ESG risks caused by digitalisation in industry can be tracked and mitigated by a new software platform. ESG reporting for corporates is predicted with the 10 best indicators of best practice digital governance to analyse the overall Corporate Digital Responsibility (CDR) rating of a company.
EthicsGrade has rated over 300 companies relating to their governance of technology, in sectors spanning energy, pharmaceuticals, FMCG and transport to date. The prediction engine increases the number of companies that can be rated 10x. Already 130 scorecards have been sent out to companies such as Adidas, Comcast, Deutsche Post and Starbucks and by the end of the year EthicsGrade will have graded the full Russell 3000 Index.
The EthicsGrade prediction engine is unique, unlike other options on the market which have only one set point of view. From a database of over 400, and growing, the prediction engine selects a smaller number of questions which are the best predictors for an ESG rating. This way EthicsGrade is helping companies report high-quality data with the minimum of time spent on the activity. EthicsGrade currently focuses on CDR with the intention to move to wider ESG issues in the future. We have the capability to tailor our ESG rating to the specific interests of an investor, focusing on their values and priorities.
“We have set out to solve the problem facing many corporations when dealing with existing ESG reporting, including having to look at a multitude of issues, with much duplication and, at times, questionable relevance,” said Charles Radclyffe, CEO of EthicsGrade. “This creates reluctance to engage, poor quality data, and ultimately, we believe, greenwashing.
“Developing an ESG rating is complex, and complicated by the need to look behind the headlines to find evidence of real progress. Individuals react differently to ESG issues, and EthicsGrade does not judge what is a right or wrong approach. Investors, consumers, employees, and other stakeholders each see the world through their own lens and the prediction engine allows us to put multiple different lenses on the same company to provide an ESG rating specific to a stakeholder’s specific concerns.”
“And for the company it gives them a dataset of digital risks into the private markets. You see, it’s one thing helping Starbucks understand the level of maturity of the governance of their digital platforms; but they know, and we know, that the risks they face- whether from cybersecurity/ ransomware, data breach, or simple system outages often will originate with their suppliers. And the business case is not just the potential regulatory or operational costs it’s the reputational harm of screwing up.”
A company’s engagement is not required to predict an ESG rating via the EthicsGrade prediction engine ensuring investors have the information they want regardless of whether a company has time or inclination to respond. Initial grading is performed with public data, while the secondary round includes non-public data provided by companies on our platform InsiderView. Companies are rated on a quarterly basis, and new ratings are added every few days.