Standard Ethics Aei

Standard Ethics is an independent sustainability reporting rating agency based in London, known for its sustainable finance and ESG (Environmental, Social, Governance) studies. In 2001, it introduced a standardized approach to sustainability ratings. Methodologically, it separates Corporate Social Responsibility (CSR) from sustainability, seeing the latter as a global and systemic approach whose definition is not given by a single entity but by international institutions.^[1]

Standard Ethics

Industry	Ratings
Founded	2004
Headquarters	London , Belgium, and Italy
Key people	Blanche Ullens de Schooten (Chairman)
Products	Solicited Sustainability Ratings
Services	Sustainability Rating
Website	Standard Ethics

Standard Ethics promotes sustainability and corporate governance with the Standard Ethics Rating, an evaluation of how well companies and sovereign nations respond to corporate governance and sustainability, as indicated by guidelines published by the United Nations, the Organization for Economic Co-operation and Development, and the European Union.

The Standard Ethics Business Model is based on the applicant-pay model. Like credit rating agencies, Standard Ethics sells solicited ratings, meaning it charges applicants for ratings. Once assigned, the rating and related analysis belong to the applicant. Conversely, under the investor-pay model, agencies charge investors a fee for a list of companies that warrant investment.^[2][3]

Standard Ethics Rating

The Standard Ethics Rating (SER) is a Solicited Sustainability Rating (SSR) evaluating how well companies and sovereign nations comply with the sustainability and corporate governance guidelines published by the United Nations (UN), the Organization for Economic Co-operation and Development (OECD), and the European Union (EU).^[4]

The rating does not use weightings and KPI-based analyses or indicators but applies a proprietary six-group variable algorithm.

Standard Ethics links the rating to an evaluation done both at a qualitative and quantitative level of the potential reputational risks for a company. This process aims to protect corporate assets, particularly corporate reputation. Companies believe that EU, OECD and UN recommendations suggest future legislative requirements. Therefore, complying with a standardized model like the SER could bring a competitive advantage.^[5]

The methodological approach of Standard Ethics was first introduced in 2001, and its ratings are based on a scale comprising nine letter grades:^[6] EEE; EEE−; EE+; EE; EE−; E+; E; E−; F; where "EEE" stands for 'above average'; "EE" for 'average'; and "E" for 'below average'.

Standard Ethics indices

Standard Ethics covers the major OECD Stock Exchange markets and the largest listed companies in those markets. In April 2019, Standard Ethics announced its SE European 100 Index, whose index constituents have been selected according to their dimension, in terms of market capitalization.^[7]

To date (April 2019), Standard Ethics has created the following Indices:

• SE European 100 Index (composed of the 100 largest European listed companies based on market capitalization, with a Standard Ethics Rating).
• SE Italian Index (40 companies within the FTSE-MIB index of the Italian Stock Exchange that have been assigned a Standard Ethics Rating).
• SE Italian Banks Index (composed of all Italian banks listed on the Italian Stock Exchange with a Standard Ethics Rating).
• SE UK Index (composed of the 40 largest British-listed companies with a Standard Ethics Rating).
• SE French Index (composed of the 40 largest French-listed companies with a Standard Ethics Rating).
• SE German Index (composed of the 30 largest German-listed companies with a Standard Ethics Rating).
• SE Belgian Index (composed of the 20 largest Belgium-listed companies with a Standard Ethics Rating).
• SE Spanish Index (composed of the 30 largest Spanish-listed companies with a Standard Ethics Rating).
• SE Dutch Index (composed of the 30 largest Dutch-listed companies with a Standard Ethics Rating).
• SE Swiss Index (composed of the 30 largest Swiss-listed companies with a Standard Ethics Rating).
• SE European Banks Index (composed of the 40 largest European-listed banks with a Standard Ethics Rating).
• SE Best in Class European Index (composed of the 30 European-list companies with the highest Standard Ethics Rating).
• SE US Index (composed of the 20 largest US-listed companies with a Standard Ethics Rating).

The way Standard Ethics reports on its indices is based on full disclosure.

National Ratings

This is the situation for sovereign nations with a Standard Ethics Sustainability Rating as of April 2019. In 2013, Standard Ethics was the first to assign the rating to the Vatican City State.^[8]

Country	Rating	Outlook	Date
Argentina	17E		October 2015
Australia	21EE+		October 2015
Austria	22EE−		March 2020
Belgium	19EEE−		October 2015
Brazil	19EE−		April 2014
Bulgaria	19EE−		April 2014
Canada	21EEE−		March 2018
Chile	18E+		April 2014
China	16E−		Nov 2018
Czech Republic	20EE−		October 2016
Denmark	23EEE		June 2016
Egypt	16E−		April 2014
Estonia	19EE−		April 2014
Finland	23EEE−		October 2015
France	22EEE−		April 2014
Germany	21EE+		April 2014
United Kingdom	22EEE−		March 2017
Greece	20EE		January 2015
Hungary	18E	Negative	March 2020
Iceland	23EEE		April 2014
India	17E	Under monitoring	April 2014
Ireland	22EEE−		April 2014
Israel	18E+		April 2014
Italy	21EE+		March 2020
Japan	20EE		April 2014
Luxembourg	21EE+		October 2015
Mexico	19EE−		April 2014
Netherlands	22EE+		March 2020
New Zealand	22EEE−		February 2018
Norway	23EEE		October 2015
Poland	19E		March 2020
Portugal	20EE		April 2014
Romania	19EE−		April 2014
Russia	17F	Under monitoring	February 2022[9]
Slovenia	21EE+		October 2015
Slovakia	20EE	Negative	February 2016
South Africa	19EE−		October 2015
South Korea	18E+	Positive	July 2016
Spain	22EE+		October 2017
Sweden	23EEE−		May 2020
Switzerland	21EE+		March 2020
Turkey	18E−	Negative	September 2017
USA	22EE	Negative	Jun 2018
Vatican City	20EE		April 2014

References

1. "How the World's First Sustainability Ratings Agency Works". Forbes.
2. "Fresh blow for RBS as ethics agency gives them an E- rating".
3. Stachowiczstanusch, Agata; Mangia, Gianluigi; Caldarelli, Adele; Amann, Wolfgang (April 2017). Organizational Social Irresponsibility: Tools and Theoretical Insights. ISBN 9781681237602.
4. Cash, Daniel (17 December 2018). The Role of Credit Rating Agencies in Responsible Finance. ISBN 9783030037093.
5. "Business Ethics Rating Understanding Business Ethics Ratings: A Comprehensive Guide". FasterCapital. Retrieved 8 September 2024.
6. As explained in a scientific publication of 2002: Jacopo Schettini Gherardini, "Introduzione" in "Etica, futuro e finanza", Schettini G. J. e Schettini G. L. (a cura di), Il Sole 24Ore, marzo 2002, Milano, Pag.9
7. "Borsa: Quotazioni, azioni e titoli - Il Sole 24 Ore Mercati".
8. "Vatican City State receives elevated Standard Ethics Rating".
9. "Standard Ethics cuts Russia sustainability rating to lowest rung". Reuters. 24 February 2022.

External links

• Official Website