The Integrity Rating Process
The integrity rating process
CBi designed the integrity rating process as a deliberate index to assess compliance and ethical business conduct. It has been proven effective among CBi signatories as a way of evaluating a organisation’s adherence to its declared values and procedures by including the view of various stakeholder groups. Where there is a high degree of agreement between a signatory’s stated values and the views of its stakeholders in relation to this, such a signatory is recognized through an annual Integrity Award. The annual integrity rating process is neither a financial audit nor a legally-binding assurance or certification of compliance.
CBi’s Five Integrity Stars
The CBi integrity rating is expressed by five Integrity Stars; each Integrity Star represents a different level of integrity performance. Each Integrity Star stands for an important step for the realization of integer business conduct.
Credentials – ‘You are who you say you are’
This is to establish the bona fides of an entity, whether or not is properly set up to carry out what it is doing. It includes simple background checks on its registration status, location, business scope, ownership, etc. Signatories of CBi obtain the 1st Integrity Star automatically after successfully completing the accreditation process (as described in chapter 3). Signatories with the 1st Integrity Star will be treated as an Associate Member of CBi.
Value System – ‘You do what you say you do’
This is simply ‘the way we do things around here’. It is the set of behavioral standards which an organization has adopted as its guiding principles in carrying out its objectives. These must be understood by all internal and external stakeholders and must be anchored in the culture of the organisation. Signatories of CBi that obtain the 2nd Integrity Star will not be publically recognized through an Integrity Award, as key elements of business integrity, such as accountability and sustainable commitment are still lacking. Signatories with the 2nd Integrity Star will be treated as an Associate Member of CBi.
Accountability & Transparency – ‘You inform your stakeholders on what you do
The organization should make appropriate disclosure to all internal and external stakeholders regarding information to which each stakeholder group should have a right, subject itself to appropriate scrutiny from them and recognize when there is need to seek approval from relevant higher authority (e.g. shareholders, board or supervisory body) concerning major decisions to be taken/implemented. Signatories that obtain this level receive the CBi 3-Star Integrity Award and become a full member of CBi.
Sustainable Commitment – ‘You do the right thing even when no one is looking’
A demonstration of the signatory’s will and power to comply with its own stated principles. This may be through internal audit procedures or an appropriately empowered nominee of the board (or its equivalent). In either case there must be mechanisms to ensure that business integrity processes are established and fostered (independent of e.g. personal leadership preferences). Signatories that obtain this level receive the CBI 4-Star Integrity Award.
Track Record – ‘You demonstrate business integrity over a period of time’
A sustainable (and reliable) commitment is expressed by the signatory’s high performance over a period of time. Signatories are recognized with the 5-Star CBi Integrity Leadership Award only if they obtained 3 or 4 Integrity Stars for five consecutive years, thereof 4 Integrity Stars in the last two years of the five-year period. After the five-year period, the signatory will be awarded with this Integrity Leadership Award if he continuous to maintain the 4th Integrity Star in the annual integrity rating. In case the signatory fails to do this, the five-year period starts again.
The CBi methodology of integrity rating
The principal aim of the rating is to explore the underlying values guiding an organization’s business conduct and how these values are translated into visible actions. Often, an organization claims to have a distinct set of values but does not act accordingly. Therefore, the methodology of the integrity rating must apply a strategy which enables the assessment of the ‘true’ level of the signatory’s integrity. However, as the renowned Professor Johann Graf Lambsdorff8 has stated, a value system cannot be assessed in a ‘check-box manner’. An organization’s consistency in word and action needs to be examined by extensive and profound analysis.
In order to overcome this challenge, CBi has developed an innovative methodology. It employs a multi-stakeholder approach which combines typical, compliance-driven assessment (indicators, program components, etc.) with perception-based information. The following graphic visualizes the various stakeholders and information sources included in the CBi integrity rating methodology:
This graphic illustrates that the CBi integrity rating methodology comprises four components (boxes shaded in orange)
1. Self-assessment (mandatory) Self-assessment by the signatory is based on a structured questionnaire which comprises checklist questions as well as open questions for anecdotes and explanatory cases along the above-mentioned five Integrity Stars. The self-assessment is targeted at the top management because it has been commonly recognized as the most significant indicator for the way decisions are made in different levels and departments of the business. Several academic studies have shown how organizational culture has been influenced by top management. The self-assessment will not be considered in the actual determination of the integrity rating (Integrity Stars). However, it provides a valuable benchmark of the signatory’s top management perception against the stakeholders’ view on the performance vis à vis integrity.
2. External assessments (mandatory)
The external assessment is based on a structured questionnaire which reflects the different levels of Integrity Stars (similar to the questionnaire used in the self-assessment). It includes checklist questions as well as open questions for anecdotes and explanatory cases. The external assessment is targeted at six stakeholder groups of the signatory:9
Investors / Creditors
Public Service Providers (e.g. National Stock Exchange, public utilities, etc.)
Other (e.g. joint-venture partners)
The stakeholders that will be questioned during the external assessment are randomly selected by the CBi Secretariat in order to ensure independence. Stakeholders respond on an anonymous basis.
An external, independent consultant conducts the assessment of the questionnaires.10 3. Reputational assessment (mandatory) Reputational assessment is based exclusively on the perception of the CBi Reference Group, whether the signatory is committed to the principles and standards of CBi. The reputational assessment is independent from the results of the external assessment, as the information from the self- and external assessment is withheld from the CBi Reference Group until the reputational assessment is completed. 4. Ad-hoc assessments (optional) Additional assessments may be conducted by the CBi Secretariat at their own discretion. This may include additional in-depth interviews with stakeholders, internet research and/or review of further documents provided by the signatory. These four components are used to determine the integrity rating (displayed by one of the five Integrity Stars) on an annual basis. It is noteworthy that CBi conducts an integrity rating and not an integrity ranking; signatories are not compared or put in an order of integrity.
The annual integrity rating process
The annual integrity rating ensures that signatories are constantly living-up to their commitment to the principles of The Convention on Business Integrity. Consequently, the participation in this annual process is mandatory for all CBi signatories. In the following, the three-step process for determining a signatory’s integrity rating is described in detail:
Process step 1: Rating from stakeholders The rating from stakeholders begins with an assessment conducted by an external, independent consultant. This assessment comprises interviews of different stakeholder groups on the basis of a standardized questionnaire. The key elements of this questionnaire are shown in Appendix I of this document.
The stakeholders who are chosen for the interviews are randomly selected by the CBi Secretariat from the list of stakeholders which is provided by the signatory in the accreditation process and which is regularly updated. The number of interviews depends on the number of stakeholders and annual turnover of the signatory.
After the completion of the interviews, the consultant determines an initial integrity rating of the signatory (at its own discretion) and communicates its rating decision to the CBi Secretariat. The CBi Secretariat and a credible international observer review the assessment and overall rating. In case of deviations with the consultant’s rating decision, additional discussions, ad-hoc interviews and research may be conducted by the CBi Secretariat. The outcome of this process step 1 will be an integrity rating of the signatory (expressed in an Integrity Star). Process step 2: Rating by CBi Reference Group
Independent of the external rating (process step 1), a rating is conducted by an independent multi-stakeholder group, called the CBi Reference Group (refer to ‘Terms & Definition’).13 This assessment is based solely on the CBi Reference’s experience and perception of the assessed signatory. The CBi Reference Group decides with a majority vote on the suitable level of Integrity Stars which should be awarded to the signatory. The Reference Group shall forward the results officially to the CBi Secretariat. The outcome of this process step 2 will again be an integrity rating of the signatory (expressed in an Integrity Star). Step 3: Final rating The final rating will be determined by the combination of the results of the stakeholder rating (process step 1) and the CBi Reference Group rating (process step 2).
In case the ratings are consistent (that is the CBI Reference Group’s perception matches the external assessment of the signatory’s stakeholders), no further action is required and the Integrity Star is assigned to the signatory. In case the results are inconsistent, the CBi Core Group has to decide on the final result14. The CBi Core Group may request (at its own discretion) additional sources of information (e.g. through an ad-hoc assessment carried out by the CBi Secretariat). The CBi Core Group may be advised by the international observer as well.
Signatories that obtain 3 or 4 Integrity Stars in the annual integrity rating process will be publically recognized at a high-level ceremony and be awarded with/able to maintain full membership status.
The CBi Integrity Award symbols the high standard of integrity which the signatory has achieved in this year. The award indicates the number of Integrity Stars and the year in which the Award has been granted.
As mentioned above, signatories that demonstrate consistent high performance over a period of at least five years will be recognized with the CBi Integrity Leadership Award, outlining an outstanding track record of business integrity.
CBi signatories are obliged to display the annual CBi Awards at their website and/or in relevant publications (such as a Corporate Sustainability Report).