Defining an ethic and sustainability rating for companies: the “legality rating”. Empirical evidence from Italy

The financial crisis, which started in 2008, and the dramatic side effects that have ensued, have exacerbated a pre-existing problem related to ethics and legality. In Italy, for instance, the fact that the credit crunch has made it more difficult for entrepreneurs get access to credit, has forced many of them to resort to approaching money-lenders (loan sharks). Since 2012, the competent authorities have been working on a legislative process, culminating recently in Decree 62, which introduced a ‘legality rating’. This is a label for the most virtuous companies, both from a legal as well as a sustainability perspective. It also represents a reward system in terms of facilitation in obtaining bank credit and public subsidies. The legality rating forms part of the so-called ethic rating, in that it certifies that the company is not involved in any criminal, civil and/or administrative court cases, furthermore that the company implements internal procedures of corporate social responsibility and/or adheres to international ethical protocols. The rating is measured on a scale of one to three stars. This research aims to demonstrate some correlation between the adhesion of companies to ethical standards and their financial performance.