The Ethical Leadership Impact Goal is driven by the way in which management handles its company’s behavior towards customers, suppliers, peers, and society. It considers monopolistic and anti-competitive behavior such as collusion, price-fixing, fraud, corruption, and bribery. Management’s ability to interact with regulators, resolve conflicts between corporate and societal interests, and act responsibly in times of crises are also important factors for this goal.
When scoring a company on the Ethical Leadership impact goal, the following underlying Sustainability Accounting Standards Board (SASB) factors are considered:
- Business Ethics: The management of risk related to the ethical conduct of business, including fraud, corruption, bribery. Also includes sensitivity to business norms that change over time, jurisdiction and culture. Provide services with the highest ethical standards of the industry, including no conflicts of interest, bias, negligence, thorough training of employees.
- Competitive Behavior: Social issues associated with the existence of monopolies, excessive prices, poor quality of service, and inefficiencies. Management of legal and social expectations around monopolies and anti-competitive behaviors, such as bargaining, collusion, price-fixing, manipulations, and protection of intellectual property.
- Critical Incident Risk Management: Company’s management of systems and scenario planning to identify, understand, prevent, and minimize the occurrence of high-impact accidents and emergencies with big potential environmental and social externalities. Specifically, safety management and technology controls, planning for potential environmental, social, and human implications of such events, and the long-term effects to the organization, workers, and society if these happen.
- Management of the Legal & Regulatory Environment: Approach to engage with regulators in cases where there is a conflict between corporate and public interests and impact on social relations, lobbying, overall resilience on the regulatory environment for business competitiveness and the ability to comply, alignment of management and investor view of regulatory environment and compliance at large.
- Systemic Risk Management: How companies manage systemic risks resulting from large-scale weakening or collapse of systems. Includes financial systems and natural resources. For Financial Institutions' ability to absorb shocks arising from financial and economic stress, and meet regulatory requirements related to the complexity and interconnectedness of companies in the industry.
The SASB is a non-profit organization founded in 2011 to help businesses and investors develop a common language about the financial impacts of sustainability. To learn more, see https://www.sasb.org/about/
To learn more about the Impact Scoring methodology, see How are Impact scores calculated?