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

Understanding the Just 100

[fa icon="calendar'] Dec 15, 2016 9:40:43 AM / by Bahar Gidwani

Just Capital was established in 2015 by two successful and well-known investors: Paul Tudor Jones and Martin Whittaker.  Its mission is to use “the power of markets to drive positive change on the issues Americans care most about.”  After two years of research and reflection, Just Capital has now published a list of the 100 best “corporate citizens.”

We’ve been interested in this project from its inception and provided the Just Capital research team with access to our ratings and other data.  Unlike other ratings systems that attempt to decide what things are good behavior or bad behavior, Just Capital sought the opinion of ordinary citizens about what defines good corporate citizenship.  When they released the first readings from these surveys last year, it caused a stir within the sustainability community by showing that social and ethics issues were more important to most Americans than environment or other governance issues.

We suspected that Just Capital’s approach would generate ratings that differ from those of the other 491 ratings sources we integrate into CSRHub’s data set.  A simple comparison between the top 100 company ratings and CSRHub’s ratings shows there is about an 8% R Squared between Just Capital’s perspective on corporate social responsibility (CSR) and that of CSRHub’s aggregate of all other sustainability rating sources.

Just 100 and CSRHub Correlation.png

 

For this first review, Just Capital chose to focus on components of the Russell 1000 Index.  They pointed out that this group of companies has a large market capitalization and that most are headquartered in the US.  (Only around 40 of the current members of the Russell 1000 Index have non-US headquarters.)  One of the planned uses for the Just ratings is to encourage US investors and consumers to support “just” companies.  Investors may find this first list useful, but US consumers and businesses buy products and work with hundreds of large foreign companies that have not yet been evaluated.

Just Capital looked at about 90% of the companies in the Russell 1000 Index.  It sought to discover how these companies performed across 67 different metrics.  CSRHub covers 969 companies from this Index and has access to around 3,000 different metrics on these companies.  Just Capital had to make a number of assumptions and adjustments to account for missing data.  CSRHub’s system automatically adjusts for missing data issues through its normalization and weighting algorithms.  Despite these methodological differences, there is some agreement between our systems.  In particular, the 100 companies Just Capital picked did have better average performance using CSRHub’s rating system than the other 869 companies we rate in the Index.

CSRHub Rankings comparison.png

 

On the other hand, there were some major differences between our rating systems.  19 of Just’s top 100 companies had overall CSRHub ratings that were in the bottom quintile (lowest 20%) of the 16,500 companies we track.  69 of the 869 companies that didn’t get into the Just 100 were in the top quintile of CSRHub’s ratings system.  To put it another way—the five top-scoring companies in the Just 100 had an average CSRHub rating of 59.  More than 100 of the other 869 that didn’t make the list had CSRHub scores above 59.

In order to better understand the difference in our results, we looked at individual examples.  Companies like Accenture, Intel, Cisco, Johnson & Johnson, and Microsoft were both in the Just 100 and at or near the top of CSRHub’s ratings.  (The average overall CSRHub percentile rank for these five companies was 96%, which means they were perceived in our system to perform better than more than 15,000 other companies.)  As we would expect, these companies had especially strong average scores in the Employee area (average 90% performance) and somewhat lower average scores on Environment and Governance issues (83% and 76%).

CSRHub and Just Capital high scores.png

 

The other end of the spectrum was more puzzling.  Here are five examples of where CSRHub’s view diverged with those of Just Capital.

high and low csr scores.png

 

Both Just Capital and CSRHub attempt to remove the influence of issues such as company size.  The ratings we have been using from Just Capital are their “relative” ranking—the measure of a company’s performance compared to others in its industry.  CSRHub’s rankings are also relative (since most of CSRHub’s sources take an industry-centric view of performance) but span all entities rather than just those in one industry.  Many of our sources overlap (and Just Capital had access to CSRHub’s ratings during its research process).  So, why are these five companies included in the Just 100?

The Just Capital folks deserve huge credit for transparency.  There is a tear sheet report on each of the companies in the Just 100—so it is fairly easy to see what factors swayed them to feel that a company deserved to be included.  CSRHub has a similar level of transparency—our users can inspect which sources we used and most of the data details that underlie our scores.

For instance, CSRHub has 62 sources and more than 1,200 ratings indicators for Discovery Communications.  Our systems show below average performance for all aspects of sustainability performance when compared to all of the companies we track (top section), the 128 Broadcasting and Advertising industry companies in our system (middle section), and the 6,374 US companies we have ratings for (bottom section).

 

Discovery Communications CSRHub drilldown.png

 

In its drill down, Just Capital gives Discovery an above average score on Worker Pay & Benefits based on 7 subscores.

 

Just Capital performance.png

CSRHub’s rating for this labor/pay topic are informed by 20 sources.  There are many negative reports, including:

  • No same-sex benefits (IW Financial).
  • No tie of compensation to overall climate performance (CDP).
  • Poor career management and promotion policies (Vigeo).
  • Low pay relative to global standards (MSCI ESG Governance Metrics).
  • Lack of Employment Quality monitoring systems (Thomson/Asset4).

These reports are offset somewhat by a positive score from Glassdoor regarding employee satisfaction (this 3.7 score is about 70th percentile) and 2014 awards from Forbes (Best Workplace), Best Workplace for Commuters, and Working Mother Magazine.  (Note though that only Working Mother repeated its award for 2015.)  It is hard to prove that Discovery deserves a poor score on this topic—but it is easy to see why others might disagree with Just Capital’s assessment.

Just Capital is well supported, media savvy (its launch events have been well attended and its article in Forbes received an “editor’s choice” star), and has a mission that resonates well with the general public.  It has taken a fresh approach to the challenge of evaluating corporate social behavior and its staff spent months forming its opinions.  Just Capital also reached out to the companies it was evaluating and invited them to contribute information.  For instance, Just Capital indicates in its tear sheet that Discovery plans to add same sex benefits for its employees in 2017.  When this is confirmed (and incorporated into the research done by CSRHub’s partners), it may “flip” some of the negative indicators we mention above.

CSR managers for companies who appear on the Just 100 should celebrate their good fortune.  Companies who did not should ask Just Capital to share the details that drove its assessment of their performance.  The CSR managers in these companies may then find facts that could be updated or corrected or areas where new programs could respond to Just Capital’s concerns.  As Just Capital expands its coverage and continues publicizes its ratings, we hope we will see benefits from its work for both corporations and consumers.  CSRHub plans to start incorporating Just Capital ratings into its analysis with its November data set, so that CSRHub users will be able to integrate this new perspective into their broader CSR communications program.

 


Bahar Gidwani

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. 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.  It covers over 16,000 companies from 135 industries in 133 countries. By aggregating and normalizing the information from 491 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.

 

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CSRHub's Cythnia Figge to Speak at Sustainable Brands '16

[fa icon="calendar'] May 18, 2016 10:04:44 AM / by Cynthia Figge

sb16sd-hero-logo-342x90

CSRHub COO and CoFounder Cynthia Figge will be moderating a panel at Sustainable Brands 2016 conference, in San Diego on June 6-9. The panel will be discussing New CDP Product-Level Supply Chain Data: Analysis and Recommendations.

At SB’16 San Diego, thought leaders, brand innovators, designers, and global business leaders will gather to explore various topics and issues pertinent to sustainability. Participants are leading the way with creativity and new products and services facilitating the transition to a truly sustainable future.

Wednesday, June 8th 11:30am-12:30pm PDT

New CDP Product-Level Supply Chain Data: Analysis and Recommendations

  • Betty Cremmins, Senior Manager, CDP
  • Christoph Meinrenken, Chief Data Scientist, COCLEAR
  • Cynthia Figge, COO and CoFounder, CSRHub

SB’16 San Diego is the largest gathering of change makers representing many of the world’s largest global brands, disruptive social entrepreneurs, NGO’s, investors, academia plus a multitude of other stakeholders that support them. For more information regarding the event, click here.  To register for the conference, members of CSRHub may use a 20% Speaker Discount Code. Please use NWSPKSB16SD when registering.

New CDP Product-Level Supply Chain Data: Analysis and Recommendations Panel will cover:

 

The Carbon Disclosure Project (CDP) has partnered with CoClear to analyze its product life cycle data from CDP’s Supply Chain Climate Change Information Request. Over 1,500 companies from 30 countries, representing 10 industry sectors, responded to the CDP questionnaire in 2013, 2014 & 2015. These companies provided life cycle emissions data on more than 300 products. Prior efforts to understand industry emissions often relied on “top-down” methods of analysis, examining high level, aggregate emissions data. With top-down analyses, it is often difficult to pinpoint with particularity the causes of carbon emissions – and which products and brands in a company’s portfolio offer the most potential for efficiency improvements. This analysis, on the other hand, identifies which life cycle stage cause highest emissions in each industry and how sectors track and manage these hotspots over time. The goal is to help industries identify efficiency improvements throughout their value chain.


Cynthia Figge, Co-founder and COO of CSRHubCynthia 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 COO 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.

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CSRHub and Bloomberg - part 2

[fa icon="calendar'] Dec 16, 2015 10:02:32 AM / by Bahar Gidwani

By Bahar Gidwani

Part 2 of a 2-part series

The first part of this post described the reasons iCompli and CSRHub decided to create the new ESG Metrics Brief report.  We thought it might be helpful to provide a concrete example of the kinds of information—and opportunities for action—that these reports create.

At number 8 on the 2014 Fortune list, Ford is a well-studied, multinational with a long history of interest in sustainability.  Ford has reported to the GRI since 2007, to CDP since 2006, and has won many awards and recognitions.  CSRHub has 139 different sources of information on Ford and 22,501 different ratings points.  Ford’s overall CSRHub rating of 60 puts it at the 71% percentile among the 118 motor vehicle manufacturers that CSRHub tracks.

The overview

The first chart in Ford’s ESG Metrics Brief provides a visual representation of this relative performance:

Ford CSRHub overall ratings

While overall performance is well above average, it is clear that of the four major categories of sustainability performance that CSRHub tracks, Ford is strongest in “employees” and weakest in “governance.”

The ESG Metrics Brief has access to CSRHub’s eight years of ratings history and a similar range of history from Bloomberg.  This chart shows how Ford’s CSRHub rating has changed over this time period.

ESG Metrics Brief CSRHub Rating

The ESG Metrics Brief next brings in other ESG sources from Bloomberg’s system.  Here is the relative performance for Ford as seen by ISS and by CDP.

ISS Governance QuickScore

CDP Performance Score

Drilling down

After a user has reviewed the overall situation for a company, he or she can “drill down” into each of the four main categories that CSRHub covers.  For instance, here is the change over time for Ford’s governance rating, compared to those of its peers.

CSRHub Governance Rating

The above chart uses CSRHub ratings.  Other sources and metrics drawn from Bloomberg help further explain Ford’s loss of competitive advantage compared to its peers in this area.  One factor may be a reduction in the amount and quality of Ford’s disclosures.

Bloomberg Gov Disc Score

A second factor could be the perception that Ford’s CEO compensation is out of line with that of its peers.

CEO compensation

Bloomberg tracks a wide array of metrics and policies that give users of the ESG Metrics Brief even more insight into this part of Ford’s sustainability behavior.

ESG Metrics Brief KPIs

CSRHub comparators

The bottom line

We believe that an ESG Metrics Brief will be a good starting point for those who want to understand one company’s sustainability performance.

  • The report is easy to obtain.  It takes three business days or less to generate each report.
  • The report is inexpensive.  Each report costs only $495—much less than the time and energy required for most researchers to generate something comparable, and far less than the cost to license the datasets.
  • The report is broad and comprehensive.  You get data on more than 120 indicators across all areas of sustainability.  Each report normally compares against between 10 and 30 peers.
  • The report helps inform the stakeholders in a sustainability strategy process.  You can share the report internally and help prove your case for new programs, further investments, and shifts in strategy.

We have more data than we can ever fit into any single report!  We look forward to getting feedback from our users about the ESG Metrics Brief and continuing to fine-tune it to meet their needs.

See more now, including a full sample, at  http://www.csrhub.com/content/icompli-csrhub-esg-metrics-brief/.

 


Bahar GidwaniBahar 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. 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.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 400 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.

 

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Bloomberg ESG and CSRHub Benchmark - part 1

[fa icon="calendar'] Dec 15, 2015 10:00:21 AM / by Bahar Gidwani

By Bahar Gidwani

Part 1 of a 2-part series

Sustainability professionals spend hundreds of thousands of dollars and months of time developing and managing their sustainability programs.  Most dread the almost inevitable question from their manager or their manager’s manager—”How are we performing relative to our peers?  Where are we doing well and where do we need to improve?”  The iCompli CSRHub ESG Metrics Brief is designed to make it easy to answer these questions in a fact-based and authoritative way.

Why has it been hard to get answers?

Sustainability managers know their own programs—and understand the data they generate and report.  However, hundreds of outside sources each form their own opinions on a company’s sustainability performance.  They use different criteria and come to different conclusions—and both their analysis methods and their viewpoints are not always readily available.

For instance, is Wal-Mart more socially responsible than Target?  The barriers to answering this question include:

  • Too much information – CSRHub contains 131 sources of sustainability information for Wal-Mart and 118 sources for Target.
  • Gaps in the data - 85 of the above data sources rate both company, but many sources are unique to only one of the two companies.
  • Broad range of comparable companies – CSRHub tracks 274 retail companies worldwide.  To fairly compare Wal-Mart and Target, one needs to put them into context against all of these other competitors.

 

Our new solution required combining two components

CSRHub’s database system maps, merges, and normalizes sustainability ratings from 425 sources.  It includes information from Wall Street firms such as Thomson, MSCI, EIRIS, and Trucost; data from non-governmental organizations such as CDP, GRI, Transparency.org and the UN Global Compact, and information from government databases, publications, and various types of certification and crowd sources.  By combining almost 80 million pieces of data, CSRHub can generate objective scores of the perceived sustainability performance for more than 15,000 companies in 132 countries.

CSRHub ratings process

The end result shows that Target is generally more sustainable than Wal-Mart—although Wal-Mart is seen has having better performance on environmental issues.

CSR Ratings for Target vs Walmart

This perception perspective helps identify where a particular company is weak or strong.  But, most corporate managers need to also see comparable sets of facts and figures, before they can invest in new projects or change their strategy.  The new ESG Metrics Brief combines CSRHub’s insights with the hard facts contained in Bloomberg’s well-respected ESG (Environment Social Governance) Database.

Bloomberg tracks data on more than 30,000 publicly-traded companies, from around the world.  Its data set includes information not only hundreds of data items its own staff gathers from public sources and company filings but also data from other major ESG sources such as Sustainalytics and ISS.  The result is a set of comprehensive reports on 6,969 companies in 77 countries.

ESG regions

Look for part 2 of this series to see a concrete example of the kinds of information—and opportunities for action—that the new ESG Metrics Brief's create.

To see more now, including a full sample, go to www.csrhub.com/content/icompli-csrhub-esg-metrics-brief/.


Bahar GidwaniBahar 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. 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.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 400 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.

 

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CSRHub and iCompli Sustainability Announce Partnership with New ESG Metrics Brief

[fa icon="calendar'] Dec 1, 2015 9:29:23 AM / by CSRHub Blogging

CSRHub is pleased to announce it has formed a partnership with iCompli Sustainability, to offer a new kind of sustainability report – the ESG Metrics Brief – that brings together qualitative and quantitative data for the corporate sustainability marketplace.

The ESG Metrics Brief provides concise, yet comprehensive feedback on corporate sustainability performance. The unique benchmarking report delivers quick, easily digestible information on over 120 environmental, social and governance indicators.  The ESG Metrics Brief will help corporate sustainability, procurement and investor relations officers assess performance, identify potential brand and reputation vulnerabilities, and make more informed decisions.

Using the ESG Metrics Brief, stakeholders can see how a company compares with its peers on the CSRHub rating system as well as other leading public and private sustainability scoring frameworks, including Bloomberg and CDP.  The report examines a company’s current performance on key indicators such as GHG, water, waste, injury rates, women in management, a company’s progress over time, and industry averages.

ESG Metrics Brief

To learn more, go to www.csrhub.com/content/icompli-csrhub-esg-metrics-brief/.

About CSRHub

CSRHub® provides access to the world’s largest corporate social responsibility and sustainability ratings and information service, covering 15,000+ companies in 132 countries. By aggregating and normalizing the information from 400+ 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, professionals, and academics use CSRHub to benchmark company and supply chain performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance. Subscribers can access 12 indicators and millions of detailed data points on employee, environment, community, and governance performance. CSRHub is a B Corporation. For more information about CSRHub, visit www.csrhub.com or contact sales@csrhub.com.

About iCompli Sustainability

iCompli Sustainability (iCompli) is a division of BPA Worldwide, the world’s largest media audit company. A not-for-profit organization established in 1931, BPA’s audit services have expanded to include external assurance of government and industry standards and independent verification of companies’ sustainability claims. iCompli provides a research-driven systems approach to help organizations make defensible decisions about their sustainability initiatives. We offer diagnostic and assessment services, data verification and report assurance, and third-party certification to industry sustainability standards. For more information about iCompli, visit www.icomplisustainability.com.

 

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