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Between Efficiency and Resilience: The Classification of Companies According to their Sustainability Performance
Zwischen Effizienz und Resilienz: die Klassifikation von Unternehmen anhand deren Nachhaltigkeitsleistung
[journal article]
Abstract
In this article, we provide a broad picture of the adaptation of economic classification technologies that were originally used to provide financial information and to classify companies according to their financial performance. The same approach is now available for the benefit of sustainability in... view more
In this article, we provide a broad picture of the adaptation of economic classification technologies that were originally used to provide financial information and to classify companies according to their financial performance. The same approach is now available for the benefit of sustainability investors. The adaptation of such financial classification technologies to account for questions of sustainability has been engendered by the growing importance of financial markets and by the recognition of sustainability, as a guiding concept for contemporary societies. Since credit ratings, as well as financial accounting and reporting, are established measures for financial performance, they have inspired the development of similar classification systems for sustainability performance, and can be used to accommodate sustainability investors. We outline the adaptation of financial classification systems to the issue of sustainability and we compare the development and institutionalization, especially as it relates to the current market structure of classification systems in the financial markets, based on both financial and sustainability data. In the second part of this paper we compare the interpretation of social sustainability by three different sustainability accounting and reporting initiatives, in order to illustrate the heterogeneity of the available data applicable to subsequent classification. We point out that the operationalization of the three initiatives differs in respect to the nature and the extent of information requested. While accounting frameworks require relatively few quantitative outcomes, reporting frameworks demand more extensive quantitative and qualitative data. Finally, we discuss the opportunities and difficulties associated with the adaptation of classification systems from the field of finance to the field of sustainability.... view less
Keywords
classification; rating; rendering of accounts; financial market; sustainability; enterprise; performance assessment; reporting
Classification
Political Economy
Sociology of Economics
Free Keywords
financialization; ratings; accounting and reporting
Document language
English
Publication Year
2017
Page/Pages
p. 189-210
Journal
Historical Social Research, 42 (2017) 1
Issue topic
Markets and Classifications: Categorizations and Valuations as Social Processes Structuring Markets
DOI
https://doi.org/10.12759/hsr.42.2017.1.189-210
ISSN
0172-6404
Status
Published Version; peer reviewed