Grandstand. In 1995, doctor Denis Labayle published life ahead of us. Survey of nursing homes (Seuil) and delivers the observation of the abusive and amoral exploitation of “grey gold”, an inexhaustible resource. In 2022, journalist Victor Castanet, in The Gravediggers (Fayard), makes an identical observation, denouncing unethical practices in accommodation establishments for dependent elderly people (Ehpad) managed by the Orpea group.
A little over twenty-five years have passed and mistreatment remains a lever for creating value for this sector of activity. With a difference, however. Today, many sustainable or socially responsible funds, whose investment policy is based on selecting companies that respect their social and environmental responsibility, invest in groups such as Korian or Orpea.
It is a sector of activity whose corporate purpose is consistent with the desire of these funds to apply ESG criteria (environmental, social and – good – governance) and to give meaning to investments. The Korian group’s project to adopt the status of company with a mission could in a certain way be part of this logic.
When the scandal broke, the Orpea group was a “good student” of ESG, a company whose social and environmental performance fully met the multiple criteria of extra-financial rating agencies. What are the reasons for the discrepancy between a good performance displayed and reprehensible and/or illegal organizational practices, a kind of “ESG washing”?
Lack of transparency
This controversy, like so many others before it, questions the interest and relevance of ESG rating. This first questions the construction model of extra-financial performance, in particular the lack of transparency of rating agencies. Why has Orpea’s rating increased by several points over the recent period? Why was controversy risk in line with the industry average when controversies had already emerged in 2020 thanks to reports from the international union UNI Global Union?
This then raises the question of the quality of the ESG information disseminated by companies. The absence of standardization guidelines for ESG information is detrimental to the readability and comparability of the latter.
But what does the Orpea affair really tell us about ESG rating? Nothing very new. It revives the doubts that accompanied the emergence of socially responsible investment (SRI) and its corollary, extra-financial analysis, during the second half of the 1990s, in the United States and in Europe. From the beginning of the 2000s, the media echoed numerous criticisms, as shown by our thesis studying the emergence of SRI in France (Déjean, 2004). What are these reviews about?
You have 53.77% of this article left to read. The following is for subscribers only.