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Best-in-Class – Good Enough? The Contribution of Best-in-Class Ratings to Sustainable Business

With the Best-In-Class approach, attempts are made to find out which company within a sector acts the most sustainably. The information gathered by this approach increasingly influences investment decisions. In Europe in 2011, EUR 283 billion were invested in accordance with this approach and this amount is likely to increase (Eurosif 2012).

This approach enables sustainability-oriented investors to spread their capital variously among all industrial sectors, including problematic sectors such as the mining or the oil sector, by always choosing the most sustainable company in those sectors. It is argued that the listing of the Best-In- Class would lead to a competition for good sustainability performances between the companies. As a consequence, the stock company would have the incentive to perform more sustainably and to improve continuously. It is not known if the Best-In-Class ratings have had this effect de facto, as it has scarcely been investigated.

Therefore, this study attempts to detect actual indications of the impact of the Best-In-Class approach.

Article number: 2014-02
Year of publication: 2014​​​​​​​
Number of pages: 48
Author: Antje Schneeweiß