Rating methodology
The basis for the rating is a comprehensive questionnaire of over 170 descriptive and measurable indicators.
Descriptive indicators
The 56 descriptive indicators are not considered in the rating. However they provide comprehensive insights for decision making. Each rating report also includes the degree of completeness in percentage of answered descriptive indicators.
Measurable indicators
All 116 measurable indicators are grouped by 19 subsections which are grouped again by the following 6 sections:
- Social performance
- Environmental performance
- Financial performance
- Business environment
- Management performance
- Production Security
Every section is rated independently and can perform between 0 to 100 percent. The overall rating is the average of all rating sections.
Indicators are grouped by subsections and subsections again by sections. The overall rating is the average out of all sections.
Level of compliance
The level of compliance for each indicator, subsection and section ranges can be between 0 (no performance) to 100 percent (maximum performance). By default each indicator shows no information which is equal to a performance of 0 percent.
Indicators which are non relevant will be removed from the rating (e.g. “Distance to the next saw mill” for a pure carbon forestry project). The weight of the the remaining indicators will then be relatively higher.
Weight of indicators
Measurability
Practice shows that not every indicator could be assessed with the same certainty. For example it is easy to check the availability of a business plan, however it is much more difficult to estimate the severity and probability of potential future wind damages of a forest plantation. Therefore we have categorized the questions in accordance to the appropriateness to measure them.
Scale to define the measurability of a certain indicator
Measurability
|
Multiplicator
|
Very good
|
1
|
Good
|
0.75
|
Fair
|
0.5
|
Poor
|
0.25
|
Very poor
|
0
|
Importance
Depending on its importance within one section, each indicator is weighted in comparison to the other indicators of a section. For example, the indicator which asks for the country risk is much more important than the current intensity of the road network within the project boundary.
Scale to define the importance in comparison to the other indicators of a section
Importance
|
Multiplicator
|
Outstanding importance
|
< 2
|
Much more important
|
2
|
More important
|
1.5
|
Same weight
|
1
|
Less important
|
0.5
|
Unimportant
|
0
|
Weight
The weight of one indicator is calculated by multiplying its measurability with its importance in comparison to the other indicators of the section (appropriateness * Importance = weight).