Abstract | Do environmental rating schemes capture climate goals?

The Paris Agreement in 2015 sets a global warming limit of 2°C above pre-industrial levels, requiring a significant reduction in global greenhouse gases. Corporations play a significant role in the production of greenhouse gases, and several methods have been developed to measure corporate performance in terms of meeting climate goals. However, it is unclear how these measures are included in Corporate Environmental Performance (CEP) assessment. Further, CEP has been criticized for being ambiguous in terms of both its definition and measurement. The integration of clear science-based quantitative corporate performance measures and targets are required for effective governance. In this paper, we assess to what extent current environmental rating schemes incorporate global climate goals. Analysing 34 rating schemes used by investors, and 3 commonly used by academics, we find that rating schemes do not either quantitatively measure, or do not disclose, to what extent a corporation’s activities are consistent with global climate goals. Further, the three rating schemes used in academic studies are not consistent and thus do not capture the same construct of CEP. Therefore, current measurement of CEP is hindering progress in meeting climate goals.

Bio | Saphira Rekker

Ms Saphira Rekker is a Doctoral candidate at the UQ Business School. Ms Rekker holds a Master’s degree in Finance from Tilburg University, and a Graduate Diploma in Sustainable Systems from the University of Queensland. Ms Rekker is undertaking her PhD in the area of measuring corporate sustainability, for which she has received the highly competitive International Postgraduate Research Scholarship. Ms Rekker already has a proven research record. This is demonstrated by five publications, including high quality journals. The first publication titled “Do high and low-ranked sustainability stocks perform differently?” in the International Journal of Accounting and Information Management, was awarded the “Outstanding Paper Award” by the Emerald Literati Network Awards for Excellence in 2013. Another publication titled “Divestment from fossil fuel companies: Confluence between policy and strategic viewpoints” was published by the Australian Journal of Management in 2016. Further, she has worked in the financial industry as a freelance research analyst and consulted for a small investment company on the implementation of a Socially Responsible Investment framework/policy.