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Journal of Business Ethics (2010) 94:6988 Springer 2009 DOI 10.1007/s10551-009-0250-6
CSR Rating Agencies: What is Their Global Impact?
Steven Scalet
Thomas F. Kelly
ABSTRACT. In the last two decades, there has been a pronounced growth of CSR rating agencies that assess corporations based on their social and environmental performance. This article investigates the impact of CSR ratings on the behavior of individual corporations. To what extent do corporations adjust their behavior based on how they rank? Our primary nding is that being dropped from a CSR ranking appears to do little to encourage rms to acknowledge and address problems related to their social and environmental performance. Specic rankings appear not to have a widespread effect of inuencing rms to acknowledge negative CSR events and publicly present plans and actions to address them. Whether rms are well or poorly ranked, they appear to focus on and publicly discuss their positive CSR activities. We discuss the wider signicance of these results as well as the overall signicance of CSR rankings for a global economy.
KEY WORDS: corporate behavior, corporate social performance, corporate social responsibility, CSR ratings, rating agencies, SRI, sustainability
Introduction
The desire to use ratings to evaluate products and organizations is common across nearly every segment of the economy. Consumers and investors want the knowledge and assurance that their decisions are as good as they can be given the time and resources at their disposal. This desire is no less pronounced for those interested in the responsibilities of corporations. In the last decade, there has been tremendous growth in CSR rating agencies that assess corporations based on their social and environmental performance.
These rating agencies receive considerable attention in the media and among businesses, as people across the economic spectrum analyze corporate
behavior beyond nancial performance. This article investigates the impact of CSR ratings on the behavior of individual corporations. CSR ratings provide information and raise awareness for a whole range of stakeholders, but to what extent do corporations adjust their behavior based on how they rank? Our primary nding is that the adjustment is slight. Being dropped from a ranking appears to do little to encourage rms to acknowledge and address problems related to their social and environmental performance.
We begin with a background discussion...