The speed of companies’ actions is an integral part of their moral rating. This is because time is of the essence in delivering impact, and because the speed or lack of speed influences their peers.
Another key point is that companies need to come out of Russia totally and not by half measure. This is critical in practice because of the vast number of companies making Announcements that are not total withdrawals. When we delve into what these companies have actually done, they involve Partial or Incomplete actions, or, in some cases, Partial withdrawals that are themselves still in process. See Shades of Red.
These dynamics lead to companies doing too little, too late. They know they are under pressure from public opinion so they may make a Partial withdrawal to have something to announce. When the pressure builds, they may withdraw for the first time, or they may top things up. Importantly, they think that they can make these corrections later and, when doing so, ‘wipe the slate clean’.
To counteract this waiting on the sidelines or doing things by half-measure, our ratings are not just about getting the truth out, but about making the truth stick and letting companies know that it will stick.
We will provide a historical record of how each company behaved in the form of an ‘Indelible Ledger’. This will record the company’s actions or inactions and allow comparison with other companies based on Speed and Degree. A company’s slate will never be wiped clean.
Many companies wait to see if they will be forced to withdraw by peer pressure, boycotts or their governments imposing sanctions and, when and if they are forced to, they are hoping people will then forget when and how they left Russia. By maintaining a permanent record of their history, we will make it impossible for them to ‘merge’ into the same category as the early movers and become confused with them morally. It will also be impossible for a company that withdraws its Activities one at a time, like a case of pulling teeth, to be confused with a company doing the right thing in a single shot. Importantly, the fear of a permanent record may force some companies to act earlier and totally.
By contrast, if we don’t maintain the Indelible Ledger, a company would be able to drag its heels, waiting to see if its peers are going to withdraw, or would be able to withdraw in part, and then, when it gets really hot in the kitchen, do the right thing. It would then be on the list of companies that had done so, indistinguishable from those that had really done the right thing. This is the inherent problem of a simple list that is updated to show status: it loses the history. That undermines justice but what is really damaging in practice about the ability to ‘refresh reputation’ is that it actually acts as a disincentive to behave properly in the first place.
Clearly, a company taking a later action, even if it were slow and caused damage in the meanwhile, is better than a company doing nothing, so we have to leave some incentive for them for morally topping up.
Thereafter, after a company has totally withdrawn from Russia, we plan to present their new status as soon as possible, but, when doing so, we will not expunge their earlier unsatisfactory actions or total inactions. The Upgrade will be recorded as incremental information. All scores of the five dimensions will be fixed as of the Announcement according to its definition which includes the first withdrawal report. Even a company’s new Moral Rating or Moral Badge will reflect its unsatisfactory behavior before it took remedial action. Thus, it can get credit in the update section for improving its moral performance but cannot hide what it failed to do before. It has an incentive to do the right thing from the start but doesn’t lose the incentive to remedy its failures.
Thus, under threat of a public and permanent record of their inaction and the chance to be separately recognized for corrective action, we hope to motivate companies to ‘join the moral world’ as soon as possible. Conversely, we have published a Warning to companies that fail.