CSRHub Blog Research on ESG metrics and comments on sustainability best practice

Do bigger companies get better ESG ratings than small ones?  We believe the answer is “no.”  This seems true across a wide range of companies, whether one measures size by revenue or by market capitalization (a proxy for enterprise value).  Our result indicates that small companies can and should expect to be able to equal or outperform their bigger rivals on environment, social, and governance (ESG) issues.

A comparison of charts from our new Bloomberg app (ESGHub) indicates that big companies disclose more information than small ones.  The chart on the left shows the distribution of disclosure for the S&P 500 Index.  There is a wide dispersion of disclosure profiles (as measured by Bloomberg’s ESG Metrics on the bottom axis) and CSRHub’s consensus ESG rating (as shown on the vertical axis).  The chart on the right shows about 1,500 companies from the NASDAQ 3,000.  There are some companies spread out on the right.  However, many companies are clustered to the left with low disclosure scores.

Even though the smaller companies are hard to distinguish based on their disclosure, they do separate on the vertical axis (aggregate ESG rating).  The left-right distinction does not appear to be related to size.  As you can see below, larger companies have only a small tendency towards higher disclosure ratings from Bloomberg.

The aggregate ESG ratings from CSRHub also do not appear to be driven by either revenue (left chart below) or market capitalization (right chart below).  This pattern has been stable for at least the past five years.  One theory is that the sustainability story of smaller companies may be simpler and easier to tell than those for large ones.  Smaller companies may also appear more credible on ESG issues, due to cultural biases against “big business.”

Bahar Gidwani is CTO and Co-founder of CSRHub. Bahar has built and run large technology-based businesses for many years. Bahar holds a CFA (Chartered Financial Analyst) and was one of the first people to receive the FSA (Fundamentals of Sustainability Accounting) designation from SASB. Bahar worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. He has founded several technology-based companies and is a co-founder of CSRHub, the world’s broadest source of corporate social responsibility information. 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 is the largest ESG and sustainability rating and information platform globally. We aggregate 186 million data points from 618 data sources including 10 leading ESG analyst databases. Our patented algorithm aggregates, normalizes, and weights data to rate 18,000 companies in 141 countries across 134 industries. We track 97% of world market capitalization. We cover 12 subcategories of ratings and rankings across the categories of environment, employees, community and governance. We show underlying data sources that contribute to each subcategory’s ratings. CSRHub metrics are a consensus view (any 2 sources may have about a 30% correlation so we make sense of the disparate data). We tag companies for their involvement in 17 Special Issues. We provide Macro-enabled Excel dashboard templates, customizable dashboards, and an API. Our big data technology enables 85% full coverage of data across our rated companies and robust analyses. We provide historical ratings back to 2008.

We recently reviewed the ESG coverage status for the 8,686 companies in the MSCI ACWI (All Country World Index).  The ACWI is a popular benchmark for many investors, because it includes approximately 85% of the global opportunities for equity investment.  We felt it would be useful to see how much ESG information is currently available on the companies on this type of broad index.

CSRHub aggregates ESG data from more than 600 sources.  Each source has a different coverage universe.  By combining these universes, we have been able to offer full or partial ratings on 18,000 companies and know that there is at least some information on another 13,000 companies.

As you can see from the table below, we have reached the point where there is CSRHub ESG data on 95% of the companies and 99% of the “weighted value” in the Index.  5,777 companies (81% of the index weight) have full CSRHub scores (overall rating and scores for Community, Employees, Environment, and Governance factors).  Another 1,116 companies (13%) have partial scores while 1,324 companies (15%) have some data, but not enough yet to allow calculation of a CSRHub rating.

We do not have data on the past components for this Index.  However, we can look at the status for the current companies over the past five years.  (CSRHub data reaches back to 2008.)  As you can see below, there has been a dramatic improvement in the number of companies with ESG data over this time period.

One benefit of this increase in coverage is that ESG ratings can now be extended to cover corporate bond and high-yield debt portfolios.  In a recent study of one such portfolio, we found full or partial ESG ratings in CSRHub on 1,681 of 1,789 holdings—94% coverage.  It remains difficult to put ESG scores on sovereign and municipal bond issues.  However, we have ratings now on many universities, cities, and states.  We may also be able to impute a rating for a locality, based on the ratings of the companies that are headquartered there.

One of the excuses made for not integrating ESG information into corporate or investor decision-making has been that there are too many gaps in ESG data.  It appears that the hard work of ESG sources around the world are gradually filling in these gaps so that we can create a consistent and holistic view of relative ESG performance for a wide range of entities.

Bahar Gidwani is CTO and Co-founder of CSRHub. Bahar has built and run large technology-based businesses for many years. Bahar holds a CFA (Chartered Financial Analyst) and was one of the first people to receive the FSA (Fundamentals of Sustainability Accounting) designation from SASB. Bahar worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. He has founded several technology-based companies and is a co-founder of CSRHub, the world’s broadest source of corporate social responsibility information. 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 is the largest ESG and sustainability rating and information platform globally. We aggregate 186 million data points from 618 data sources including 10 leading ESG analyst databases. Our patented algorithm aggregates, normalizes, and weights data to rate 18,000 companies in 141 countries across 134 industries. We track 97% of world market capitalization. We cover 12 subcategories of ratings and rankings across the categories of environment, employees, community and governance. We show underlying data sources that contribute to each subcategory’s ratings. CSRHub metrics are a consensus view (any 2 sources may have about a 30% correlation so we make sense of the disparate data). We tag companies for their involvement in 17 Special Issues. We provide Macro-enabled Excel dashboard templates, customizable dashboards, and an API. Our big data technology enables 85% full coverage of data across our rated companies and robust analyses. We provide historical ratings back to 2008.

Republished from Environmental Leader

Skytop Strategies will launch its fifth annual CSR Summit hosted in partnership with Nasdaq at their Entrepreneurial Center on April 17^th in San Francisco.

CSRHub’s CEO and co-founder Cynthia Figge will be giving a topic briefing on Data Obsessed: Does Data Really Drive Investment into CSR?  

CSR 5.0 presents the evolution of corporate social responsibility from its initial shared value paradigm to its current form. The program will track the growth of CSR as a sector, examine the multi-dimensional ways that CSR programs are implemented in corporations today, and present cutting-edge ideas that will shape the future of CSR as an industry.

For the full program, click here. 

Register using coupon code CSRHUB2019 to receive 35% off your registration: https://skytopstrategies.com/product/csr-5-0-conference-pass/

As a bonus, you may bring a colleague, peer, or client if you register before April 10^th.

 Cynthia Figge is a forerunner and thought leader in the corporate sustainability movement who co-founded EKOS International in 1996, one of the first consultancies integrating sustainability and corporate strategy. Cynthia is CEO and Cofounder of CSRHub. Cynthia has worked with major organizations including BNSF, Boeing, Coca-Cola, Dow Jones, and REI to help craft sustainability strategy integrated with business. She was an Officer of LIN Broadcasting/McCaw Cellular leading new services development, and started a new “Greenfield” mill with Weyerhaeuser. She serves as Advisor to media and technology companies, and served as President of the Board of Sustainable Seattle. Cynthia has an MBA from Harvard Business School. Cynthia is based in the Seattle area.

CSRHub is the largest ESG and sustainability rating and information platform globally. We aggregate 180M data points from 615+ data sources including 12 leading ESG analyst databases. Our patented algorithm aggregates, normalizes, and weights data to rate 18,000 companies in 132 countries across 136 industries. We track 97% of world market capitalization. We cover 12 subcategories of ratings and rankings across the categories of environment, employees, community and governance. We show underlying data sources that contribute to each subcategory’s ratings. CSRHub metrics are a consensus view (any 2 sources may have about a 30% correlation so we make sense of the disparate data). We tag companies for their involvement in 17 Special Issues. We provide Macro-enabled Excel dashboard templates, customizable dashboards, and an API. Our big data technology enables 85% full coverage of data across our rated companies and robust analyses. We provide historical ratings back to 2008.

Skytop Strategies will launch its ESG5 Summit on April 4th in New York. CSRHub Co-founder and CTO Bahar Gidwani will be speaking on Materiality: Aligning Materiality to Your Company’s Business Model.

The growing focus on the implementation of environmental, social and governance standards and best practices is driven by increasing scrutiny of the public markets, their analysts, and institutional investors; and growing emphasis on transparency and accountability in today’s global markets. As a result, capital markets now engage regularly in discussions on how to assess the value of ESG practices on overall company performance, working with companies that integrate ESG into their performance equation to quantify, qualify and assign added-value by experts making buy, sell or hold recommendations.

Engage with experts and learn how to apply ESG considerations to your company and your investments.

Materiality: Aligning Materiality to Your Company’s Business Model

Moderator:
David A Lubin, Co-Chairman and Managing Director, Constellation Research and Technology, former Co-Chairman and Managing Director, Renaissance, and Executive Chairman, Palladium
Panelists:
Bahar Gidwani, CFA, FSA, Co-founder & CTO, CSRHub
Cathy Hansell, Founder and President, Breakthrough Results
Richard F. McMahon, Jr., Senior Vice President, Energy Supply & Finance, Edison Electric Institute
Virgus Volertas, Senior Analyst | Corporate Governance, UAW Retiree Medical Benefits Trust

APRIL 4, 2019 
ROYALTON PARK AVENUE 
420 PARK AVE SOUTH 
NEW YORK, NY

For the full program, click here. Receive a 35% discount off the dated price using coupon code CSRHUB2019. Register today.

Bahar Gidwani has built and run large technology-based businesses for many years. Bahar holds a CFA (Chartered Financial Analyst) and was one of the first people to receive the FSA (Fundamentals of Sustainability Accounting) designation from SASB. Bahar worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. He has founded several technology-based companies and is a co-founder of CSRHub, the world’s broadest source of corporate social responsibility information. 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 is the largest ESG and sustainability rating and information platform globally. We aggregate 180M data points from 610+ data sources including 10 leading ESG analyst databases. Our patented algorithm aggregates, normalizes, and weights data to rate 18,000 companies in 132 countries across 136 industries. We track 97% of world market capitalization. We cover 12 subcategories of ratings and rankings across the categories of environment, employees, community and governance. We show underlying data sources that contribute to each subcategory’s ratings. CSRHub metrics are a consensus view (any 2 sources may have about a 30% correlation so we make sense of the disparate data). We tag companies for their involvement in 17 Special Issues. We provide Macro-enabled Excel dashboard templates, customizable dashboards, and an API. Our big data technology enables 85% full coverage of data across our rated companies and robust analyses. We provide historical ratings back to 2008.