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RepRisk

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RepRisk AG
Company typePrivate
Founded1998
HeadquartersZurich, Switzerland
Websitehttp://www.reprisk.com

RepRisk AG is an environmental, social and corporate governance (ESG) data provider headquartered in Zurich, Switzerland.[1][2][3]

The company runs an ESG database on the performance of companies, projects, sectors and countries to identify ESG risks. It looks at reports of environmental degradation, human rights abuses and corruption that can damage an organization's reputation, financial profitability or lead to compliance issues.[2][3][4][5][6][7][8]

History

RepRisk was formed in 1998 as ECOFACT, a Zurich-based environmental risk consultancy focused on the financial sector. In 2006, its ESG database was created at the request of a banking client. It lists companies linked to environmental risks. The database has over 42,000 entries, including companies, projects, NGOs and governmental bodies reported to have links to negative ESG incidents.[9]

Reports

Methodology

RepRisk monitors third-party sources and external stakeholders, including print and online media, news websites, newsletters, NGOs, governmental bodies, think tanks, blogs and Twitter,[4] in 14 languages. RepRisk’s analysts monitor these mediums daily to identify companies and projects that have been involved in ESG-related incidents. RepRisk monitors 27 ESG issues (for example local pollution, forced labor or tax evasion) and 36 topic tags, or "hot topics" (such as palm oil, Arctic drilling, tobacco, gambling or water scarcity).[3][10][11]

The research scope is defined in accordance with international standards and norms, such as the ten principles of the United Nations Global Compact (UNGC).[3]

The analysis process has three phases: 1) identification, 2) breakdown and analysis, and 3) approval. Once advanced algorithms identify an ESG-related incident, RepRisk’s analysts analyze the incident based on severity and novelty of the event, the source of the information, and links to the company, project, country, etc. involved in the incident. Following a quality check, all data and information surrounding the incident is added to the RepRisk ESG Risk Platform.[9][12]

RepRisk Index (RRI)

Screenshot from the RepRisk ESG Risk Platform, showing graph of RepRisk Index (RRI) trend with ESG Breakdown.

The RepRisk Index (RRI) is a proprietary algorithm that captures criticism and quantifies a company’s exposure to ESG-related risks. The RRI does not measure reputation, but rather is an indicator of reputational risk related to ESG issues.

A company’s RRI score can range from zero (lowest) to 100 (highest) and the higher the value of the score, the higher the risk exposure. Companies that have been exposed to higher levels of criticism in the past are less sensitive to new allegations, in comparison to a company that experiences a first-time incident. If a company does not experience new criticism, their score will eventually drop to zero over a maximum period of two years.[1][13][14]

A company’s Current RRI value indicates the current media and stakeholder exposure of a company, project, sector or country, whereas a Peak RRI is an overall risk exposure indicator that indicates the highest level of criticism over the past two years.[citation needed]

The RRI score is calculated based on a number of factors, including the influence of the source of the information, the frequency and timing of criticisms, and the novelty and severity of the criticism.[1][13][14]

Annual report

RepRisk releases a yearly ranking of the companies it considers the 'top ten most controversial in the world'. It uses its database to create the RepRisk Index (RRI). The RRI uses an algorithm based on captures of criticism and quantifies a company’s exposure to ESG issues.[13][15][16][17][18][19]

Rank 2009[16] 2010[17] 2012[18] 2013[19] 2014 [20]
1 Peanut Corporation of America Transocean Ltd Tazreen Fashions Ltd International Federation of Association Football (FIFA) Chonghaejin Marine Company
2 Vedanta Resources BP PLC Olympus Corp Punta Fa SL (Mango) Takata Corp
3 Newmont Mining Corporation Vedanta Resources PLC Lonmin PLC Comigel SAS Chang Guann Company
4 Rio Tinto ExxonMobil Corporation News Corp Ltd HSBC Holdings PLC Zhongrong Metal Products
5 Walmart Foxconn Electronics Inc Samsung Group Findus Group Ltd Uber Technologies
6 Siemens Chevron Group HSBC Holdings PLC Fonterra Co-operative Group Ltd International Federation of Association Football (FIFA)
7 KBR BG Group PLC Reebok International Ltd GlaxoSmithKline PLC Dongguan Shinyang Electronics
8 ExxonMobil Corporation Royal Dutch Shell ING Bank NV BNP Paribas SA General Motors
9 BP PLC Sinar Mas Group Wyeth LLC ICAP PLC KT ENS Corp
10 BHP Billiton Magyar Aluminium TeliaSonera AB Samsung Group Neiman Marcus Group

Additional reports

  • Special Report on ESG risks in Colombia (December 2014) (link)[21]
  • Special Report on Indigenous people report (September 2014) (link)
  • Special Report on Most controversial mining (August 2014) (link)
  • Special Report on MINT countries (February 2014) (link)
  • Special Report on Consumer electronics (December 2013) (link)
  • Special Report on Report on Artctic Drilling (June 2013) (link)
  • Special Report on BRIC countries (December 2012) (link)

Research

  • The Effect Of Bad News On Credit Risk (Research Study): Julian Koelbel, a PhD student at the Swiss Federal Institute of Technology (ETH) in Zurich, used RepRisk data in the research study: The effect of bad news on credit risk: a media based view of the pricing of corporate social responsibility. The paper, which won an Award for Excellence in Responsible Investment Research at the UN PRI’s annual Academic Network conference in 2013, highlighted that more negative news on CSR issues are associated with higher credit default swap spreads.[22]
  • ESG Alpha in China (Research Study): Michael Barnett of the Centre for Corporate Reputation at Oxford University, and Jimmy Chen, Andreas Hoepner and Qian Li from the Centre for Responsible Banking & Finance at the University of St Andrews, used RepRisk data as the basis for their recent research paper, "ESG Alpha in China." The research paper, which investigated the effect of ESG risks on the share performance of Chinese firms and found that ESG criteria can be used to generate alpha for investments in Chinese companies, won the European PRI award in the category of Investment Strategy.[23]
  • Kepler Cheuvreux: Kepler Cheuvreux and Affectio Mutandi included RepRisk data in their Soft Law Violation & Liability research report, one of a series of reports produced by the company surrounding business ethics.[24]

External use of data

  • UBS in 2010 decided to only conduct ethical business under strict pre-established guidelines. They used RepRisk in 2011 for ESG data.[25][26]
  • RobecoSAM as a component of its Corporate Sustainability Assessment (Dow Jones Sustainability Index) monitors media and stakeholder commentaries to identify companies' involvement and response to environmental, economic and social crisis situations that may have a damaging effect on their reputation by using RepRisk.[27]
  • Dow Jones Sustainability Index (DJSI) / RobecoSAM: RobecoSAM uses RepRisk as part of the Media and Stakeholder Analysis section of its Corporate Sustainability Assessment for the Dow Jones Sustainability Index, in order to identify companies' involvement in environmental, economic and social situations that may have a damaging effect on their reputation and core business.[32][33]
  • The CDP Climate Performance Leadership Index: RepRisk’s data serves as an input in the evaluation of companies for CDP’s Climate Performance Leadership Index (CPLI), which reveals the top companies around the world that are doing the most to combat climate change. RepRisk’s data adds to the current CPLI evaluation process by validating company-provided information and clarifying how a company’s policies, commitments and initiatives translate into performance.[citation needed]
  • 2014 Newsweek Green Rankings: Newsweek incorporated RepRisk assessments of reputational risk for companies for the "Reputation Score" indicator in their 2014 Green Rankings. The Newsweek Green Rankings are one of the world’s most recognized assessments of corporate environmental performance.[34]
  • Global 100 Ranking: RepRisk’s assessment was incorporated in the sanctions portion of the screening of the Global 100 Most Sustainable Corporations in the World annual ranking and sustainability equity index managed by Corporate Knights Capital.[35][36]

Research and project partners

Awards

  • RepRisk was ranked as the best Risk Analytics firm in the SRI & Corporate Governance research value chains in the 2014 IRRI Survey by WeConvene Extel (Thomson Reuters) and SRI-Connect.[37]
  • In March 2013 RepRisk was awarded by the Swiss Government’s Commission for Technology and Innovation (CTI) a research grant to assess and develop tools using RepRisk data that support ESG transparency in supply chain.[citation needed]
  • RepRisk received the award for ‘Most Important Innovation in Sustainability’ at the Sustainability Congress 2011 in Bonn in May 2011.[38]

References

  1. ^ a b c Kelleher, Ellen (September 23, 2012). "SRI funds and rivals so alike". Financial Times. Retrieved 24 July 2014.
  2. ^ a b "New Partnership Offers Clients of Governance & Accountability Institute Access to RepRisk Comprehensive ESG Intelligence". 3BL Media. Retrieved 10 July 2014.
  3. ^ a b c d "RepRisk AG - Corporate Profile". SRI Connect. Retrieved 12 July 2014.
  4. ^ a b Faye, Kilburn (March 11, 2014). "RepRisk Preps ESG Country-Sector Risk Matrixes". Waters Technology. Waters Technology.
  5. ^ "Norwegian government fund selects RepRisk for portfolio monitoring". Reputation Institute. 28 January 2014. Retrieved 28 May 2014.
  6. ^ "ESG Analytics Unveils Private Equity Industry's First Comprehensive Investment Decision Support Tool". Business Wire. September 26, 2013. Retrieved 26 May 2014.
  7. ^ Haederli, Alexandre (27 January 2013). "RepRisk évalue la réputation des grandes entreprises". Le Matin Dimanche. Retrieved 26 May 2014.
  8. ^ Parker, Kevin (25 February 2014). "SICM's Parker: Forget the emotional arguments about sustainable investing". Fundweb. Retrieved 26 May 2014.
  9. ^ a b c d e "Overview of ESG Rating Agencies" (PDF). Novethic Research. Novethic Research. Retrieved 24 July 2014.
  10. ^ Adams, John (3 February 2014). "UBS Taps Big Data to Shrink Reputational Risk". American Banker.
  11. ^ Avantika, Chilkoti (December 12, 2012). "Brics: risky businesses". Financial Times. Retrieved 26 May 2014.
  12. ^ Kropp, Robert. "RepRisk Names World's Most Controversial Mining Companies". Social Funds. Social Funds. Retrieved 26 May 2014.
  13. ^ a b c Elk, Jennifer. "RepRisk releases Annual 'Most Controversial Companies' List". Sustainable Brands. Retrieved May 26, 2014. Cite error: The named reference "elk" was defined multiple times with different content (see the help page).
  14. ^ a b "Germany's AFU, RepRisk Ally for Fund ESG-risk Reports". Waters Technology. Retrieved June 26, 2014.
  15. ^ Kelleher, Ellen, "SRI funds and rivals so alike", Financial Times, September 23, 2012
  16. ^ a b "Most Environmentally and Socially Controversial Companies of 2009". Accountability Central. Retrieved June 6, 2014.
  17. ^ a b "Top 10 Most Environmentally and Socially Controversial Companies of 2010". Inspired Economist. Retrieved June 6, 2014.
  18. ^ a b Collins, Tyler. "RepRisk Releases Report on Most Controversial Companies of 2012". First Affirmative. Retrieved June 26, 2014.
  19. ^ a b "RepRisk Releases Annual 'Most Controversial Companies'". Sustainable Brands. Retrieved June 26, 2014.
  20. ^ Schiller, Ben (11 February 2015). "These Were Last Year's Most Controversial Companies". FastCoExist. Fast Company. Retrieved 11 February 2015.
  21. ^ "RepRisk Special Reports". RepRisk. RepRisk. Retrieved 26 February 2015.
  22. ^ "PRI Academic Network Conference Awards recognise excellence in responsible investment research". UNPRI.org. United Nations.
  23. ^ ""ESG Alpha in China" research paper based on RepRisk data scoops FIR/PRI Award". RepRisk. RepRisk. Retrieved 25 February 2015.
  24. ^ "Soft law violation & liability" (PDF). Kepler Cheureux.
  25. ^ "UBS turns to RepRisk for ESG data". Banking Technology. January 27, 2012.
  26. ^ Adams, John (February 3, 2012). "UBS Taps Big Data to Shrink Reputational Risk". American Banker.
  27. ^ "Corporate Sustainability Assessment - Sustainability Indices". sustainability-indices.com.
  28. ^ "Norwegian government fund selects RepRisk for portfolio monitoring". Responsible Investor. Reputation Institute.
  29. ^ Grene, Sophia (July 5, 2009). "Innovation key to staying ahead in ESG game". Financial Times. Retrieved June 6, 2014.
  30. ^ "Norway appoints SourceAsia for ethical screening". Investment and Pensions Europe. September 23, 2009. Retrieved June 6, 2014.
  31. ^ Ali, Saleem (November 22, 2014). "Sovereign Wealth Fund Divestment as an Environmental Protection Strategy". National Geographic. Retrieved 24 November 2014.
  32. ^ "Dow Jones Sustainability Indices in collaboration with RobecoSAM". Sustainability Indices.
  33. ^ "Measuring Intangibles: ROBECOSAM'S Corporate Sustainability Assessment Methodology" (PDF). ROBECOSAM.
  34. ^ "2014 Newsweek Green Rankings FAQ and Advisory Council". Newsweek.
  35. ^ "Ranking de las 100 empresas más Sostenibles del mundo". Obras Urbanas. Obras Urbanas. Retrieved 23 January 2015.
  36. ^ "Global 100". Corporate Knights.
  37. ^ "The IRRI Survey 2014" (PDF). Extel, Convene and SRI Connect. Retrieved 13 March 2015.
  38. ^ "RepRisk awarded for "Most Important Innovation in Sustainability" at the Sustainability Congress in Bonn, Germany". RepRisk.com. Retrieved 13 March 2015. {{cite web}}: C1 control character in |title= at position 66 (help)
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