The latest quarterly digital governance ratings for global companies reveals that only a handful of companies, including Microsoft, and Deutsche Telekom, achieved an A rating.
330 global companies have been graded with the average score being 50.61 or a ‘C rating’ highlighting that the majority of companies are yet to integrate environmental, social and governance (ESG) policies within their digital strategy.
EthicsGrade develops AI-driven models to assist in completing the picture of ESG maturity of some of the world’s largest organisations to show which companies are implementing good governance commensurate with their digital strategy, as well as those whose rankings have slipped in 2022.
Microsoft and Deutsche Telekom were marked highly across their technology governance such as cyber and privacy-related safeguards, and consideration of the environmental consequences of their digital strategy.
Charles Radclyffe, Managing Partner, EthicsGrade “As one of the largest tech conglomerates globally, Microsoft has significant reach and responsibility. It’s ESG and good governance strategy provides a high standard for the policy and efforts for the rest of the tech industry; although sadly many others are nowhere near the same level.”
Companies with highest corporate digital responsibility rankings:
- Microsoft = 82.80 A
- Deutsche Telekom = 82.68 A
- Cisco Systems = 80.17 A
- Sony = 76.70 B
- Merck Group = 77.79 B
The worst performing companies with little or no corporate digital responsibility
- Gazprom = 1.20 NR
- Renren = 11.95 NR
- Scoop.it =14.55 NR
- Rosneft = 16.34 NR
- Plenty of Fish = 17.23 NR
Both telecoms and the IT sector have companies demonstrating a high quality of privacy and security policies, along with data and technology ethics principles.
For example Cisco (80.17) and Ericsson (74.95) both demonstrated high-level consideration of digital governance, public policy, privacy and sustainability; frequently publishing house-views and policies on these topics and contributing to wider public conversation.
Similarly, Deutsche Telekom, the German telecommunications company is the second highest scoring organisation that EthicsGrade has rated. It exhibits a high degree of transparency regarding data ethics and AI, with detailed public information available on their AI ethics principles, and efforts to improve public education surrounding cybersecurity risks.
Its Corporate Responsibility Report provides insight into their work to ‘green’ their network, with a range of sustainability steps in place to reduce energy efficiency and hardware choices to minimise environmental impact. Additionally, efforts to make their digitalisation process more inclusive has also been a focus for Deutsche Telekom, adding to its impressive EthicsGrade rating.
Lowest Performing Industries
With more people using online dating platforms they hold a large amount of very personal data. However, EthicsGrade was unable to identify meaningful transparency into their data and security protocols, how they are ensuring the use of AI and automation responsibly, and how they safeguard their users from cybersecurity risks aside from catfishing. Given these platforms rely on the use of algorithmic matching algorithms in order to provide services to potentially millions of users with very small back-office teams, it’s critical that users can trust not just the person they are matched with, but the match-making AI with their heart.
Five of the largest online dating platforms in the UK: Tinder (27.23), Hinge (28.62) , Plenty of Fish (17.23), Match.com (18.64) and Grindr (31.76) were all below the tenth percentile of rated companies, and with insufficient data received a not-rated (NR) grade. This highlights the lack of transparency across this sector.
Russian Companies
Over the last quarter, EthicsGrade saw a significant decrease in scores for companies based in Russia. It’s analysts were unable to access Gazprom, Rosneft and VK’s corporate information due to their websites becoming blocked in outside territories, following the war in Ukraine.
Lowest scoring Russian companies:
- Gazprom -44.34 from 45.54 R to 1.20 NR,
- Rosneft = -40.32 from 56.66 D to 16.34 NR,
- VK = -13.04 from 57.07 D to 44.03 R
Whilst it is unlikely Russian companies have changed their governance on digitalisation in recent months, clearly geopolitics has an unintended impact on ESG ratings agencies who are struggling to ascertain accurately the ESG risks of companies on the other side of the Russian firewall. While this will matter less to the asset management industry, as most western investors will have already exited their holdings in Russia – this does have a bearing on other stakeholders, most notably consumers, employees and the Russian supply-chain, who, despite the macro-geopolitical landscape will be reliant on free and open data-sources like EthicsGrade to determine which companies they engage with best align to their values.
Charles Radclyffe continued: “Investors should see red flags at global companies which are unrated for data governance, particularly if their business models rely on AI and data analytics. Organisations that receive an ‘NR’ rating are not being sufficiently transparent about their technological governance and thus have failed to fully integrate ESG principles across their core business operations.”
The full quarterly update can be found here https://www.ethicsgrade.io/ratings.