The GIF Scoring system is the third component of the GIF Framework.
“Risk” significantly means “effect of uncertainty on objectives”. A risk is “a combination of the consequences of an event and the associated likelihood of occurrence” (ISO 31000).
Risk = likelihood x consequence
Unlike a traditional “compliance-non-compliance” binary metric, the GIF scoring system adopts a semi-quantitative approach typical of risk assessment. In other words, the metric does not follow traditional single choice (Yes/No/NA). Rather it adopts a scoring oriented methodology aiming to represent the exposure level to risks in each Area.
The ESG risk evaluation process is based on the following assumptions:
- In the field of the ESG issues it’s impossible to evaluate a risk without an assessment at site. ESG rating based on publicly available information or self assessment and declaration cannot be reliable and up to date.
- The ESG risk evaluation must be oriented to confirm the plausibility of assumptions regarding “future adverse impacts”. Past results and trends (above all without data validation) do not meet the OECD Guidance and EU Regulations and Directives recommendations.
- The metric must be semi-quantitative according to specified descriptors for likelihood, consequence and impacts to determine a comparable score.
- The ESG risk evaluation cannot be a “one shot picture” but needs periodical validation to confirm the level of exposure to risks over time.
In conclusion, the Overall Score is the average of the scores per Topics and represents the total exposure level of the Organization to ESG risks. It reflects both the extent to which the Organization implements the social responsibility management system and the actual or potential exposure level to ESG risks that can result into present or future adverse impacts on the organization and its stakeholders.
Thresholds to pass Due Diligence
The criteria to pass the Due Diligence are:
- minimum overall score = 40
- minimium score per “Governance & Management System” = 40
- minimum score per “core area” = 40
The minimum score to pass means that the organization has at least a “tolerable” level of exposure to risks against the criteria addressed by the OECD Guidance for Due Diligence.
The highest score means that the Organizations has “very low risks” in every area and is aligned with both OECD Guidance and ISO 2600 requirements.
Download here the document “GIF Metric”