Approach to Impact Assessment
GIIRS uses an iterative approach to assessing impact that is holistic, designed to recognize positive performance and impact, comparable across company size, transparent and oriented towards action and scalability.
Holistic: The GIIRS assessment strategy is based on belief that a company has multiple paths to impact and a holistic analysis of impact across various stakeholders should be used to highlight a company's overall impact. GIIRS issues a composite score of overall company social & environmental performance to inform a complete view of company and fund impact. GIIRS also recognizes that some companies, funds and investors do focus on one or two impact areas specifically, so the ratings system also offers impact area-level ratings to highlight areas of excellent performance and high impact (i.e. company focused on environmental impact can be recognized as having a 4- or 5-star Environment rating, while an investor will still be informed of the company's overall company score, which will also include social performance.)
Positive performance: GIIRS is designed to recognize the proactive, positive social and environmental impact a company achieves. The ratings system therefore allows a company to earn incremental positive points only; there are no negative points or weighted negative screens. One result of a positive approach is that GIIRS inquires about many different types of positive impact in the assessment and has found it virtually impossible for a company to achieve all practices and achievements covered. Additionally, a low score on a GIIRS assessment does not imply any negative performance or malpractice of a company or fund. A company begins the assessment with zero points and earns incremental positive points for each positive impact policy, practice and achievement.
The GIIRS Disclosure Questionnaire asks a company to report any potentially sensitive industries, practices, outcomes or fines/sanctions, but this section is not a weighted component of the overall rating. GIIRS maintains the right not to issue a rating for a company or fund if it finds any egregious information during the ratings process, but unless deemed egregious, GIIRS will disclose potentially sensitive information to investors and keep the positive approach to overall GIIRS Impact Ratings.
Action-oriented: Though GIIRS has several questions on company-level policies, the assessment seeks to weight action above intent. Within the assessment and within a particular Goal, GIIRS assessment questions related to practices and achievement are generally weighted more heavily than questions regarding policies.
Scalability-oriented: Many questions in the ratings system refer to written policies in place regarding social and environmental performance. While many companies have unwritten, less formalized policies and practices, GIIRS often requires written formal policies to be in place to receive full credit in the ratings system. This method is framed around the understanding that maintaining and executing informal, unwritten policies is more easily achieved when companies are small in size, but as companies grow, take on additional capital and bring on new employees, it is increasingly important to record formal policies and expectations in guidelines that can be adopted by the most recent hire and presented in early training or orientation materials. GIIRS seeks to reward companies which take proactive steps to institutionalize impact-related practices and policies.
Comparable across organizational size: GIIRS believes all companies have the potential to grow when investors can identify the impact and then make an investment to enable further growth. Therefore, GIIRS Impact Ratings are designed to be comparable across company and fund sizes, allowing an investor to evaluate and compare a 5-person seed-stage company and a more established 50-employee company. GIIRS provides metrics data to investors to include scale and related contextual information in investment decision-making, but does not incorporate factors of scale directly into impact ratings.
Leverage of third-party certifications: Whenever possible, GIIRS relies on relevant third-party certifi cations (Fair-Trade, USDA Organic, Cradle-to-Cradle, LEED, etc.) to leverage expertise in detailed product or practice assessments and existing industry standards in the overall company rating.
Educational/Management tool: In addition to providing a third-party rating of social and environmental performance of a company or fund, the rating system also serves as an educational and management tool. GIIRS has built many "Best Practice Guides" within the assessment to inform companies on how to implement the positive policies and practices included in the assessment. Questions with such guides are denoted with a "Best Practice Guide" hyperlink located to the left of the question. Sample Best Practices Guides include: "How to Write an Employee Handbook" and "Guide to Community Service Programs." Companies who have participated in the ratings process also report increased knowledge and awareness of their company decisions and the impacts on stakeholders. Many companies choose to set annual goals based on their GIIRS score and use the assessment as a guideline of future proactive actions to take.
Transparent: GIIRS has a commitment to transparency within the ratings system. Assessment weightings for the various assessment tracks are visible to any interested party online, and each question weighting is clearly labeled to demark a question's weight distribution within its Topic area (see "Weightings and GIIRS Impact Rating Composite Score" for more information.)
Dynamic: GIIRS and the relevant Standards Advisory Boards will release a new version of the ratings system every two years in order to refl ect current best practices in social and environmental performance and to improve the ratings system over time.