Samenvatting

In this paper validity and compatibility of the SAM and KLD screening instruments are the central themes. A screening instrument can be called valid if it identifies performance that is important to society. A screening instrument is called compatible if these instruments can be used interchangeably. Validity The outcome of the content-analysis approach suggest that there is clearly not a perfect match between the SAM and KLD instruments and the CSAF, indicating that the SAM and KLD screening instruments taken the CSAF as the standard, cannot be called valid measures of corporate sustainability performance. However, as discussed earlier, assessing validity is not a binary phenomenon. A simple ‘yes’ or ‘no’ will not do. To make things more complicated, the validity of a measure also depends on the aggregation level under observation. It makes a big difference if validity is assessed at a high (i.e. Dimension) or low aggregation (i.e. Sustainability Item) level . At the highest level there is a perfect match with the CSAF, indicating that both screening instruments are valid measures of corporate sustainability performance. At the lowest level the situation is quite different. Here we see that overlap is relatively poor. Besides, the weight distributions of the SAM and KLD instruments and the CSAF are also largely dissimilar. When we break the validity discussion down to the Dimension level, we can see that overlap between the SAM and KLD instruments is also relatively poor, although the SAM instrument is slightly more attuned to the CSAF than the KLD instrument. This most notably applies to the Governance Dimension. The SAM instrument scores relatively poor on environmental issues. This is due to the fact that we analyzed the generic (i.e. non-industry specific) screening instrument. SAM typically addresses environmental issues in industry specific supplements. Compatibility The second question in this study concerns the compatibility of the SAM and KLD screening instruments. Or more accurately phrased: the extent to which these rating schemes are compatible. If we would consider compatibility assessment of screening instruments as a binary phenomenon, then we should conclude that the SAM and KLD instruments are not compatible. However, just like validity, assessing the compatibility of screening instruments is not a binary phenomenon. The extent to which the rating schemes of the two SRAs are compatible relates to the aggregation level. At the highest aggregation ( or Dimension) level the screening instruments are perfectly compatible. Both instruments cover governance, social, environmental and economic issues. At the lowest (or Sustainability Item) level the situation is quite different. At this level compatibility of both instruments is poor. Overlap is poor and the weight distributions are hardly correlated. Obviously both instruments are reflect different interpretations of corporate sustainability performance. Compatibility is highest for the Social Dimension. For the Governance, Environment and Economic Dimension compatibility is very poor. The overall conclusion should therefore be that that compatibility of the SAM and KLD screening instruments is (very) poor and that for this reason these instruments cannot be used interchangeably