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

By Bahar Gidwani

part 3 of a 3-part series

CSRHub recently released many new web features and an important new Excel-based tool, CSRHub Dashboard, to serve our 14,000 members. These changes are in response to our members asking us to give them more control over the data, with the ability to get granular details, access to both ratings and rankings, and a way to bring our data to their desktops via commonly-used tools such as a spreadsheet.

We have been updating the site about twice a year since our launch in late 2010.  We’ve also been adding new sources (now up to 365) and new companies (we have data on more than 10,000 companies in 104 countries).  However, this release took CSRHub to a new level.  We now offer the most comprehensive database of sustainability information in the world, and have become a core tool for a wide range of sustainability research.

As we look ahead over the next two years, we hope to offer our members even more:

• Expand our coverage to include data on more than 50,000 organizations. Much is known about the sustainability performance of the world’s 1,000 largest companies.  Most of them have permanent, professional sustainability staff who create CSR reports, use the GRI standard, send data to CDP, and encourage their companies to commit to the UN Global Compact.  But, while the world’s top companies contribute a lot to the world’ economy, there are millions of other public companies, private companies, not for profits and government organizations who contribute much more.  To change the corporate and organizational social behavior of these firms, we need to provide them with relevant sustainability data through tools such as CSRHub and our new Dashboard.  We already have some data on about 140,000 smaller organizations.  We hope to add enough new data to bring at least 40,000 of these firms into public view.

• Continue to add new sources. We plan to integrate more data from certification groups, supply chain software firms, and government organizations.  These sources collect data on both big companies and on thousands of smaller companies and organizations.  We also plan to ingest “crowd” data based on “semantic analysis” into our system.

• Integrate our data into more tools and applications. More than 60 organizations have signed up to use the CSRHub Specification for REST Access (CSRA).  The use data from this “API” to improve how consumers purchase products, candidates pick the right job, and sustainability practitioners find the right “best practice” to fix a problem.  Our partners follow many different business models and reside on six of the seven continents (we don’t have partners yet in Antarctica!).  We expect soon to see hundreds of developers using our simple, cheap source of sustainability data.

• Contribute more “content.” We have gathered and organized a unique data resource.  We are now recruiting partners to turn our data into content—articles, stories, reports, and informative dashboards.  Our widget is used by both major web sites (e.g., Huffington Post’s Green section) and sustainability-oriented bloggers.  Our database is being used in academic research (see here a page with links to some of the dissertations that have already been written using CSRHub data).  We’re part already of a new set of reports that Enablon is offering through its Wizness service—and we should have other partner publications to announce, soon.  Our dream is to have our scores become as ubiquitous in business use as credit ratings, and as useful for consumer purposes as the ratings on Amazon or Yelp.

• Help our users find sustainability-related tools and products.  We already offer access to more than 100,000 reports from a wide range of sources.  But, we need to do a better job of bringing together tools, reports, and resources and tying them to specific “use cases.”  We plan to launch a “store” that may help with this.  It will contain sections for each use case we serve.  And, it will have a page for each company we track and will show which products are available to do research on that company.

As you can see, we have a lot of work ahead of us.  As a B Corporation, we are dedicated to both making money and to using transparent access to corporate sustainability information to help change corporate social responsibility performance.  We believe we are contributing value to our users—and that our value is growing.  Our new higher subscription price will help us generate more cash that we can use to help achieve our ambitious goals.

Please let us know if you support our goals and agree with our longer-range plan.  Your feedback and support have helped us tremendously.  Thanks.

Part 1
What’s New at CSRHub? A lot!

Part 2
CSRHub Dashboard

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. Bahar is a member of the SASB Advisory Board.  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, covering on 10,000 companies from 135 industries in 104 countries. By aggregating and normalizing the information from 365 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 is a B Corporation, an Organizational Stakeholder (OS) with the Global Reporting Initiative (GRI), a silver partner with CDP (Carbon Disclosure Project), and an Advisory Council Member of Sustainability Accounting Standards Board (SASB).

This is the final post in a 3-part series on expanding sustainability data. 

By Bahar Gidwani

One often-cited approach to broadening the availability of corporate social responsibility (CSR) information is via “reporting groups.”  Three examples of these organizations are the Global Reporting Initiative (GRI), the UN Global Compact (UNGC), and the Corporate Register.  (Note, CSRHUB is an Organizational Stakeholder of the GRI, works closely with the UNGC, and refers its users to the Corporate Library for copies of company CSR reports.)  GRI helps companies organize their social reporting.  UNGC encourages conformance to a small set of social principles. Corporate Register stores and organizes corporate CSR reports. The work of all three groups encourages both public and private organizations to publicly disclose various aspects of their social and sustainability performance.

Even after years of patient effort, these three organizations have only induced about 11,000 companies to reveal information.  Only about 6,000 companies participate in two of the three programs and only about 1,000 are in all three.  Yet, without a lot of data (at least all of the information that all three of these bodies might receive), it is hard to generate a rating of a company’s performance.

Further, when one examines the 1,000 organizations that are in all three programs, many have already been rated by the SRI community.  We estimate that only about 600 ratings could be added using the data these three groups have collected.  As a result, we won’t find the answer to our rating needs just through the efforts of the reporting community.

Fortunately, some new ratings sources are emerging that show promise of rising from the grass roots and filling in the lawn.  They include companies we’ve spoken about before such as:

• GoodGuide:  Using independent test methodologies and direct samples of consumer opinion, GoodGuide has been able to estimate the social impact of thousands of products.  Many of these products come from private or otherwise un-rated companies.  GoodGuide has invested the necessary time and energy to dig out data on these companies and produce its own ratings of them.  It now covers 100,000 products from more than a thousand companies.
• Glassdoor:  When employees want to look for a new opportunity, they turn to the company ratings on Glassdoor. These ratings have been created by aggregating employee opinions about companies. Like TripAdvisor for travel or Yelp for services offerings, Glassdoor has used the power of the crowd to discover how employees feel about their employer.  It now covers 110,000 companies.
• WikiPositive: Volunteer contributors have built profiles on the social performance of more than 900 smaller companies. Using wiki-style shared editing, each contributor’s view is ingested and added to a page. Editors review the data and ask for help refining and improving it.

Doing external research—either directly via a paid staff, via crowd source collection of comments, or using a group of wiki contributors—is time consuming and expensive.  The data gathered is useful for the particular need of the researcher, but may not cover the broad range of issues that are included in sustainability.

Other groups are seeking to address these issues by providing new self-driven ratings opportunities. Some of these are verified by a third party—some are not. Most allow contributed data to be kept private, but reward companies and organizations for agreeing to make some or all of it public.  Three examples are:

• B Corporation: More than 400 companies have self-administered the B Corporation certification process (including CSRHUB!). B-Corporations commit to being socially responsible on a variety of dimensions. Recently, B Corporation has integrated its system with that of the Global Impact Investing Rating System (GIIRS).  This system is intended to help both investors and companies better understand the impact of their operations and investments.
• Underwriters Laboratories Environment (ULE): With its many years of experience certifying product safety and quality, Underwriters Laboratories (UL) is a natural candidate to provide help with sustainability ratings.  The Environment branch of UL has launched several product certification efforts. ULE is developing a company certification process that will measure and verify many aspects of environmental and social performance.
• The Sustainability Consortium (TSC): TSC was launched by WalMart, and is now jointly administered by Arizona State University and the University of Arkansas. Its 75 members are trying to expose the social performance of the companies in various supply chains, and more accurately quantify and communicate the sustainability of products. For example, the Consortium works with the Carbon Disclosure Project (CDP) and uses the CDP’s methodology for measuring carbon. Those who participate in the Consortium disclose the carbon content of their products privately to CDP.

We hope these new sources can eventually fill in the data we need to complete our ratings matrix.  It appears to us that the most progress at first will be in the US—we know of few bottoms-up approaches being pioneered in Europe or Asia. However, all of these efforts are closely tied to Web-based technology and therefore all should be easily moved into other economic areas.

It is hard to estimate the time needed to complete this process. Ten years?  Progress may move quickly if and when countries make environmental and social reporting mandatory. There may not be an initial economic benefit for participating in rating systems, but companies and organizations who spend time and money completing the rating process will likely uncover new business opportunities and insights into their brands and markets.

At some point, a tilt will occur and it will become costly not to participate. From that point on, we believe the quality and depth of ratings data will grow rapidly. At least the frameworks we have built so far will become the basis for this future system.  Therefore, we who are pushing this area now should hope to benefit from the investments we have made and will continue to make.

By Bahar Gidwani

This post originally appeared in Triple Pundit.

In a previous post, we described the trove of corporate social responsibility (CSR) data that is available from finance-related researchers.  One of the main places these firms get their data is from company-written CSR reports.  Corporate Register offers links to more than 6,000 of these reports—from all types of companies and organizations.

How do companies decide what to report and how to report it?  Since CSR and sustainability reporting are fairly new areas, most companies look outside of their accounting and management teams for guidance and standards.  They get help from organizations such as:

Global Reporting Initiative (GRI): One of the first and most-widely used reporting standards bodies, GRI launched in the late 1990s with support from a who’s who of sustainability pioneers and backing from UNEP.  Thanks to untold hours of work from stakeholders, technical advisors, and national organizations, GRI has defined and guided CSR reporting for more than 2,500 companies and organizations.  The latest GRI standard (called G3) includes more than 160 areas for measurement and disclosure.  GRI is now working to encourage mandatory dual reporting (where companies must report both their fiscal and social performance) by 2020.

International Standards Organization (ISO): We have all benefited for years from ISO standards for product quality, health, and safety.  Now, ISO has created a standard for internal tracking and reporting social responsibility performance called ISO 26000.  This massive project has benefited from input from 450 participating experts, 210 observers, and 42 liaison organizations.  ISO26000 data can generally be “mapped” into the formats needed for other standards (such as GRI) so companies can use their internal data for external reporting.  ISO also offers the ISO 14000 standard for environmental management.  This standard helps companies track and improve their environmental performance.

Social Accountability International (SAI): The SA8000 standard is based on the UN Universal Declaration of Human Rights, Convention on the Rights of the Child and various International Labour Organization (ILO) conventions.  It applies at the facility level—so companies may have only gone through the SA8000 process on some of their plants or offices.  As of September of 2010, more than 2,300 facilities in 62 companies have received SAI certification—and many other facilities are at various stages in the process.  Of course, many of the materials gathered during this type of certification can feed into an organization’s CSR report.

Impact Reporting and Investment Standards (IRIS): The Global Impact Investing Rating System (GIIRS) was launched to give company ratings to impact investors (those who want to use their investments to generate positive change).  As part of this ambitious effort, GIIRS has helped to develop IRIS—an independent set of standards that would help mission-driven businesses measure and report their social impact.  The current IRIS taxonomy includes five spreadsheets of measurement processes and more than 90 definitions.

UL Environment: There are several emerging efforts underway to give companies a voluntary standard way of rating themselves, and obtaining third party verification. These include an exciting project by UL Environment, in partnership with Greener World Media, which is developing an organization-wide sustainability standard that will be used to assess corporate policies and practices, known as the ULE 880.

B Corporation (B Corp): More than 360 companies (including CSRHUB) have now completed the B Corp assessment process.  We answered a long list of questions about our social behavior and then were quizzed about various aspects of our performance.  We got a passing grade—plus good reminders about the social side of our mission and management approach.  B Corp reveals a list of the companies that have completed the assessment, but does not yet share most of the data it gathers.

In general, there is a gap between the data companies gather and the data that they reveal, via CSR reports, regulatory filings, and other communication activities.  There may also be a gap between the data companies report and their true performance.  Most CSR standards allow for “third party verification.”  However, in many cases, the only groups with the necessary training and experience to serve as verifiers are CSR and sustainability consulting groups—with the fees for their reviews paid by the companies they are reviewing.  This leads to charges such as “greenwashing” and to a lack of the uniform reporting and transparency required to prove the effectiveness and credibility of these standards.  CSR standards groups are doing worthy and necessary work—but they need more regulatory and marketplace support to force companies and organizations to comply with both the spirit and the letter of their standards.

Bahar Gidwani is Cofounder and CEO of CSRHUB. He was the CEO of New York-based Index Stock Imagery, Inc, from 1991 through its sale in 2006. He has built and run large technology-based businesses, and has experience building a multi-million visitor Web site. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey. Bahar has consulted to companies including Citibank, Banco Portuguese do Atlantico, Crane Co., Sperry, GE, General Dynamics, Computer Associates, Oracle, Microsoft, Computer Sciences, EDS, Cerner, and Acxiom. He has an MBA from Harvard Business School. Bahar is based in New York City.

CSRHUB is a corporate social responsibility ratings tool that allows managers, researchers, consultants, academics and individual activists to track the CSR performance of major companies. We aggregate data from more than 90 sources to provide our users with a comprehensive source of CSR information about 5000+ publicly traded companies in 62 countries. Browse our ratings at www.csrhub.com.

Our firm, CSRHUB, recently decided to become a B Corporation.  We filled out a survey, went through several rounds of review, and thought deeply about some of the issues the process exposed.  We always believed we were a positive and progressive company.  We were pleased that our values fit well with those set out by this widely-respected and well-tested standard.

B Corps use the power of business to solve social and environmental problems.  Unlike traditional corporations, B Corps agree to meet social and environmental performance standards, disclose their performance so that it is transparent, and include consideration of all stakeholder interests in their legal structure.

Now that we have been through the B Corp process, I wanted to offer anyone who is thinking about it, three reasons for becoming a B Corp:

1. The power of reporting.  If you report it, you can measure it.  If you can measure it, you can improve it.  All businesses need to build a feedback loop that helps them improve their long term value.  We could never have built our tool if we did not have thousands of self-reported reports from the companies we rate, to work with.  Our society is based on the sharing of ideas and information.  Be a part of it and make your fair contribution.
2. You benefit from using a tested process.  When you run a business, you get immersed in its day to day issues.  You can lose sight of what is important—the reasons you started it and have worked so hard to build it.  The B Corp interview was a check list—like making sure the engines on a plane can hit full throttle and that the rudder moves, before you start down the runway.  You want your plane to climb high and fly fast—and you need to be sure your engines are hitting on all cylinders and nothing is stuck in the tail, before you leave the ground.
3. You get to take a stand.  Our profile system requires people to make decisions about how they feel about issues.  Are they against involvement in Burma?  In favor of nuclear power?  What is most important, good governance or good labor practices?  By becoming a B Corp, I felt we were publicly committing to the principle that businesses can both do well and be an agent for positive change.  (See a previous post on the concept of the “virtuous quadrant.”)  The B Corp community now includes 353 companies.  You can be proud to belong to this group.

It is easier not to report, not to examine one’s own prejudices and practices, and not to state one’s views publicly.  However, the issues addressed by the B Corp process—and by the whole area of CSR and sustainability practice and theory—can’t be avoided.  We are part of a community that intends to change the world and we need to show that we have whole-hearted dedication to our cause.  How could we or any other business who believes as we do, not want to engage in this process?