Sustainability rating and moral fictionalism: opening the black box of nonfinancial agencies
Accounting, Auditing & Accountability Journal
ISSN: 0951-3574
Article publication date: 2 April 2021
Issue publication date: 12 November 2021
Abstract
Purpose
The purpose of this paper is to explore the practices, challenges and ethical issues underlying the fabric and dissemination of corporate sustainability ratings.
Design/methodology/approach
Based on 36 semi-structured interviews with sustainability rating practitioners, the study shows the trade-offs, ethical judgments and customizable aspects involved in rating practices, which cannot rely only on formal and predefined methods.
Findings
In contrast with the official optimistic rhetoric about the rationality and rigor of sustainability rating methods, agencies face serious challenges in the measurement and comparison of performance in this area, particularly in terms of the aggregation of scattered and fuzzy indicators, commercial pressures and the availability, materiality and reliability of the information collected. Despite these concerns, sustainability ratings do appear to be useful in improving corporate responsiveness and increasing investor awareness of the complex and difficult-to-measure aspects of nonfinancial reports.
Practical implications
Rating agencies should collaborate to set up common indicators that would be easier for firms to produce and should better separate their sustainability rating production activities from other services they offer to companies (e.g. consultancy).
Originality/value
This study contributes to the literature on the measurement and promotion of corporate sustainability by analyzing rating practices through the lens of moral fictionalism, which here refers to the human tendency to build ethical judgments on fictional but convenient and useful representations.
Keywords
Acknowledgements
This study was funded by the Canada Research Chair on the Internalization of Sustainable Development and Organizational Responsibility.
Citation
Boiral, O., Talbot, D., Brotherton, M.-C. and Heras-Saizarbitoria, I. (2021), "Sustainability rating and moral fictionalism: opening the black box of nonfinancial agencies", Accounting, Auditing & Accountability Journal, Vol. 34 No. 8, pp. 1740-1768. https://doi.org/10.1108/AAAJ-12-2019-4356
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited