Benchmarking is first of all a way of providing investors with necessary information to raise issues directly with their portfolio companies. However, impactful benchmarking is creating a framework that goes beyond the individual assessments of companies. It provides matrix of frontrunners and laggards that allows stakeholders to place individual companies into context. Thereby, with the help of pressures from civil society, investors, and other drivers it can create a race to the top with companies continuously improving their performance.
The ranking as well as the surrounding engagement with the individual companies also kick-start and motivate action within the companies, indicating best practice and next steps to encourage improvement. Choosing the right companies to assess, benchmarking can demonstrate the state of play and highlight the potential need for regulators to step up and take action. In summary, benchmarking can be used to shape the conversation both about “what good looks like” but also on what is necessary to get there.