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‹‹ ETHICAL RATINGS: A SYSTEMATIC ANALYSIS ORIENTED TO BUSINESS ECONOMICS ››

‹‹ ETHICAL RATINGS: A SYSTEMATIC ANALYSIS ORIENTED TO BUSINESS ECONOMICS ››. 20 th International Economics Conference – IECS 2013. Massimo Pollifroni University of Turin (Italy) Sibiu, 17 th May 2013. A – Introduction.

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‹‹ ETHICAL RATINGS: A SYSTEMATIC ANALYSIS ORIENTED TO BUSINESS ECONOMICS ››

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  1. ‹‹ETHICAL RATINGS: A SYSTEMATIC ANALYSIS ORIENTED TO BUSINESS ECONOMICS›› 20th International Economics Conference – IECS 2013 Massimo Pollifroni University of Turin (Italy) Sibiu, 17th May 2013

  2. A – Introduction In a previous work (IECS 2012) I have tried to research the causes of the current global crisis, which manifests itself in financial terms, but whose origin is due to the ethical model of reference.

  3. A – Introduction Just from this last point of view, the article has attempted to highlight what should be the correct drivers of ethical management for companies oriented towards an internationalization of their business.

  4. B - Business Ethics Drivers Business Ethics Drivers Definitions Potential Outcomes = = = = = = Driver is present ✓ Driver is present ✓ Driver is absent ✗ Driver is absent ✗ Corporate Social Responsibility Integrate social, environment ethical profiles = = U U U U U U Corporate Profitability Driver is present ✓ Driver is present ✓ Driver is absent ✗ Driver is absent ✗ Regular and fair return on capital with constant monitoring of the other financial ratios = = = = = = = = Business Ethics Potential Outcomes Model not oriented to B.E. Model not oriented to B.E. Model oriented to B.E. Model not oriented to B.E. = =

  5. For theorizing a process of globalization oriented to Business Ethics the two drivers must be present jointly. The exclusive presence of: • Corporate Social Responsibility (CSR) does not always guarantee business continuity; • Corporate Profitability (CP) does not always guarantee that the enterprises “should have in place a process to integrate social, ethical and human rights concerns into their business operations and core strategy in close collaboration with their stakeholder”(EC 2011).

  6. C – Aims and Topics Following these ethical issues, the aims and topics of the present paper are: • producing a systematic analysis of the ethical indicators used in the current international practices; • extrapolating the ethical ranking models with a high relevance in Business Economics • and highlighting the strong limits of the methodology in current use.

  7. 1 - Producing a systematic analysis of the ethical indicators used in the current international practices.

  8. The actors: “Standard Ethics”

  9. The actors: “DJSI World Index”

  10. The actors: “FTSE4Good Index”

  11. The actors: “World Bank” “World Bank” carries out the “Worldwide Governance Indicators” (WGI) project, an initiative that reports aggregate and individual governance indicators for 215 economies over the period 1996–2011, for six dimensions of governance (more information are available at: http://info.worldbank.org/governance/wgi/resources.htm#sources ).

  12. The actors: “World Bank” “Voice and Accountability” “Political Stability and Absence of Violence” “Government Effectiveness” “Regulatory Quality” “Rule of Law” “Control of Corruption”

  13. The actors: “Transparency International” • The “ethical indexes” issued by “Transparency International” are: • the “Corruption Perception Index (CPI)”, • the “Bribe Payers Index (BPI)” • and the “Global Corruption Barometer (GCB)”.

  14. The actors: “Transparency International”

  15. 2 - Extrapolating the ethical ranking models with a high relevance in Business Economics

  16. 3- Highlighting the strong limits of the methodology in current use The first consideration concerns the use of the market capitalization value as (main) yardstick for corporate inclusion inside the basket of “ethical stock market indexes”: this methodology used in the international practice proves to be highly discriminative for small and medium-sized listed companies, which perhaps could be more deserving – from the ethical point of view – than the main global players listed on major stock markets.

  17. 3- Highlighting the strong limits of the methodology in current use The second consideration concerns the nature of the subject evaluator of ethical rating, which should have a profile of independence from the rated entity: the issue is strongly linked to the current debate on the rating agencies in a “Worldwide Credit Crisis” concerning: the limits of reputation (Schettini Gherardini, 2011), the insufficiency of reform and the proposals for improvement the model (Hunt, 2009). Thanks for your attention!

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