EthicalQuote

Covalence EthicalQuote also called EthicalQuote or simply CEQ is a market index tracking reputation of the world’s largest companies on Environmental, Social, Governance (ESG), Corporate Social Responsibility and ethics and sustainability, components of Socially Responsible Investing (SRI). The index seeks to capture many dimensions of firms’ ethical performance.[1]

History

In 2001, Covalence SA was founded by six shareholders including Ngenda Kigaraba, Antoine Mach, Marc Rochat, Jean-Felix Savary and Steven Street. Covalence is a private, for profit company.[2]

Covalence EthicalQuote is one of the founding members of Swiss Sustainable Finance (SFF), a partnership with the Federal Department of Economic Affairs, Education and Research.[3]

Research and Assessment

CEQ accounts for cultural diversity, political pluralism and scientific uncertainty. It aggregates thousands of documents extracted from diverse sources and classified according to 50 sustainability criteria inspired by the Global Reporting Initiative. The extra-financial ratings are used by indexes of sustainable Swiss equities.[4] In 2007 Covalence partnered with Thomson Reuters and Bloomberg distributing EthicalQuote through their platforms.

According to research sponsored by the Journal of Business Ethics there is an equity valuation effect of press releases of upgrades or downgrades reflected in the CEQ . The research encompasses a joint test of the value relevance of the index and the impact of ethical reputation on a firm’s value. A significant causal relationship is identified between stock market reactions and the changes in the CEQ. Particularly, disclosures of positive and negative changes in firm ethical performance cause increases or decreases in firm value. Second, the research found cross-sectional analysis indicates a positive association between changes in firm ethical performance and both its financial performance and its financial reporting quality. The results measures taken to increase ethical performance are associated with positive benefits to shareholders.[5]

A desire to look at industries that have "a heavy impact on culture and the way people think” inspired a collaboration in reporting by Covalence SA, Ethical Investment Research Service (EIRIS) and the WWF. The initiave is not to " criticise these companies but to make a general point: responsible business practices can be a value driver, but they need to be systematically embedded in the DNA of a company, .... Comparison can be a powerful motivation to change.” said Mr Kleanthous (a senior policy adviser at WWF).[6]

References

  1. ↑ Baringhorst, Sigrid; Veronica Kneip (2007). Politik mit dem Einkaufswagen: Unternehmen und Konsumenten als Bürger in der globalen Mediengesellschaft. Rockenhaus, Bielfeld: Die Deutsche Bibliothek. p. 297. ISBN 3899426487.
  2. ↑ Covalence, SA (2007). "Covalence History 2001-2007" (PDF). Covalence SA. Retrieved March 4, 2008.
  3. ↑ "The new platform "Swiss Sustainable Finance" promotes sustainability in the Swiss financial centre (press release)" (PDF) (Press release). Swiss Sustainable Finance. July 1, 2014. Retrieved July 1, 2014.
  4. ↑ Bendell, Jem; Ian Doyle (March 2014). Healing Capitalism: Five years in the life of Business, Finance and Corporate Responsibility. Sheffield S3 8GG, UK: Greenleaf Publishing. p. 297. ISBN 9783899426489.
  5. ↑ Elayan, Fayez; Jingyu Li (2014). Changes in the Covalence Ethical Quote, Financial Performance and Financial Reporting Quality. St Catharines, Canada: Goodman School of Business. ISSN 0167-4544.
  6. ↑ "Luxury brands fail to make ethical grade", Financial Times, Retrieved November 29, 2007.

External Sources


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