How Well Do Social Ratings Actually Measure Corporate Social Responsibility?

Ratings of corporations’ environmental activities and capabilities influence billions of dollars of “socially responsible” investments as well as some consumers, activists, and potential employees. In one of the first studies to assess these ratings, we examine how well the most widely used ratings-those of Kinder, Lydenberg, Domini Research & Analytics (KLD)-provide transparency about past and likely future environmental performance. We find KLD “concern” ratings to … [ Read more ]

Do Corporate Social Responsibility Ratings Predict Corporate Social Performance?

Ratings of corporations’ environmental activities and capabilities influence billions of dollars of “socially responsible” investments as well as some consumers, activists, and potential employees. Unfortunately, there is little evidence about the validity of these ratings. We examine how well two of the most widely used ratings-those of Kinder, Lydenberg, Domini Research & Analytics (KLD) and Innovest Strategic Value Advisors-predict environmental performance. We find that firms … [ Read more ]