Assessing Corporate Sustainability Through Ratings: Challenges and Their Causes

Authors

Sarah Elena Windolph, Leuphana University LüneburgFollow

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

Assessing corporate sustainability is increasingly practice-relevant, not least because the capital market and other markets have been paying growing attention to the topic. Recently, ratings have become an important assessment approach and nowadays a variety of organizations and financial service providers conduct their own ratings. Yet, despite their growing popularity, ratings are criticized in research and practice. Thus, the purpose of this paper is to systematize the challenges that corporate sustainability ratings face: lack of standardization, lack of credibility of information, bias, tradeoffs, lack of transparency, and lack of independence. Furthermore, the paper discusses the causes of these challenges and suggests possible ways to improve the reliability of ratings.

Recommended Citation

Windolph, Sarah Elena (2011) "Assessing Corporate Sustainability Through Ratings: Challenges and Their Causes," Journal of Environmental Sustainability: Vol. 1: Iss. 1, Article 5.
DOI: 10.14448/jes.01.0005
Available at: https://repository.rit.edu/jes/vol1/iss1/5