fund managersSustainability rating reveals countries' true creditworthiness
oekom research evaluates the sustainability of 52 industrialised and emerging countries
Munich, 2 February 2012 - The past few months have seen a vigorous debate about trends in the financial ratings not only of the eurozone countries but also of the USA. Sustainability-oriented investors, in particular, are convinced that conventional financial ratings inadequately reflect the ability of these countries to meet their obligations arising from the issuing of government bonds. The additional inclusion of sustainability ratings, which evaluate the social and environmental conditions in a country, provides a more soundly-based assessment of that country’s creditworthiness. The latest country ratings from the sustainability rating agency oekom research show that Greece, Italy, Portugal and Spain, as well as the USA, have all failed to attain oekom’s Prime threshold. Norway, Sweden and Denmark took the top places, with Germany coming in 6th position.
oekom research analysed the social and environmental sustainability of a total of 51 individual countries, as well as of the European Union as a whole. The issues evaluated included the current situation with regard to freedom of speech and freedom of the press, investment in education and modern infrastructure, the energy mix and the way the country is tackling climate change. Norway and Sweden retained their leading positions, while Denmark improved on the previous year’s 9th ranking, taking 3rd place. This was mainly due to improvements in the environmental area, for example in terms of climate protection and the energy mix. Austria came in 5th, followed by Germany in 6th place. These countries, together with Switzerland, the UK and France, were among the 21 countries to be awarded oekom Prime status. This is awarded to countries which satisfy the stringent minimum requirements laid down by oekom research for a responsible organisation of the political and social system.
The southern European crisis countries of Greece, Italy, Portugal and Spain, on the other hand, failed to achieve oekom Prime status. “Greece was already receiving poor ratings in our sustainability rating at a time when conventional rating agencies were still giving it scores in the A range,” says Oliver Rüter, Research Director at oekom research. “Investors who have been basing their decisions on our sustainability ratings do not have any Greek government bonds in their portfolios.”
The USA was ranked 44th. Many of the hopes pinned on the inauguration of Barack Obama as President have not been fulfilled. For example, the USA continues to refuse to make a constructive contribution to global climate protection, and its consumption of energy and resources remains high. Increasing income differentials are leading to social tensions, which are reflected, for example, in the protests by the “Occupy Wall Street” movement.
The significance of the sustainability rating, according to Oliver Rüter, is that “A country which invests in education, which promotes research and development into renewable energies and energy efficiency and which provides its citizens with access to modern information and communication media is laying the foundations for that country’s positive economic development.” The legal and social framework of a society is just as important. In times of crisis, a pluralistic society in which citizens’ rights and human rights, freedom of speech and freedom of the press are fully guaranteed and in which all citizens have access to government services irrespective of their ability to pay bribes will find mechanisms for resolving conflict that are different from those employed in countries where such rights are restricted. These are all factors which have a positive impact on a country’s performance and thus also on its creditworthiness.
Background:
oekom research’s Country Rating covers the EU Member States, the OECD countries and other major economies in Asia and Eastern Europe. It comprises 150 social and environmental indicators and in the first instance serves investors and financial service providers as a basis for their sustainable investment decisions. Since 2001, oekom research has published the study annually.
Excerpt from the rankings list from oekom research’s country rating:
Position | Country |
1 | Norway |
2 | Sweden |
3 | Denmark |
4 | Finland |
5 | Austria |
6 | Germany |
10 | Switzerland |
15 | European Union |
17 | United Kingdom |
21 | France |
27 | Italy |
36 | Brazil |
44 | United States of America |
51 | South Africa |
52 | India |
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oekom research - the rating agency
oekom research is one of the world’s leading rating agencies in the field of sustainable investment. The agency analyses companies and countries with regard to their environmental and social performance. oekom research has extensive experience as a partner to institutional investors and financial service providers, identifying issuers of securities and bonds, which are distinguished by their responsible management of social and environmental issues. More than 70 asset managers and asset owners routinely draw on the rating agency’s research in their investment decision-making. oekom research’s analyses therefore currently influence the management of assets valued at over 140 billion euros.
Further information can be obtained from:
oekom research AG, Rolf D. Häßler, Head of Corporate Communications
Goethestraße 28, 80336 Munich
Fon: +49-89-544184-57, Fax: -99, rolf.haessler@oekom-research.com
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