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

A Big Data Approach to Gathering CSR Data

[fa icon="calendar'] Sep 26, 2012 9:45:50 AM / by Bahar Gidwani

The following is part 2 of a 3-part series on “Big Data.”

By Bahar Gidwani

We have previously defined “Big Data” and shown how we feel it could help address some problems that exist in collecting corporate social responsibility (CSR) and sustainability data on companies.  We have also further described the problems with the currently dominant method of gathering this data—an analyst-based method.

CSRHub uses input from investor-driven sources (known as “ESG” for Environment, Social, and Governance or “SRI” for Socially Responsible Investment), non-governmental organizations, government organizations, and “crowd sources” to construct a 360 degree view of a company’s sustainability performance.  To better understand this process, let’s consider an example.

Hewlett Packard is a heavily tracked company.  We have 56 sources of data for this company that together contribute 494 different rating elements.  We map each of these elements into one of twelve different CSR subcategories.  For instance, here are mappings for 20 of the elements that contribute to the Hewlett Packard rating:

Description of Data Element

Subcategory Mapping

Source

Participant in the Walmart Sustainability Assessment Environment Policy & Reporting Carbon Disclosure Project 2010 Full Data
Better World product rating Product Better World Companies
Board Structure/Board Diversity Board Thomson Reuters Asset4
Commitment to Society and to Human Rights Protection Policies Leadership Ethics ISOS Group Assessments
Committed to improving sustainability performance Human Rights & Supply Chain BSR Member
Corporate Governance Rank Transparency & Reporting CR’s 100 Best Corporate Citizens 2011
Green House Gas (GHG) Footprint Energy & Climate Change Trucost
Human Rights/ Child and Forced Labor Issues Community Dev & Philanthropy MSCI ESG Intangible Value Assessment
Member of the Electronic Industry Citizenship Coalition Human Rights & Supply Chain Electronic Industry Citizenship Coalition
Most Admired Companies for Minority Professionals in 2011 Diversity & Labor Rights BlackEngineer Most Admired Companies 2011
North America 300 Carbon Rank Energy & Climate Change Environmental Investment Organisation
Number of corporate sustainability reports issued Transparency & Reporting CorporateRegister.com
Number of EPEAT certified products Environment Policy & Reporting EPEAT
On FCPA Corporate Investigations List Leadership Ethics FCPA Corporate Investigations
Same-sex benefits Compensation & Benefits IW Financial
Statement references corruption Leadership Ethics UN Global Compact 2010
Top 100 most accountable companies according to AccountAbility Transparency & Reporting AccountAbility
Top 50 Socially Responsible Environment Policy & Reporting Top 50 Socially Responsible
Supports UN Drugs and Crime Anti-Corruption Measures Leadership Ethics UN Office on Drugs and Crime Anti-Corruption Measures
Working Mother list 2010 Compensation & Benefits Working Mother List 2010

Some of these data elements could map to more than one subcategory.  For instance, a company that is on the list of “Best Workplaces for Commuters” would get credit both for its energy saving effort (in “Energy & Climate Change”) for the benefit its programs bring to its employees (in “Compensation & Benefits).

The list above includes examples of each of the three main contributors to the system: Investment-related sources (Asset4/Thomson Reuters, Carbon Disclosure Project, GovernanceMetrics International/Corporate Library, IW Financial, MSCI, Trucost, Vigeo); Activists and NGOs (Accountability, BSR, CorporateRegister, CR 100, EIO, FCPA, Top 50 Socially Responsible); and Government & Consumer (Better World, Black Engineer, EICC, EPEAT, UN Global Compact, UNODC, Working Mother).  The completed mapping process connects the 494 data elements from the 56 sources for HP into our twelve subcategories in 971 different ways.

Subcategory

Investment-Related

Activists & NGOs

Government & Consumer

Total By Subcategory

Board

67

12

1

80

Community Dev & Philanthropy

39

16

10

65

Compensation & Benefits

34

6

6

46

Diversity & Labor Rights

51

8

13

72

Energy & Climate Change

37

44

15

96

Environment Policy & Reporting

46

69

14

129

Human Rights & Supply Chain

40

19

8

67

Leadership Ethics

80

27

14

121

Product

56

8

6

70

Resource Management

46

31

11

88

Training, Health & Safety

30

6

2

38

Transparency & Reporting

51

30

18

99

Total By Type

577

276

118

971

While investment-related sources contribute more data elements than the other types, there are at least some of each type present in each subcategory.  Another way to look at this is to see that many sources contribute to each subcategory:

Subcategory

Number of Sources

Total Elements

Board

11

80

Community Dev & Philanthropy

21

65

Compensation & Benefits

18

46

Diversity & Labor Rights

23

72

Energy & Climate Change

24

96

Environment Policy & Reporting

25

129

Human Rights & Supply Chain

23

67

Leadership Ethics

29

121

Product

14

70

Resource Management

24

88

Training, Health & Safety

13

38

Transparency & Reporting

25

99

Each value from each data element is converted into a zero to 100 rating (zero = lowest, 100 = highest).  These scores are then adjusted by comparing them to each other.  In the example above, there are 11 sources for HP’s board performance.  Suppose three of them gave it a great rating, six a medium rating, and two a poor one.  Computer analytics would guess that the six scores that agree are correct and that HP’s board rating is in the medium range.  The assumption is that three sources tended to be biased towards high scores and two towards low scores.  This chart shows the actual distribution of scores at the subcategory level, along with a calculation of the “normal” error curve that results.

CSRHub big data

When the analysis is repeated across thousands of companies, a picture emerges as to which sources tend to be overly positive or negative and which tend to predict the “mean” of the other sources.  All sources can be adjusted, based on this feedback—moving them up or down so they more accurately match the opinion of all other sources.  After a large number of iterations in this process, there is a consensus score for each subcategory for each company analyzed.

CSRHub ratings process

By making a few assumptions about how the errors in data are distributed, one can assess the accuracy of ratings.  In a previous post, we showed that CSRHub’s overall rating accurately represents the values that underlie it to within 1.8 points at a 95% confidence interval.

In our next post, we will discuss the benefits and drawback of using this complex and data intensive approach to measuring company CSR performance.


Bahar Gidwani is a Cofounder and CEO of CSRHub. Formerly, 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, was a partner at Kidder, Peabody & Co., and worked at McKinsey & Co. Bahar has consulted to both large companies such as Citibank, GE, and Acxiom and a number of smaller software and Web-based companies. He has an MBA (Baker Scholar) from Harvard Business School and a BS in Astronomy and Physics (magna cum laude) from Amherst College. Bahar races sailboats, plays competitive bridge, and is based in New York City.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on nearly 5,000 companies from 135 industries in 65 countries. By aggregating and normalizing the information from over 170 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.

 

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[fa icon="comment"] 1 Comment posted in Accountability, Asset4/Thomson Reuters, Bahar Gidwani, Better World, Big Data, Carbon Disclosure Project, CorporateRegister, CR 100, EICC, EIO, EPEAT, ESG, FCPA, GovernanceMetrics International/Corporate Library, Government & Consumer, social, Investment-related sources, UN Global Compact, Uncategorized, Working Mother, IW Financial, MSCI, socially responsible investment, Top 50 Socially Responsible, Trucost, UNODC, Vigeo, Activists and NGOs, and Governance, Black Engineer, BSR, CSRHub, environment, Hewlett Packard, SRI

Expanding Sustainability Data: Emerging Sources

[fa icon="calendar'] Jun 3, 2011 11:22:11 AM / by Bahar Gidwani

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.

  Screen shot 2011-06-03 at 12.17.12 PM

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.

 


 

Bahar Gidwani is a Cofounder and CEO of CSRHUB. Formerly, 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, was a partner at Kidder, Peabody & Co., and worked at McKinsey & Co. Bahar has consulted to both large companies such as Citibank, GE, and Acxiom and a number of smaller software and Web-based companies. He has an MBA (Baker Scholar) from Harvard Business School and a BS in Astronomy and Physics (magna cum laude) from Amherst College. Bahar races sailboats, plays competitive bridge, and is based in New York City.

 

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[fa icon="comment"] 1 Comment posted in B Corporation, Bahar Gidwani, Carbon Disclosure Project, corporate social responsibility, CSR, GoodGuide, sustainability ratings, Underwriters Laboratories Environment, UN Global Compact, Uncategorized, WikiPositive, sustainability, Corporate Register, CSRHub, Glassdoor, Global Reporting Initiative, SRI, The Sustainability Consortium

Expanding the Boundaries of Sponsorship

[fa icon="calendar'] May 9, 2011 8:12:58 AM / by Bahar Gidwani

How the Catlin Group Turned Climate Change Research Corporate


By Bahar Gidwani


4684077396_510fdf97e8 Catlin Group Limited is a major UK Insurance company ($4B of premiums written, 600 people, HQ is technically in Bermuda).  A few years ago its CEO, Stephen Catlin, was considering how best to boost his company’s visibility.  Apparently, he considered sponsoring a sports team (a fairly standard practice among large companies) and then decided instead to sponsor an Arctic research trip:

“There is a wide range of activities that companies like Catlin can sponsor, ranging from sporting events to artistic performances,” says Stephen Catlin, CEO of Catlin Group Ltd. “We believe that by sponsoring the Catlin Arctic Survey, we are making a contribution to the understanding of climate change, one of today’s most important issues both for the insurance industry and for the planet as a whole.” 

I only recently heard about the Catlin Arctic Survey—which has been generating great information about the Arctic ice cap for several years.  However, there are more than 25,000 mentions of it on Google, and a wide variety of social organizations have supported this effort.

In our system, Catlin gets a pretty average rating.  A quick check of their disclosures (they have a small section of their web site devoted to CSR issues) show they filed a public CSR report in 2010.  They have a code of ethics and have invested in employee development.  They disclose some aspects of management compensation and made about £800,000 of charitable donations to community groups.  Catlin is a member of Business in the Community (a UK group that is somewhat analogous to the US-based Business for Social Responsibility) and participates in ClimateWise (a group of UK insurance companies that cares about climate change).

However, Catlin has not committed to the UN Global Compact, has not joined Carbon Disclosure Project, and has not adopted the reporting guidelines suggested by the Global Reporting Institute.  In other words, it is a good citizen, but could do more.

Still, the smart decision to sponsor a high profile project has probably added more to Catlin’s brand than putting its name on a soccer stadium or putting its logo on the sides of a racing sailboat. The cost was modest—less than £3 million.  The logic was good—an insurance company should be interested in a project that could help us all better predict climate change. And the opportunity to participate as a partner with multiple advocacy and activist groups (otherwise prickly and suspicious) should keep Catlin on the “good list” for a lot of people.

Of course, some of the coverage has been quirky. You can read articles about why lacy underwear has become part of the expedition’s equipment or how members of the team prepared to swim to the North Pole.  However, on balance, Catlin has probably done well on its investment—as Queen Isabella did by supporting Christopher Columbus and Lincoln Ellsworth did by supporting Arctic and Antarctic exploration (Ellsworth had a mountain range named after him!).  I hope their success prompts other companies to consider shifting some of their sponsorship budget into activities that will help further social, community and environmental causes.


Bahar Gidwani is a Cofounder and CEO of CSRHUB. Formerly, 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, was a partner at Kidder, Peabody & Co., and worked at McKinsey & Co. Bahar has consulted to both large companies such as Citibank, GE, and Acxiom and a number of smaller software and Web-based companies. He has an MBA (Baker Scholar) from Harvard Business School and a BS in Astronomy and Physics (magna cum laude) from Amherst College. Bahar races sailboats, plays competitive bridge, and is based in New York City.

Inset photo courtesy of Polar Cruises. 

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[fa icon="comment"] 1 Comment posted in Bahar Gidwani, Carbon Disclosure Project, CSR, UN Global Compact, Uncategorized, Business for Social Responsibility, Business in the Community, Catlin Arctic Survey, ClimateWise, Global Reporting Initiative

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