Covalence has conceived 45 criteria for their capacity to capture various information on the contribution of multinational enterprises to human development globally, with particular attention paid to the realities and needs of developing countries.
The 45 criteria have the following characteristics:
- General legal framework consisting of six major international treaties
- Based on widely accepted principles, not on specific ethical choices, to cope with diversity and pluralism
- Capacity to cover changing aspects of companiesâ€™ operations
- Capacity to cover diverse actions led by stakeholders and media coverage
Legal references of Covalence 45 criteria are: the Universal Declaration of Human Rights, the OECD Guidelines for Multinational Enterprises, the ILO Declaration of Principles concerning MNEs and Social Policy, the Rio Declaration on Environment and Development, the agreements of the World Summit for Social Development, the UN Global Compact, and the UN Millenium Goals. The Global Reporting Initiative’s G3.1 Guidelines are used as sustainability guidelines reference.
Covalence EthicalQuote Ranking combines the score calculated across criteria (measure of popularity) and the scores calculated in each criteria group (measure of diversified performance).
The 45 criteria are classified into 4 groups: I. Working conditions; II. Impact of production; III. Impact of product; IV. Institutional impact. Here is how the criteria groups are defined:
- I. Working Conditions
This group covers labor issues within the company as well as with subcontractors and suppliers, e.g. Labor Standards, Wages, Diversity or Social Benefits.
- II. Impact of Production
The second group covers direct and indirect effects of the companyâ€™s operations on people and the environment, e.g. Job creation, Fiscal contributions or Environmental Impact of Production.
- III. Impact of Product
The third group of criteria looks at the direct and indirect impact of the companyâ€™s products and services on people and the environment, e.g. Product Social Utility or Product Environmental Risk.
- IV. Institutional Impact
The last group of criteria aims at capturing information on the relations of companies with governments and communities, e.g. Human Rights Policy, United Nations Policy or Anti-corruption Policy.
In the process of setting the list of 45 criteria, Covalence has undertaken discussions with, and used feedback from the following NGOs: ADAP (Association pour le DÃ©veloppement des Aires ProtÃ©gÃ©es), AGSI (Association Geste Solidaire ImmÃ©diat), GRAD (Groupe de RÃ©alisation et dâ€™Animation pour le dÃ©veloppement). The creation of Covalence in 2001 benefited from the support of the Graduate Institute of International and Development Studies (Geneva, Switzerland).
Rather than definitive moral judgments, the criteria should be seen as open boxes allowing to store and organize information on a barometer, case-by-case basis. Covalence criteria are not sector-specific. They are designed to cover any multinational company and to allow cross-sector comparisons.