-in-class approach They show an individual company’s relative position with respect to its competitors and absolute universal CSR grades. Thereexistsotherviablemodels forindustryspecificratings. Industry specific
- 11. The system willcomprise ofthe followingelements Conceptual underpinnings andobjectives Methodology inspiration Methodology integration Methodology documentation Data Collection Data Analysis Data Assessment/Evaluation Permits sector differentiation Reviews ofmethodology Inclusion ofstakeholder issues Elements oftheframework Categories Aspects Criteria/indicators Ratings thresholds Methodology coverage Qaunt./Qual. Quantitative: For sector benchmarking For trend analyses Sources of information Universe ofcompanies Database Protocol Feedback tool ,etc.
- 13. Finally we will follow QS standard on transparency and quality of rating systems to ensure that our rating system initiates and continue robustly .
- 14. ThankYou