SustainAbility’s Advice for Evaluating ESG Raters

NAEM’s “Measuring Corporate Sustainability” conference kicked off today with a thoughtful discussion of SustainAbility’s Rate the Raters research, a year-long study  to improve the transparency and quality environmental, social and governance (ESG) ratings.

With more than 100 ratings out there, Manager Kyle Whitaker offered the following advice to companies that are looking to develop their strategy for engaging ESG research and rating firms:

  • Prioritize and invest in the ratings that deliver value to your business:  The days of responding to dozens of information requests  are over, Whitaker said. To make this process manageable, companies should first understand, who the audience or intended audience is. It’s also important to understand how that audience is using the data.
  • Ask “What’s in it for me?”: It’s important to understand what the benefit to a company before getting started.
  • Manage expectations internally: EHS and sustainability leaders need to do a better job explaining a particular rating to both the C-Suite as well as to those who supply the data. Explaining what the rating is, why the company is participating and what participants may expect from the rating is an important part of improving the value of the reporting effort internally.
  • Focus on public disclosure: 63 percent of ratings depend on public disclosure, according to Whitaker. Participating with the Global Reporting Initiative (GRI) is a valuable way to disseminate this information and companies should make that a priority if they haven’t already done so.
  • Set the agenda: Business leaders have an important role to play in the future of sustainability analytics. Companies should begin engaging ESG researchers by providing feedback on which metrics are most material to them; it’s also worth noting which metrics they don’t report internally.

With all the requests for information, how do you filter the ratings your company participates with?

About NAEM Staff

The National Association for Environmental Management (NAEM), is a non-profit professional association that empowers corporate leaders to advance environmental stewardship, create safe and healthy workplaces, and promote global sustainability. As the largest network for environmental, health and safety (EHS), and sustainability decision-makers, we provide peer-led educational conferences and an active network for sharing solutions to today’s corporate EHS and sustainability management challenges. Visit NAEM online at www.naem.org.

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