By Bahar Gidwani

Part 2 of a 2-part series

The first part of this post described the reasons iCompli and CSRHub decided to create the new ESG Metrics Brief report.  We thought it might be helpful to provide a concrete example of the kinds of information—and opportunities for action—that these reports create.

At number 8 on the 2014 Fortune list, Ford is a well-studied, multinational with a long history of interest in sustainability.  Ford has reported to the GRI since 2007, to CDP since 2006, and has won many awards and recognitions.  CSRHub has 139 different sources of information on Ford and 22,501 different ratings points.  Ford’s overall CSRHub rating of 60 puts it at the 71% percentile among the 118 motor vehicle manufacturers that CSRHub tracks.

The overview

The first chart in Ford’s ESG Metrics Brief provides a visual representation of this relative performance:

While overall performance is well above average, it is clear that of the four major categories of sustainability performance that CSRHub tracks, Ford is strongest in “employees” and weakest in “governance.”

The ESG Metrics Brief has access to CSRHub’s eight years of ratings history and a similar range of history from Bloomberg.  This chart shows how Ford’s CSRHub rating has changed over this time period.

The ESG Metrics Brief next brings in other ESG sources from Bloomberg’s system.  Here is the relative performance for Ford as seen by ISS and by CDP.

Drilling down

After a user has reviewed the overall situation for a company, he or she can “drill down” into each of the four main categories that CSRHub covers.  For instance, here is the change over time for Ford’s governance rating, compared to those of its peers.

The above chart uses CSRHub ratings.  Other sources and metrics drawn from Bloomberg help further explain Ford’s loss of competitive advantage compared to its peers in this area.  One factor may be a reduction in the amount and quality of Ford’s disclosures.

A second factor could be the perception that Ford’s CEO compensation is out of line with that of its peers.

Bloomberg tracks a wide array of metrics and policies that give users of the ESG Metrics Brief even more insight into this part of Ford’s sustainability behavior.

The bottom line

We believe that an ESG Metrics Brief will be a good starting point for those who want to understand one company’s sustainability performance.

• The report is easy to obtain.  It takes three business days or less to generate each report.
• The report is inexpensive.  Each report costs only $495—much less than the time and energy required for most researchers to generate something comparable, and far less than the cost to license the datasets.
• The report is broad and comprehensive.  You get data on more than 120 indicators across all areas of sustainability.  Each report normally compares against between 10 and 30 peers.
• The report helps inform the stakeholders in a sustainability strategy process.  You can share the report internally and help prove your case for new programs, further investments, and shifts in strategy.

We have more data than we can ever fit into any single report!  We look forward to getting feedback from our users about the ESG Metrics Brief and continuing to fine-tune it to meet their needs.

See more now, including a full sample, at  http://www.csrhub.com/content/icompli-csrhub-esg-metrics-brief/.

Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 400 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

By Bahar Gidwani

It seems that “sustainability” was a core topic at this year’s World Economic Forum (WEF) conference at Davos.  Many talks centered around the idea of a “fourth industrial revolution” and all of the changes in corporate behavior that would result.

The conference created good opportunities to release new lists of sustainable companies and new index products designed to help investors use their money to encourage positive changes in corporate behavior.  For instance, our friends at Corporate Knights released the latest edition of their well-respected Global 100 list.

A quick test of the top ten companies on the Global 100 list shows that they have strong average CSRHub ratings.  Nine of the ten companies are 80% percentile or better and CSRHub’s analysis indicates that all are above average performers compared to both the other companies in their country and their industries.

However, another set of companies was singled out at the meeting and the members of this list did not show similarly strong sustainability characteristics.  The new list was the S&P Long-Term Value Creation (LTVC) Global Index.  S&P selected the companies for the LTVC using data from RobecoSAM (the creator of the Dow Jones Sustainability Indexes) with input from the Canada Pension Plan Investment Board (CPPIB).  Since CPPIB is a co-founder of a group called “Focusing Capital on the Long Term,” the Wall Street Journal article on this announcement suggested that this new index would also be supported by other Focusing Capital co-founders such as McKinsey & Co. and BlackRock Inc.  In fact, BlackRock has already committed to invest $2 billion under the direction of this new Index.

The S&P’s web site entry on the LTVC says it is supposed to contain stocks “ranking highly in global equity markets, using both proprietary sustainability and financial quality criteria.”  The methodology document describes how RobecoSAM’s Economic Dimension scores are combined with S&P’s Dow Jones Indices Quality scores to generate the rankings.  Economic Dimension scores are driven by code of conduct issues, compliance and corruption problems, measures of innovation and indicators about how supply chains are managed.  A company’s Quality score is the result of combining calculations of return on equity, accrual of assets, and financial leverage.

While there are 246 companies in the LTVC, S&P doesn’t disclose the full list.  In fact, it only shares the top ten components.  A quick look at these ten companies shows a striking difference to what we saw with the Global 100.

CSRHub’s data indicates that only five of the top ten companies in the S&P list have above average perceived sustainability performance.  Two of them—O’Reilly Automotive and Dollar Tree Stores—are in the bottom 10% among the over 15,000 companies that CSRHub tracks.

S&P’s new index may tie well to long-term value creation.  It may even capture factors that tie to long-term stock market appreciation.  But, it does not seem fair to characterize this group of companies—at least from what we can see here—as “ranking high…on sustainability characteristics.”  Perhaps it is time for those of us who track corporate responsibility and care about the metrics we have created, to take back the term “sustainability”?  We could then make sure that our favorite word is only used where it truly applies.

Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 435 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

By Bahar Gidwani

Several groups have written predictions about the future course of the Environment, Social, and Governance (ESG) measurement space.  We’ve seen stories about the importance of millennials (as both customers and employees), a sense that carbon tracking is finally an accepted part of corporate life, and that companies must watch out for a range of new legal and regulatory issues.

At CSRHub, we are exposed to all of these trends, and many more.  Our data collection engine automatically absorbs new data elements on 3,500 topics from 435 data sources.  It analyzes this information, normalizes it, weights it, and outputs ratings on more than 15,000 companies.  Each month we get a fresh look at what sustainability professionals around the world think is important.

One thing we’ve watched for several years is the shift in emphasis between interest in Environmental, Social, and Governance issues (“ESG” issues).  Governance and Environment each had their time as the top area of focus.  However, our data shows clearly that Social issues are now emerging as the focus for corporate social behavior analysis.

The overall sustainability ratings for the companies CSRHub tracks was stable or even dropped a little between 2009 and 2011.  We believe this was due to cutbacks on ESG spending, following the great recession of 2008-9.  Since 2011, we have seen steady overall improvement across companies in all industries and geographic regions.

It is relatively easy to drill down into this data and pull out the average ratings across all of the companies CSRHub tracks, for each aspect of ESG.  However, our coverage has grown rapidly over the past eight years, partly due to the fact that we’ve found more data sources (we started with only 70 sources) and partly due to the fact that more companies are reporting sustainability information.  To ensure that we could focus just on trends in ESG focus, we selected 400 companies from this year’s Fortune 500 for whom we had full ratings back to 2009.

As you can see in the graph below, the ratings on Governance issues for this set of 400 companies have fallen since 2009 (probably as the legal and governmental pressures from the recession receded).  Environment had an upward spike in perceived performance from 2012 through 2014, but has now leveled off.  Social ratings have now started to move up and look likely to soon pass those for the other two areas of ESG.

We can also track how much information we receive from our sources for each area of social performance.  If we assume that the amount of information our sources receive ties to the amount of information that companies produce, we see evidence that the group of companies we study have generated more data in Social than in either of the other two areas.

CSRHub tracks six different social metrics areas: Community Development & Philanthropy; Compensation & Benefits; Diversity & Labor Rights; Human Rights & Supply Chain; Product; and Training Health & Safety.  We expect to see our clients continue to step up their efforts to benchmark their performance against that of their competitors in each of these areas.  Software firms will add more tools and consultants will write more reports on Social practices—just as they did during the 2008-09 era for the Governance space and in the 2012-14 era for the Environment space.  The overall effect should be a refocused interest on improving corporate performance on social issues, over the next few years.

 Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 435 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

By Bahar Gidwani

This is part 1 of a 3-part series on Implementing SASB.

Over the past six months, we have been working with the Sustainability Accounting Standards Board (SASB) on a series of reports we call the Sustainability Accounting Standings Series (SASS).  The reports are designed to help companies understand SASB’s guidance on the sustainability-related information that reasonable investors would consider material in their SEC filings.  We have used CSRHub’s vast library of reporting information (we have collected 91 million pieces of corporate sustainability data and rate more than 15,500 companies) to assess the readiness of 280 companies in the Apparel, Accessories & Footwear (AA&F) and 1,799 companies in the Metals & Mining (M&M) industries.  Although these completely different industries are each at a different stage in their journey towards integrated reporting, they face a number of common issues as they move towards integrating SASB’s guidance into their financial reporting.

We used the SASB industry Classification System (SICS) to select the companies to study in each report.  The table below shows that M&M companies are far behind AA&F on their reporting and disclosure practices.

On the other hand, almost all AA&F companies have disclosed at least some sustainability data and almost half have reached the point where they can receive full CSRHub ratings.

In contrast, the M&M companies CSRHub can rate tend have much higher rates of commitment to external reporting systems such as the Global Reporting Initiative (GRI) and the United Nations Global Compact (UNGC) than AA&F companies do.  In fact, M&M companies have higher average reporting rates for these two metrics than do all CSRHub-rated companies.

We suspect this difference may be due to the fact that AA&F companies have moved beyond basic reporting processes and towards more sophisticated methods.  It may also be a result simply of selection effect when we compare a sample that has virtually all AA&F companies against the handful of M&M companies who have disclosed significant amounts of information.

Another similarity is that the top five companies and bottom five companies in each industry look remarkably similar in terms of their perceived sustainability performance.  The two industries show a similar range of CSR behavior.

More details on these findings are available in the SASS reports on these two industries.

See The SASS (Sustainable Accounting Standings Series) Apparel, Accessories and Footwear Industry Report.

See The SASS (Sustainable Accounting Standings Series) Metals & Mining Industry Report.

 Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 435 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

By Bahar Gidwani

This is part 2 of a 3-part series on Implementing SASB.

In my last post, I started contrasting and comparing the readiness to follow SASB guidance for two industries: Metals & Mining (M&M) and Apparel, Accessories, & Footwear (AA&F).  Based on the higher rate of reporting in AA&F, we would consider that industry more highly “evolved” as far as sustainability reporting, than M&M.

Despite the generally higher level of reporting within AA&F than in M&M, most of the companies in both industries do not appear ready at present to implement and report the metrics involved in the SASB standard.  This is because each industry’s “topics’ and “metrics” are different and the “bar” set for both industries is well above current practice.

The eleven M&M topics cover reporting of labor issues, carbon production, and other aspects of company operation.  The four AA&F topics focus mostly on these companies’ supply chain and the risks that are in them.  This table summarizes the percentage of companies that in each industry that our data indicated could be ready to report each topic.

As you can see, we believe only 40% of the companies we studied in each industry have the data required to satisfy investor’s needs for material information.  The remaining companies (and for M&M, we must add the 75% of companies who had so little available data that we could not study them) could not disclose the data suggested in the SASB standard, even if they were willing to do it.

For example, the M&M industry is asked to disclose data on their energy efficiency.  About a quarter of the companies we studied seemed to be ready to do this.  The rest were either only somewhat ready or not ready at all.

A more complex requirement from the AA&F industry will be equally difficult to comply with for most companies in that industry.  For example, the AA&F industry is asked to disclose the percentage of its suppliers who have been found to be out of conformance with various labor standards.  However, our research shows that only 25% of the studied companies show evidence that they are disclosing this type of information.

More details on these findings are available in the SASS reports on these two industries.

See The SASS (Sustainable Accounting Standings Series) Apparel, Accessories and Footwear Industry Report.

See The SASS (Sustainable Accounting Standings Series) Metals & Mining Industry Report.

See part 1 of the Implementing SASB series.

 Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 435 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

By Bahar Gidwani

This is part 3 of a 3-part series on Implementing SASB.

In my last two posts, I showed that two dissimilar industries may have a similar lack of preparedness to disclose material sustainability-related information to investors.  In order to conform to the guidance set out in SASB’s standards, the Metals & Mining (M&M) and Apparel, Accessories, & Footwear (AA&F) will need to collect large quantities of new data or reshape existing data streams.

Outside organizations such as government regulators and industry associations could prove to be crucial factors in moving these industries forward.  For instance, all US mining operations are required to report injuries to the Mining Safety Health Administration (MSHA).  Therefore, a high percentage of M&M companies are able to disclose information on their workplace health and safety issues.

Unfortunately, MSHA does not require companies to publicly disclose their reports to this agency.  Each company tends to to take its own approach to the scope and format of its public disclosure—and outside sources interpret these results in different ways.  The result is that the same company may get a good rating from one source and a bad one from another.

MSHA probably cannot change its disclosure rules without Congressional support—but, it could provide a pathway for sharing more of data—and for encouraging more consistent reports—by inviting companies to declare that their raw original filings can be collected and shared.  (This is similar to some of the efforts that have been undertaken in the supply chain area.  For instance SEDEX allows customers to share their audits of suppliers with one another.)  Then, sources who analyze this information would at least have the same starting point for their work—and companies could better compare their performance against those of their peers.

In AA&F the Sustainable Apparel Coalition (SAC) has led the way towards improved supply chain management for its members, by creating the Higg Index.  This set of tools is designed to help organize and harmonize supply data for the AA&F industry.  Unfortunately, only 21 of the 159 companies we studied in our AA&F report (13%) are members of SAC.  Note that their perceived sustainability performance is well above the average for the non-members.

The AA&F industry has formed special organizations to respond to supply chain issues.  For instance, in response to the Rana Plaza collapse, a group of European-based clothing companies set up the Accord on Fire and Building Safety in Bangladesh (Accord).  This group has grown to include 220 members, of whom 67 are tracked by CSRHub and 14 are part of the SICS group of Apparel, Accessories, & Footwear companies.  A second group of 17 mostly US companies set up the Alliance for Bangladesh Worker Safety (Alliance).  Labor unions and other NGOs have criticized the garment industry for failing to create a unified response and for some of the actions of both groups.  In general there has been more support for the Accord group than for the Alliance (see this Clean Clothes Accord analysis, for instance), but both groups have been harshly criticized and many of the problems that underlay the Rana disaster (and the previous deadly fire also in Bangladesh, at the Tazreen factory in 2012), continue to be present.  Still, companies in both groups seem to have sustainability performances that are above the level for the industry in general.  This indicates that a combination of intra-industry leadership and external pressure could help move the AA&F industry forward.

More details on these findings are available in the SASS reports on these two industries.

In these three posts, we have shown that it may take many years for two industries to disclose all of the investor-material information that is described in the SASB standards.  During the adoption period, investors who desire the material information described in these standards will either need to work with partial data, use indicators that correlate with or can otherwise substitute for the desired metric, or invest in only those companies who have adopted the standard.  We do not know which approach will dominate or how long it will take before compliance becomes the norm and not the exception.  However, the next few years are likely to offer exciting opportunities to investors who specialize in using non-financial sustainability-related information.

See The SASS (Sustainable Accounting Standings Series) Apparel, Accessories and Footwear Industry Report.

See The SASS (Sustainable Accounting Standings Series) Metals & Mining Industry Report.

See part 1 of the Implementing SASB series.

See part 2 of the Implementing SASB series.

 Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 435 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

By: Bahar Gidwani

A number of years ago, CSRHub showed that its measures of corporate sustainability correlate with the level of development of countries.  For that study, we used the United Nations Human Development Index (HDI).  We found a correlation of 28% for 27 developed countries, but poor correlation with human conditions in less developed countries.

Harvard Business School Professor Michael Porter and his colleagues at a group called The Social Progress Imperative have developed a new way of measuring country human development called the Social Progress Index.  The SPI Index is highly correlated with the UN HDI.

The SPI contains more levels of detail than the HDI.  (For the SPI, 61 raw value indicators lead to 12 calculated scores that roll up to three dimensions and a final score.  The HDI is driven by five measures.)  The SPI covers 161 countries—the HDI tracks 199.  Both cover more countries than CSRHub (we have data on companies in 132 countries).  However, after we throw out the 70 countries where CSRHub does not yet have enough rated companies to generate solid average scores for all four of the categories CSRHub tracks, there is a 57 country overlap with the SPI.

At the most simple level, the SPI score for a country is well-correlated with the average CSRHub ratings for the companies in each country.  The r-square of 33% is paired with a F score of 6.5.  This suggests a greater than 0.9995 confidence that two data sets are related.

Digging down into the details shows that positive corporate behavior in the community area is negatively correlated with gains in SPI.  In contrast, positive corporate behavior in environment areas is positively correlated with gains in SPI.

We believe that companies in countries with weak SPI scores have built good community programs to offset their society’s weaknesses.  In contrast, companies in the countries with good SPI scores have built up their environment programs, to help improve trust in their activities.

The high “P-Values” and small tStat coefficients for the correlations with Employees and Governance ratings indicates that these company programs are not directly tied to the SPI.  This makes sense, as the SPI’s indicators are focused on societal issues such as health, literacy, and longevity, not on how well corporations pay their employees, train them, or how well they govern themselves.  Still, it is disappointing that there is not a connection between these elements and the SPI.  We would have liked to believe that paying one’s employees well and giving them good benefits would improve overall health and well-being.  We would also have liked to see a tie between a high standard of ethics within corporations and strong government programs that care for those who are disadvantaged or poor.

Note that our study is limited due to the fact that we tie a company solely to the country it is headquartered in.  Most of the larger companies we track have operations in multiple countries and often, multiple regions.  We are also working with a single year’s data on both companies and countries.  Longer term studies may reveal a richer level of detail.

With the wealth of data now available via the SPI, there should be many opportunities for further study on the tie between corporate behavior and societal performance.  We hope our readers will share any results they uncover so that we can make sure that responsible corporations get fair credit for the social benefits they create within their societies.

 Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 435 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

By Bahar Gidwani

The 2016 Newsweek Green Rankings were released last week.  Our friends at Corporate Knights Capital and HIP Investor again provided the underlying data behind the list.

We probably get more questions about Green Rankings and the radical changes in position that seem to occur each year, than for any of the 461 different rating systems we track.  The table below shows the changes in position on the list that five companies experienced over the past three years.  Some of this variation may be due to changes that Newsweek has made in the way its scores are calculated and for 2013 to 2014, changes in its data providers.  (Last year’s list was driven by the same providers but there were several changes made prior to this.)  Some variation may be due to actual changes in the performance of the companies on the list and the relatively narrow scope of the study.  (CSRHub currently tracks the sustainability performance of more than 16,000 companies.)  Finally, the Newsweek Green Rankings are meant to assess and measure environmental performance.  Most other ranking systems cover a broader set of sustainability metrics.

Newsweek’s scores correlate reasonably well with the aggregate score we generate from the views of the rest of the ESG ratings space.  (We use a small amount of Corporate Knights information and share a data provider with HIP.  But, we probably less than 3% of our data set with them.)  As you can see below, the Newsweek ratings have about a 50% correlation with CSRHub’s ratings for each set of companies.

However, even with this degree of correlation, there is a relatively poor agreement between the companies CSRHub would choose on Newsweek’s list of 500 companies as the best or worst performers and the companies on the Newsweek lists.  (Note that the rest of the analysis in this post focuses on the Global Rankings.  However, we found similar results for the US Rankings.)

We dug in a bit more to see if we could explain what might be driving these variation at each extreme.  A correlation between the Newsweek rating and CSRHub’s four category ratings shows that Newsweek’s score as expected is most closely tied to CSRHub’s environment rating.  There is also a connection with CSRHub’s Employee and Governance ratings.  However, there is no statistically supported connection with CSRHub’s Community rating, which includes the three subcategories of Product, Community Development & Philanthropy, and Human Rights & Supply Chain.

The coefficient for the Environment component of this regression is 2.5X bigger than that for Governance and 4.5X bigger than the effect of Employees.  Still, top Newsweek companies probably need to perform well on at least the “E” and “G” parts of ESG.  The Social “S” part though—Employee and Community issues—has only a weak effect.  This would lead us to predict that some of the difference in rank between Newsweek and CSRHub is driven by differences in these factors.

As you can see below, the top CSRHub companies have average Community and Employee ratings that are 14% and 11% respectively above the average for the top Newsweek companies.  The opposite is true for bottom-ranked companies.

The companies who moved up this year are likely to trumpet their success.  Those who moved downward may be able to argue that their overall performance didn’t really change—they only changed emphasis from E and G factors, into the S (Social) area.

 Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.
 
CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 16,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 461 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

By: Bahar Gidwani

Do some states attract more progressive companies while others receive investment from companies who are thought to be less socially progressive?  If so, why might this occur?

A recent article in Site Selection Magazine used the CSRHub database as part of determining which of 50 US states and 132 non-US countries were most attractive for a new site from a sustainability perspective.  This article presents analysis which provides deeper understanding of the corporate social responsibility aspect. Our goal is to make it easier for companies to use sustainability as a site selection criteria and localities to screen siting companies for sustainability, thereby improving their desirability.

CSRHub’s Contribution to the Study

The CSRHub data set contains estimates of the perceived corporate social responsibility (CSR) performance of more than 16,000 entities.  It includes data on both public and private companies and on government entities and not for profits.  CSRHub collects information for its big data engine from more than 469 sources and its data set includes companies from 133 countries.  For more information on how CSRHub ratings are generated, please see the CSRHub site.

Because many Site Magazine entries were from subsidiaries, a total of 3,073 CSRHub companies connected to at least one site decision entry on the Site Selection list, and 2,217 of these matched companies had full CSRHub scores.  These companies were responsible for 5,549 of the site entries—About 55% of these site entries (3,052) were for U.S. sites and the other 45% were for sites in 106 other countries.

Using only scores from fully rated companies, CSRHub calculated two numbers for each US state and for each foreign country:

• The average perceived CSR performance for the entities headquartered in that location. For example, CSRHub found that the 63 fully rated companies in Minnesota had an average percentile rank of 54.8%. Similarly, the 34 companies in Finland have 88% average ranks.  (CSRHub tracks a total of 137 companies in Minnesota and 72 companies in Finland.
• The average perceived CSR performance of the entities who placed sites in a location. For example, entities with an average 58.5% rank placed 93 sites in Georgia.  (Another 23 sites were placed by entities who were headquartered in Georgia.)  Entities with an average 70.7% rank placed 75 sites in Brazil  (Another 5 sites were placed in Brazil by Brazilian companies.)

The difference between these numbers shows whether companies selecting sites in a given location are perceived to be more or less sustainable than that location’s current rating.  The following table shows the relevant data on both scores for the 39 US states that had at least 5 sites selected by companies outside of the state and at least five companies tracked by CSRHub.  The table is sorted in order by the difference between the two scores.

The preponderance of positive scores is probably due to several factors:

• Many of the new entrants into these US states came from European companies. European companies have consistently higher sustainability ratings than US companies.
• Idaho and South Dakota companies already have relatively high scores. They may be seeing lower scores for those siting in their state because they are attracting companies primarily interested in extracting their resources.
• Connecticut has positioned itself as a business-friendly state and this may have encouraged some lower-ranked companies to enter.
• Arkansas, Delaware, and Mississippi all have lower starting scores and are likely to see benefits from encouraging positive companies join their communities.

The table below shows the same information for non-US countries.  Note that we have narrowed the list to those countries with at least five sites from companies with headquarters outside the country and that have at least five entities that are fully rated by CSRHub.

The foreign table shows much bigger differences in the baseline performance of the companies in each country.  The three countries with the biggest negative differential are those who also have the highest average scores for their existing companies.  It is probably difficult for these countries to find many companies outside of their jurisdictions who can match this level of performance.

The three countries with the biggest positive score difference with new site contributors are:

• Greece—which has very low scores from its current companies and who is getting huge support and attention from other higher-scoring parts of the EU.
• Saudi Arabia—which is trying to build a base of sustainable, non-energy-reliant industries.
• Egypt—which has such weak performance within its existing base of companies that outside companies must generally seem quite attractive.

We hope that studies such as the one done by Site Selection Magazine will encourage companies to include sustainability factors in their site research strategies.  Our data suggests that the localities who are accepting new sites will generally see candidate companies who are at least as socially positive as the companies who are already in their communities.  However, it may make sense for localities to screen each candidate carefully and seek to improve their reputation for being a socially positive and sustainable place to put a new site.

Appendix 1:  How CSRHub Generates a Score

Appendix 2:

Appendix 3:

 Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 16,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 461 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

CSRHub Co-Founder and CEO, Bahar Gidwani, will be speaking at NAEM’s 2016 Sustainability Management Conference, in Milwaukee WI, on August 2-3. Bahar will discuss The Next Generation of Sustainability Tools and Data Analysis. At NAEM’s annual conference, attendees will learn how to further integrate sustainability into their business operations from fellow corporate EHS and sustainability leaders. Through a mix of peer-led case studies and benchmark dialogues, NAEM’s annual sustainability conferences allow for participants to gain insights in order to  immediately improve performance, identify opportunities for their businesses and set better sustainability goals.

Wednesday, August 3^rd 1:00pm-2:00pm CDT

The Next Generation of Sustainability Tools and Data Analysis

• Bahar Gidwani, Co-Founder & CEO; CSRHub
• Jeff Hintzke, Vice President, Deployment Services; Alta Energy Inc.

More powerful technology and ever-improving software are making it easier than ever to collect and report large amounts of data. So, what’s possible now, and what can we expect in the future? Hear from two experts about the new generation of tools at your disposal to sort and dissect data in ways that reveal valuable insights about your sustainability program and company as a whole.

NAEM

The National Association for Environmental Management (NAEM) empowers corporate leaders to advance environmental stewardship, create safe and healthy workplaces, and promote global sustainability. As the largest professional community for EHS and sustainability decision-makers, they provide peer-led educational conferences and an active network for sharing solutions to today’s corporate EHS and sustainability management challenges.

To register for this conference please click here.

Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. He plays bridge, races sailboats, and is based in New York City.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 16,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 461 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.