A new initiative to help identify sustainable practices and sustainable businesses looks set to improve confidence in ethical investments.
The Global Initiative for Sustainability Ratings (GISR) aims to provide a unified system for rating companies with truly sustainable business practices.
GISR aims to offer its benchmark as an alternative to the plethora of different sustainability ratings, tools and methods now operating, which it claims are confusing the market, undermining confidence and detracting from the establishment of a centralised order in which ethical investors can trust.
GISR has declared its hope that it can influence asset owners, asset managers, and government procurement practices, driving society in general towards companies that are true sustainability leaders.
GISR claims it is collaborating with asset managers, pension funds, foundations and non-governmental organisations that share a commitment to shaping and strengthening the future of sustainability ratings.
Customer confidence in ethical funds and the ethical investments sector has been hampered, due to the difficulty of identifying companies which truly implement ethical values. Recent research by the ethical watchdog EIRiS showed that 44% of ethically-minded people claim that clearer evidence is needed of the ‘green’ impact of ethical investments. Interest in ethical investments is growing, however, and there is currently £7bn invested in ethical funds in Britain, compared to £1.5bn in 2000, according to EIRiS.
Ethical funds limit their investment strategy to those companies that match their ethical criteria.
Some funds use ‘positive screening’ to locate and include companies which manufacture environmental products, encourage biodiversity, or promote renewable energies.
Other ethical funds use ‘negative screening’ to exclude companies in certain industrial sectors such as tobacco, alcohol, meat, nuclear power, and defence, or avoid specific activities such as deforestation, exploitation of workers, and animal testing.
GISR grew out of the Tellus Institute’s ‘Corporation 20/20′ project, which was backed by a range of the world’s largest companies and organisations including General Electric, Hewlett Packard, Citigroup, and Greenpeace. Moving forward, GISR has said it hopes to grow into an independent, not-for-profit, global organisation.
