LETTER:Environmental risk rating

From Mr David Lascelles

Sir: In your business section today ("Index will give companies a 'green' rating", 31 May), you report that the Centre for the Study of Financial Innovation (CSFI) decided not to launch a "green rating" scheme because of the length of time it took to complete an experimental rating of Scottish Nuclear.

In fact, the Scottish Nuclear rating was always intended only as an experiment to test the "green rating" concept, which the CSFI, in its role as a think tank, believes deserves closer examination. The problem of environmental liability is little understood in the financial markets, and any method that enables lenders and investors to make better informed decisions about it will obviously fulfil a valuable role. Our conclusion was that environmental risk rating is useful, provided it focuses on a company's "bottom line", rather than just its environmental friendliness or otherwise.

The CSFI (which is a charity) is not in the business of launching commercial projects, but it does aim to disseminate new ideas for the financial community. Far from discouraging environmental risk rating, as your story suggests, our report on Scottish Nuclear has been acclaimed as a pioneering piece of work in a field of growing interest. Ecco, Infocheck and anyone else are welcome to build on what we have done; that is what the Centre is for.

Yours faithfully,

DAVID LASCELLES

Chairman

Advisory Council

Centre for the Study of Financial Innovation

London, W1