Corporate Social Responsibility Rating

Over the last decade the rating of Corporate Social Responsibility (so-called CSR rating) has evolved into well established international information service markets. Widely common characteristics of CSR ratings are amongst others a focus on companies' relationships to stakeholders, the value chain of companies' economic activities and the life-cycle of products. Almost all CSR ratings operate with international norms and conventions mainly adopted from non-governmental organizations (NGOs). CSR ratings cover (big capitalised) companies listed on stock exchanges and represented in leading international stock indices.The ratings are provided for economic decision-making and addressed mainly to capital market participants like asset managers. The different rating schemes are based on an individual self-understanding of CSR by the rating institution. Four types of rating schemes exist in practice: - Risk assessment approaches focus on how a company handles its specific environmental and social risks. - Approaches of (sustainable) company value management assume that the concept of sustainable development can be transformed into company-specific strategies enabling a company to create excess returns. - Innovator/pioneer approaches intend to identify companies which exploit extraordinary environmental and economical opportunities.- Best practice approaches try to find out companies with a superior management of CSR-issues. The most important challenges for CSR ratings might be their ability to cope with quality standards and transparency, the reaction of close competitors like credit rating agencies, and the power of ethical investors as the most important clients of CSR rating institutions