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An analysis of the methodologies adopted by CSR rating agencies

Author

Listed:
  • Khaled Saadaoui

    (EM Normandie - École de Management de Normandie)

  • Teerooven Soobaroyen

    (Essex Business School - University of Essex)

Abstract

This paper aims to analyse the similarities and differences in the methodologies adopted by corporate social responsibility (CSR) rating agencies. The authors gather secondary and primary evidences of practices from selected agencies on the methodologies and criteria they rely upon to assess a firm's CSR performance. The authors find not only evidence of similarities in the methodologies adopted by the CSR rating agencies (e.g. the use of environment, social and governance themes, exclusion criteria, adoption of positive criteria, client/"customised" input, quantification) but also several elements of differences, namely, in terms of the thresholds for exclusion, transparent vs confidential approach, industry-specific ratings and weights for each dimension. Drawing from Sandberg et al.'s (2009) conceptualisations, the authors tentatively argue that this mixed picture may reflect competing organisational pressures to adopt a differentiation approach at the strategic and practical levels whilst recognising, and incorporating, the "globalising" tendencies of the CSR business at the terminological levels. Although these data are based on a relatively small number of agencies, the findings and analysis convey some implications for users of CSR ratings and policymakers, particularly in light of the recent Paris 2016 Agreement on Climate Change and the increased emphasis on the monitoring of social, environmental and governance performance. The authors contribute to the literature by highlighting how key intermediate rating organisations operationalise notions of CSR.

Suggested Citation

  • Khaled Saadaoui & Teerooven Soobaroyen, 2018. "An analysis of the methodologies adopted by CSR rating agencies," Post-Print hal-01954551, HAL.
  • Handle: RePEc:hal:journl:hal-01954551
    DOI: 10.1108/SAMPJ-06-2016-0031
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    Citations

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    Cited by:

    1. Kathleen Wilburn & Ralph Wilburn, 2019. "Missing Social Outcomes In Csr Reports Of Award Winners," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 13(2), pages 13-36.
    2. Rajesh, R. & Rajeev, A. & Rajendran, Chandrasekharan, 2022. "Corporate social performances of firms in select developed economies: A comparative study," Socio-Economic Planning Sciences, Elsevier, vol. 81(C).
    3. Iram Hasan & Shveta Singh & Smita Kashiramka, 2022. "Does corporate social responsibility disclosure impact firm performance? An industry-wise analysis of Indian firms," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(8), pages 10141-10181, August.
    4. Xiaodong Teng & Yanzhi Wang & Aiguo Wang & Bao-Guang Chang & Kun-Shan Wu, 2021. "Environmental, Social, Governance Risk and Corporate Sustainable Growth Nexus: Quantile Regression Approach," IJERPH, MDPI, vol. 18(20), pages 1-15, October.
    5. Elena Escrig-Olmedo & María Ángeles Fernández-Izquierdo & Idoya Ferrero-Ferrero & Juana María Rivera-Lirio & María Jesús Muñoz-Torres, 2019. "Rating the Raters: Evaluating how ESG Rating Agencies Integrate Sustainability Principles," Sustainability, MDPI, vol. 11(3), pages 1-16, February.
    6. Maria Folqué & Elena Escrig‐Olmedo & Teresa Corzo Santamaría, 2021. "Sustainable development and financial system: Integrating ESG risks through sustainable investment strategies in a climate change context," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(5), pages 876-890, September.
    7. Louis Maximilian Ronalter & Merce Bernardo & Javier Manuel Romaní, 2023. "Quality and environmental management systems as business tools to enhance ESG performance: a cross-regional empirical study," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(9), pages 9067-9109, September.
    8. Monika Sipa & Malgorzata Smolarek & Tomasz Jalowiec & Piotr Masloch & Henryk Wojtaszek & Ireneusz Miciula & Grzegorz Masloch, 2021. "Diversity of Factors Determining Employee Satisfaction as an Area of CSR Activity in Companies of Different Scale," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 507-522.
    9. Yunfu Zhu & Haoling Yang & Ma Zhong, 2023. "Do ESG Ratings of Chinese Firms Converge or Diverge? A Comparative Analysis Based on Multiple Domestic and International Ratings," Sustainability, MDPI, vol. 15(16), pages 1-17, August.
    10. Dolores Gallardo-Vázquez & Luis Enrique Valdez-Juárez & Ángela María Castuera-Díaz, 2019. "Corporate Social Responsibility as an Antecedent of Innovation, Reputation, Performance, and Competitive Success: A Multiple Mediation Analysis," Sustainability, MDPI, vol. 11(20), pages 1-28, October.

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