Deutsche Bank – Responsibility

Global Initiative develops standard for increased transparency and effectiveness of sustainability ratings

Sustainability ratings and rankings are to become more transparent, more efficient and more effective – that is what the Global Initiative for Sustainability Ratings (GISR) is working towards. In its discussion paper published on December 18, 2013, the GISR presented Version 1.0 of the first of three modules for an internationally harmonized rating standard.

The paper defines 12 principles that are to be used as a basis for sustainability evaluations. They refer to the process as well as to the content of the evaluation.

At present, sustainability evaluation is characterised by an infinite variety of players, approaches and tools. The consequence: companies have to deal with numerous inquiries and questionnaires; the standards that are applied frequently differ from one another, as do the evaluation results; and investors don’t have a neutral assessment of the quality of sustainability ratings, rankings and indices.

The GISR wants to remedy that situation. The multi-stakeholder initiative, which was founded in 2011 by the non-governmental organisation Ceres and the independent research institute Tellus, is actively supported by Deutsche Bank. It has set itself the goal of establishing an internationally accepted standard for sustainability ratings, rankings and indices. The standards’ systematic application is supposed to be ensured by an accreditation procedure. This way, the GISR aims to increase the stringency, transparency and benefit of sustainable activity in business so that the capital market and companies become drivers of sustainable development – which is the goal.

The principles that have been presented constitute the foundation of the future standard; it is intended to encompass three elements and corresponding levels of accreditation:

GISR principles

Level 1: The 12 principles
Core attributes that a sustainability rating, ranking or index must have regarding content and processes of the rating providers in order to be regarded as credible

Level 2: Core themes
Aspects and issues that are essential for evaluation of the sustainability performance of a company

Level 3: Indicators
Parameters based on which the sustainability performance of a company must be measured.

Next, GISR plans to present rules and processes for operationalization that will make the accreditation of sustainability ratings on the basis of the principles possible. The development process is scheduled to be completed and the standard adopted at the end of 2015.

As a member of the Steering Committee of the GISR, Dr. Sabine Miltner, Group Sustainability Officer of Deutsche Bank, is convinced that developing the planned standard is an important initial step that must be followed up on: “Our goal must be to ultimately achieve an amalgamation of credit and sustainability ratings in order to increase their transparency and informative value – in a manner analogous to the goal of integrated reporting.”

Process

Transparency A rating should be transparent to those whose decisions are affected by the application of such rating.
Impartiality The design and application of a rating, whose primary users are external to the rated company, should be protected from undue influence by the rated company.
Continuous Improvement Through periodic update, a rating should track and integrate the bestavailable science, measurement techniques, issues, and indicators.
Inclusiveness Development of a rating should identify and systematically engage those stakeholders whose decisions are influenced by the application of the rating.
Assurability A rating should be designed to allow for independent, third-party assurance that its application comports with the GISR Standard.

Content

Materiality A rating should assess performance based on sustainability issues relevant to the decision-making of stakeholders for which a rating is designed.
Comprehensiveness Rating one or more aspects of sustainability performance should systematically assess for impacts on human, intellectual, natural, and social capital.
Sustainability Context A rating should assess performance in the context of science-based thresholds and limits, or, if unavailable, widely-accepted norms pertaining to long-term human and ecological well-being.
Long-Term Horizon A rating should enable the evaluation of the long-term performance of a company while simultaneously providing insights into short- and medium-term outcomes in alignment with the long-term.
Value Chain A rating should reflect all portions of a company’s value chain over which the company exercises significant influence.
Balance A rating should utilize a mix of measurement techniques to capture historical and prospective performance.
Comparability A rating should allow users to compare the performance of the same company over time and of different companies within the same time period.

“Our goal must be to ultimately achieve an amalgamation of credit and sustainability ratings in order to increase their transparency and informative value – in a manner analogous to the goal of integrated reporting.”

Sabine Miltner Group Sustainability Officer of Deutsche Bank

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