Only 89 global companies out of 302 have a digital governance rating of C or above in EthicsGrade’s latest ratings, highlighting that many companies continue to ignore or provide little or no detail on their technology governance and artificial intelligence (AI) ethics.
EthicsGrade found that only a handful of companies, including Microsoft, and Deutsche Telekom, achieved an A rating are implementing good governance in their technology in 2022,; these were marked highly across public policy, technical barriers to trust, ethical risk, data privacy and sustainability.
The highest graded companies are a diverse list, spanning across all sectors and highlights the lack of consistency companies have adopted when it comes to implementing digital governance. Chinese smartphone maker, Xiaomi, is the only company to have improved by two grades this quarter. This is as a result of significant changes it has made to governance disclosures due to cybersecurity researchers finding Xiaomi guilty of extensive tracking and data harvesting without explicit consent, and whilst browsing anonymously in April 2020.
Charles Radclyffe, CEO of EthicsGrade, said: “It is increasingly important for companies to integrate ethical principles in their digital transition, and to ensure such transition is appropriately monitored and governed. This is apparent to all stakeholders, and investors are increasingly looking to see it fully embedded in ESG strategies and reporting requirements. Examples of this include initiatives being established since the publication of draft EU regulations on AI in April 2021 which are due to be finalised later this year. Many companies will need to be much better prepared.”
Furthermore, 18 companies had their rating downgraded this quarter. This includes British Airways – from R to NR as link to the information on supporting worker’s rights and unionisation of employees expired so they weren’t able to keep their previous grade; and Alibaba Cloud from D to R – information they had previously disclosed has been removed which communicated how they perform responsible automation, re-skilling their former employees, and also missing details about improving representation in their AI development team specifically.
Charles Radclyffe continued: “Customers and investors should see red flags at online companies which are unrated for data governance, particularly if their business models rely on AI and data analytics. Organisations that receive an ‘R’ rating tend to be characterised as being ‘defensive’ in their response to challenges to their regard for questions of technological governance.”
EthicsGrade’s methodology looks at how digital ethics questions can be measured and managed as ESG issues. At EthicsGrade companies are rated every quarter, and new ratings are added every few days.
90 companies examined were difficult to grade and have been given an ‘R’ rating. Companies which receive a ‘R’ rating do so because EthicsGrade is not sufficiently confident from its research of them that their governance around technology deserves to be graded. This could be because the organisation is early stage, or its use of AI and related technologies is itself early in development. For firms where neither is true, then this shows an unsophistication to governance components of their strategy.
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