Methodology

The Accountability Rating evaluates companies across four key areas, or ‘domains’. In each of these equally weighted domains, we score companies against a range of criteria. This has the effect of answering a number of key questions.

• Strategic Intent: Does the company seek to address important social, environmental and broader economic issues in its core business strategy?

• Governance and Management: Are senior executives and the board accountable to stakeholders when setting strategy and formulating policy on extra-financial issues? Are these issues translated into management systems, standard procedures, incentives and performance targets towards specified goals?

• Engagement: Does the company engage in dialogue with the people and groups who have an interest in its business, may be affected by it or have an effect on it? Does the company publicly report its social and environmental performance? And are its disclosures subject to credible independent assurance?

• Operational Performance: How effective has the company been in implementing its strategies, management systems and engagement mechanisms as indicated by its performance in a variety of social and environmental impact areas.

Our team of expert analysts assesses companies primarily on the information they put into the public domain. This includes their annual financial report, sustainability reports and web disclosures. In the Operational Performance domain, we also consider information published by reliable third parties to assess the degree to which a company has been involved in environmental, social, or broader economic controversies.

Application to the world’s largest companies

Every year, we apply the Accountability Rating to the world’s largest companies – the Fortune Global 100 (‘G100’). The results are published in Fortune in the fourth quarter of the year. With the help of partner companies, we also publish Accountability Rating country rankings.

Key changes for 2008

Based on positive feedback, we have continued the use of the four-domain model introduced in 2007. We have, however, greatly expanded the scope of the Impact domain to include a larger number of key impact areas, while focusing on metrics that are comparable between companies and sectors.

In all four domains, we have added further criteria to our assessment by way of ‘context questions’. They allow our experienced analysts to probe more deeply into corporate performance.

For the 2008 application of the Rating to the G100, prior to publication of the results, a panel of experts independent of the Rating team examined the scores given to the G100 companies. Where the panel felt any of our assessments did not reflect a company’s true level of accountability, we revisited our evaluation of that company, re-scoring it if necessary.

In addition, upon finalisation, the scores for the G100 were compared with data from Swiss investment research and information provider ASSET4. This enabled us to explore correlations and discrepancies between companies’ Accountability Rating results and other areas of business performance.