Ethics Reputation Rating Levels

RRC’s Ethics Reputation Ratings utilize an intuitive symbol set that is intended to facilitate the markets’ understanding of RRC’s ethics reputation rating system. At present, a total of five rating levels exist: E1, E2, E3, E4, and E5, in descending order of ethics reputation strength. Definitions of these rating levels are set forth below.

E1
A company’s ethics reputation that is rated E1 is of the highest quality and carries the smallest degree of risk of ethics reputation default. Companies with ethics reputation ratings in this category score highly across all ethics components from all constituencies and are viewed as very solid and stable. Senior management is perceived as highly ethical and as instilling a sense of ethical behavior and rectitude that pervades all levels of the corporate hierarchy and organizational culture. Companies whose ethics reputations are rated E1 are able to deploy their perceived ethical strength as a powerful advantage in areas such as strategic alliances, customer and employee loyalty, and regulatory oversight. Companies with ethics reputations in this rating category also benefit from extraordinary support in times of controversy, are generally perceived as attractive investments, and enjoy strong overall reputations among those familiar with them.

E2
A company’s ethics reputation that is rated E2 is of high quality and carries a small degree of risk of ethics reputation default. Although companies with ethics reputation ratings in this category possess many favorable ethics characteristics and score well across most ethics components from most constituencies, fundamentals may suggest some weakness, either in a single component or within a particular constituency. A perception of corporate arrogance may, for example, cloud an otherwise unblemished reputation. Companies with ethics reputation ratings in this category receive a level of support in times of controversy that is commensurate with the visibility of their efforts to remedy the situation, but the depth and duration of such support are not unconditional. Companies in this category may exhibit behavior that, left uncorrected, could develop into an ethics vulnerability.

E3
A company’s ethics reputation that is rated E3 is of medium quality and carries an average degree of risk of ethics reputation default. Companies with ethics reputation ratings in this category earn average scores on many ethics components or from many constituencies, but may show significant weakness on several other components or from several other constituencies. Companies whose ethics reputations are rated E3 have only a limited ability to leverage their ethics reputations to garner support in times of controversy.

E4
A company’s ethics reputation that is rated E4 is of poor quality and carries a great degree of risk of ethics reputation default. Companies with ethics reputation ratings in this category show weakness across most or all ethics components and from most or all constituencies. Companies whose ethics reputations are rated E4 are, or are soon likely to be, in varying degrees of ethics reputation distress. Ethics reputation rehabilitation is, however, still possible, provided that affected companies take very public and sustained corrective measures sufficient to rebuild the markets’ confidence in the ethical nature of their conduct. No significant ethics reputational advantages accrue to companies in this category, and no support in times of controversy may reasonably be expected.

E5
A company’s ethics reputation that is rated E5 is of the poorest quality and carries the greatest degree of risk of ethics reputation default. Companies with ethics reputation ratings in this category are in severe ethics reputation distress or have entered outright ethics reputation default, but in either case have no reasonable expectation of ethics reputation rehabilitation. Senior management is perceived as highly unethical and as instilling a culture of unethical behavior and irresponsibility that pervades all levels of the corporate hierarchy and organizational culture. No ethics reputational advantages whatsoever accrue to companies in this category. In fact, the ethics reputations of these companies carry significant negative connotations.