CSRHub CEO Bahar Gidwani has authored a new Director Notes for The Conference Board.

The Conference Board has now published a new Director Notes on CSRHub’s recent brand study, The Link Between Brand Value and Sustainability. Bahar authored the study working with Brand Finance, the global brand analyst headquartered in London.

This study proves there is a strong link between Brand Strength and Sustainability, with the correlation doubling in 2012 to 28%!

You may have seen this study in Bahar’s 5-part blog series on CSRHub or other outlets. Now, you may download this beautifully published study all in one PDF document, including all the support charts and graphs.

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 corporate social responsibility and sustainability ratings and information on 8,400+ companies from 135 industries in 104 countries. By aggregating and normalizing the information from 290+ 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 change the world.

By Carol Pierson Holding

This week, Cynthia Figge, Co-founder and COO of CSRHub (full disclosure: CSRHub is my sponsor), reported at Sustainable Brands that the correlation between CSR and brand strength has reached .28. (A perfect correlation is 1.0)

This number is truly remarkable!

First, look at it in absolute terms. In 2006, I organized the first study that proved a relationship between CSR and brand existed at all.  That study was considered such a breakthrough that I was invited to present the results at all the major sustainability conferences, from the Conference Board to SRI (Socially Responsible Investing) in the Rockies to the Wharton Sustainability Conference. All that excitement over a small, but significant relationship – a .05 correlation.

That 2006 study – conducted just six years before the CSRHub study – barely qualified for statistical significance. So the fact that the CSR/brand correlation reached .28 so fast is a very big deal. Of course, we used different databases back then. CSR outside the US wasn’t being tracked by US firms so our numbers were domestic only. The CSRHub study combined global data from Brand Finance, the UK brand value company, and CSRHub’s aggregated global information. Still, the rise was extraordinary.

In fact, so unbelievable that CSRHub’s CEO Bahar Gidwani, a self-admitted geek with degrees in physics and astronomy and a Harvard MBA, tested every permutation of statistical error. The numbers hold.

Look at the above chart again. 2012 jumps one and one half times over 2011. This is after years of languishing. Was 2012 the tipping point? If so, why?

After waffling around during the grim days of recession and climate change denying, something pushed us into a new age of CSR.

Maybe it’s just that CSR has finally traversed the natural path of innovation. The numbers from 2006 to 2012 form an almost perfect hockey stick-shaped graph of innovation adoption, starting from the 20 years or so before 2006 with consistently low level of “innovators,” increasing over five years through the “early adopter” phase and now blasting into the “mainstream.” But why now?

Figge reported on the subcategories that carried the higher correlation. As expected, environmental factors had robust correlation due to the ubiquity of sustainability reports and environmental crises. But employee issues exerted an even stronger influence. Social media accelerated the impact of greater employee engagement and the accompanying word-of-mouth.

The relationship between social media and the growing influence of CSR on brand is underscored in a recent study from Cone Communications titled “Social: Where CSR Brand Leadership Is Won Or Lost” which says —

“Social media is transforming the CSR landscape… Citizens are universally taking to social channels to learn more about issues, share positive and negative information and influence their personal networks.”

They call this conversion of CSR and social media “The Era of CSR.”

I would argue that something else is also at play: a shift in culture from one tilted towards competition and force to one based on co-operation and kindness. Thanks to the environmental movement, our perspective is becoming longer-term and focused on preserving the commons, or the natural resources that we all share, rather than competing for them.

Evidence of the shift is most apparent in the younger cohort. We’ve seen acts of violence drop by half since 1994 among 10-24 year olds. GenY is showing a preference for the “sharing economy” in industries from cars to hotels to homes. David Brooks wrote last week about a young hedge fund trader who lives on a grad school budget and sends the rest off to Africa to find a cure for malaria.

Shifts in older cohort culture are also becoming apparent. In a much-praised book called “The Athena Doctrine: How Women (and the Men Who Think Like Them) Will Rule the Future,” author John Gerzema concludes that “…the only way to succeed when everyone knows your business is to act in an empathetic, patient, humane, and scrupulously ethical way” — traits he ascribes to being “like women.”

Even Apple, once the poster child for a winner-take-all American corporation and the one activists loved to hate, has undergone a dramatic shift. As reported in this week’s Fortune, “Ma Jun, the noted Chinese environmental activist, says Apple has gone in a short period of time from being the most uncooperative of electronics companies to ‘one of the most proactive IT suppliers’ of all.”

[csrhubwidget company="Apple-Inc" size="650x100" hash="c9c0f7"]

Surely “The Era of CSR” is upon us.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 7,300 companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 7,300+ companies from 135 industries in 93 countries. By aggregating and normalizing the information from 230 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 change the world.

By Cynthia Figge

Cynthia Figge's SB'13 Plenary speech "New Insights into the Correlation Between CSR and Brand Strength" follows.

Hello! I’m so grateful to be meeting with all of you, and celebrating my 7^th year at SB since New Orleans!!

Why are we all here? Because we believe that a company that invests in sustainability increases its brand value, right? I’m going to unveil some research that proves the relationship between brand and CSR is even more profound than we thought — around the world, across industry type, and company size.

Even more exciting, last year, that correlation more than doubled in strength.

My company, CSRHub, the world’s largest aggregator of global CSR information, ran five years of our data against the data of Brand Finance, the global brand analyst headquartered in London.

With our overlapping datasets, we analyzed over 1,000 companies, and  for 2012 we got a .28 correlation between brand strength and CSR. This seemed extraordinary.

So we tested the data. My co-founder at CSRHub is a self-admitted geek with degrees in physics and astronomy, and a Harvard MBA (where we met) and he knows his regression. He looked at F values. He split the data in two groups. Tested the combined effect of outliers. He tested for spurious relationships. He ran regressions with third factors such as enterprise value and market cap. Over all these trials, the correlation holds. 28% of brand strength is related to CSR performance.

Let’s dig in and discover which CSR factors may be driving brand strength.

We looked at each of the twelve factors in CSRHub’s model. This chart is ranked by the four categories employees, environment, community and governance. Look closely at the subcategories in light blue. One of the highest correlations is between brand and Environment Policy and Reporting. This is not at all surprising given the environmental crisis – and companies tend to communicate about this in their sustainability reports. They also tend to communicate about products and leadership ethics, the two bottom blue stripes.  But the highest correlated subcategories are all employee issues. Employee engagement and word of mouth seem to be extremely important in creating brand value.

Most astonishing to us was our analysis over time. When we looked back over five years of data, this is what we found:

Brand strength to CSR correlation has suddenly strengthened in the last year, doubling in 2012 over 2011. The relationship stayed relatively constant over the previous 4 years. Then in 2012 that correlation more than doubled.

Why? Perhaps we are reaching critical mass. Consumers are more aware of sustainability. It’s been in the press more. More sustainability websites like CSRHub are out there. NGOs are talking more about the role of corporations in their success. My son just graduated from college and he takes sustainability as a driver of business success for granted.

Why is this important?

You’re the one audience that really gets the implications of this data. CSRHub and Brand Finance have proved a deep link between CSR and brand strength. There is DRAMATIC ROI for sustainability. And that ROI is increasing rapidly. My take is that more companies see sustainability as the breakthrough platform for strategic advantage.  After strategic sustainability consulting for 17 years I believe we may be at the edge of big shift.

An interview with Cynthia Figge and 3p’s Nick Aster at SB'13.

Cynthia Figge is a forerunner, thought leader and speaker on the corporate sustainability movement. As the co-founder and COO of CSRHub, Cynthia's team provides free corporate sustainability ratings on over 7,300 publicly-traded and private companies worldwide. In addition to CSRHub, Cynthia is the co-founder of EKOS International, one of the first consultancies to integrate sustainability and corporate strategy. She has crafted corporate sustainability strategies for a host of major organizations, including BNSF, Boeing, Coca-Cola, Dow Jones, and REI. Cynthia also serves as an advisor to SNS Future in Review, Board Director of Compassionate Action Network, and served as President of the Board of Sustainable Seattle. She has an MBA from Harvard Business School. Prior speaking engagements in corporate responsibility have included SRI Basecamp, Future in Review, Sustainable Brands, and SRI in the Rockies.

Join us as at Paradise Point in San Diego, CA, June 3-6 where sustainability, brand and innovation professionals come together from around the world to explore how to build better brands for tomorrow.

Our Co-founder and COO Cynthia Figge will speak at the opening of the event on June 4. Cynthia will present “New Insights into the Correlation Between CSR and Brand Strength.” Cynthia will be making a special announcement you won’t want to miss!

We look forward to seeing CSRHub members at SB’13!

For more information and to register, click here.  CSRHub members can enjoy a 20% discount off current pass prices by using NWSPKSB13 code when registering.

Cynthia Figge is a forerunner, thought leader and speaker on the corporate sustainability movement. As the co-founder and COO of CSRHub, Cynthia's team provides free corporate sustainability ratings on over 7,300 publicly-traded and private companies worldwide. In addition to CSRHub, Cynthia is the co-founder of EKOS International, one of the first consultancies to integrate sustainability and corporate strategy. She has crafted corporate sustainability strategies for a host of major organizations, including BNSF, Boeing, Coca-Cola, Dow Jones, and REI. Cynthia also serves as an advisor to SNS Future in Review, Board Director of Compassionate Action Network, and served as President of the Board of Sustainable Seattle. She has an MBA from Harvard Business School. Prior speaking engagements in corporate responsibility have included SRI Basecamp, Future in Review, Sustainable Brands, and SRI in the Rockies.