EthicsGrade’s latest quarterly ratings reveal the global companies who are implementing good governance in their technology in 2022, as well as those whose rankings have slipped.
Of the 302 companies graded, less than a third (89) have a score of C or above. Many companies continue to ignore or provide little or no detail on their technology governance and artificial intelligence (AI) ethics.
EthicsGrade – an environmental sustainability, social justice and corporate governance (ESG) ratings agency specialising in understanding the risks stemming from digitalisation, notably AI ethics – found that only a handful of companies, including Microsoft, and Deutsche Telekom, achieved an A rating; these were marked highly across public policy, technical barriers to trust, ethical risk, data privacy and sustainability.
Only three companies have improved their score over the last quarter including:
Xiaomi: B from D
IBM: B from C
Instagram: C from D
The highest graded companies are a diverse list, spanning across all sectors and highlights the lack of consistency companies have adopted when it comes to implementing digital governance. Chinese smartphone maker, Xiaomi, is the only company to have improved by two grades this quarter. This is as a result of significant changes it has made to governance disclosures due to cybersecurity researchers finding Xiaomi guilty of tracking and data harvesting without explicit consent, and whilst browsing anonymously in 2020 and 2021.
To build assurance of user security and privacy, Xiaomi made their data protection architecture transparent through the publication of their security and privacy white papers in April 2022.
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Charles Radclyffe, CEO of EthicsGrade, said: “It is reassuring to see companies such as Xiaomi responding to controversies and taking the opportunity to bolster their governance and disclosures, although it remains to be seen whether they can now keep out of the news for the wrong reasons as we continue to track them and any future controversies which might emerge. The very best companies that we track are not just staying ahead of their own controversies, but those in their peer group, and investing the time to learn lessons from others’ mistakes so they don’t make the same errors”.
“It is increasingly important for companies to integrate ethical principles in their digital transition, and to ensure such transition is appropriately monitored and governed. This is apparent to all stakeholders, and investors are increasingly looking to see it fully embedded in ESG strategies and reporting requirements. Examples of this include initiatives being established since the publication of draft EU regulations on AI in April 2021 which are due to be finalised later this year. Many companies will need to be much better prepared.”
EthicsGrade’s methodology looks at how digital ethics questions can be measured and managed as ESG issues. 90 companies examined were difficult to grade and have been given an ‘R’ rating. Companies which receive a ‘R’ rating do so because EthicsGrade is not sufficiently confident from its research of them that their governance around technology deserves to be graded. This could be because the organisation is early stage, or its use of AI and related technologies is itself early in development. For firms where neither is true, then this shows an unsophistication to governance components of their strategy.
Furthermore, 18 companies had their rating downgraded this quarter. This includes British Airways – from R to NR as link to the information on supporting worker’s rights and unionisation of employees expired so they weren’t able to keep their previous grade; and Alibaba Cloud from D to R – information they had previously disclosed has been removed which communicated how they perform responsible automation, re-skilling their former employees, and also missing details about improving representation in their AI development team specifically.
Charles Radclyffe continued: “Customers and investors should see red flags at online companies which are unrated for data governance, particularly if their business models rely on AI and data analytics. Organisations that receive an ‘R’ rating tend to be characterised as being ‘defensive’ in their response to challenges to their regard for questions of technological governance.”