Not all rating systems are the same, and each can reflect a given assessment system based on a set of priorities or vintage points. Strictly financial ratings systems have prevailed so far, but there are also ethical indicators, which include the groundbreaking Catholic rating system launched by the Quadragesimo Anno Foundation at the Lateran Pontifical University during the conference “Investing for the common good”, supported by Valore Ltd in cooperation with Vatican Insider and Core Values. The operative role of Quadragesimo, whose promoting committee has Cardinal Antonio Maria Vegliò as its honorary president, is reconfirmed in an investment fund meant to help families that can’t afford to pay their mortgage.
The project for the creation of a rating system that adheres with Church Social doctrine provides a new practical tool for all those who want to avoid investing in harmful activities. Accordingly, money used to reduce and not to increase social disparities at global level has a potential role in addressing market unbalances. This innovative approach is still in its first stages, yet to be developed and devised.
The criteria of investing anywhere at any time “provided it is profitable” has created far too many disasters and injustices.
How can rating systems promote a good use of money? First of all, assessments are expressed in numbers, letters or judgements that are easily understandable and accessible. They are veritable “yardsticks” that measure the features of a given company, its products or behaviours. Those tasked with making assessments must enjoy utmost credibility, they are bound to specify the adopted criteria, that must be well-defined and not open to interpretation. The system must be scientifically rigorous and lacking conflict of interest. It must not be vulnerable to external influence even when the company undergoing rating assessments pays the technical cost of the assessment.
Stock market ratings are assessment tools used as solvency ratios, namely, to gauge a company’s (or a Country’s) ability to meet its debt towards investors and citizens. When the rating is low, it signals a risk that the invested funds or interests could not be repaid.
They can be used also for other purposes. They can signal the extent of corporate environmental sensitivity, the extent to which a firm respects its customers, staff and interlocutors. They can measure regulatory and fiscal compliance. A sound firm should draw advantage from positive certification, and should be considered more reliable and transparent compared to firms lacking recommendations in public procurement processes.
Likewise, indicators highlighting virtuous behaviour (no weapons, no dictatorships, no pollution), of fund investment companies should attract the attention of stakeholders valuing not only the maximization of profits. It already happens. It is estimated that a quarter of global collective investments (investment funds and others) are characterised by some form of social responsibility. Even taking into account a certain degree of opportunism and the latest trends, the shift in the destination of money is occurring at global level. The new rating system, devised by renowned experts, , backed by the moral authority of the Church, drives other big investors (pension funds, insurance companies, large corporations, States) towards new sensitivities and good practices.