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Aug 21, 2020 CSRHub Blogging

Do Political Donations Really Predict Corporate Behavior?

Goods Unite Us has spent thousands of hours vetting companies' political expenditures in federal elections. They will tell you about the donations made by the organization and its senior employees along with each company's exclusive Campaign Finance Reform Score. CSRHub measures the environmental, social and governance performance of thousands of companies by aggregating 700 sources to derive consensus ESG ratings.

Goods Unite Us and CSRHub have combined datasets to see if any correlations showed up in terms of political affiliation and ESG scores. And some did. 

Our new joint report, which to our knowledge is the first of its kind, is available here. In short: 

goods unite us_CSRHub2

Blue companies outperform red companies overall and in three of four ESG categories.

CSRHub’s ratings measure four main categories: a company’s relationship with its community, its employees, the environment, and the boardroom governance that guides all of it. We found that the political leanings, right or left, of a company’s leadership could predict it’s scores overall and in three of the four ESG categories.

The findings of our joint report paint an amazingly clear picture of how the political leanings of a firm’s leadership affect its relationships with the environment, its supply chain, and its own workers. If a company is blue, it is statistically more likely to have better scores in all of these areas.

CSRHub’s Chief Technology Officer and cofounder Bahar Gidwani notes: “Both corporate managers and investors are interested in understanding the relationship between a company’s political activity and its social impact. This study demonstrates that there is a connection and suggests that political contributions should be seen as part of a company’s sustainability profile.”

The findings were statistically significant in all categories except for governance, where Democrat-leaning companies did score higher, but not in a way significant enough to show a generalizable pattern. 

In a nutshell, political donations are an exceptionally good predictor of not only a company’s political views, but also of its actual behavior. As Abigail Wuest, our CEO and cofounder, puts it, “These donations can tell you a lot about a company’s day-to-day behavior. And that’s priceless information to have when you’re deciding who to buy from or invest in.”

Our final report is available here.

CSRHub offers one of the world’s broadest and most consistent set of Environment, Social, and Governance (ESG) ratings, covering 20,000 companies. Its Big Data algorithm combines millions of data points on ESG performance from hundreds of sources, including leading ESG analyst raters, to produce consensus scores on all aspects of corporate social responsibility and sustainability. CSRHub ratings can be used to drive corporate, investor and consumer decisions. For more information, visit www.CSRHub.com. CSRHub is a B Corporation.

Published by CSRHub Blogging August 21, 2020