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

Preventing (Or At Least Predicting?) CSR Ratings Failure

[fa icon="calendar'] Jan 23, 2012 6:24:13 AM / by Bahar Gidwani

By Bahar Gidwani


One of our board members sent us a link to a great Harvard Business School article about how green ratings sources have failed to properly measure News Corporation’s social and environmental performance. The authors point out that News Corporation has set a goal to be “zero carbon” and therefore climate neutral.  But at the same time, the editorial side of News Corporation’s media properties has taken an anti-climate-change stance.

The authors describe a few of the ways in which a large company such as News Corporation could have actively pushed for positive change. They ask why ratings firms (including some who are our partners) don’t include “corporate activism” as one of the ways they measure corporate social responsibility (CSR).

It may sound smug, but we agree with this article and hope that our CSRHub ratings do make this adjustment. As a starting point, we would offer our ratings for News Corporation:

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(Note: All ratings in this article are based on our CSRHub average user profile.  Our site’s users can adjust the ratings on our site to suit their personal opinions and values.)

As you can see, we show News Corporation as average within its industry and well below average on employee and community issues. Interestingly, at the subcategory level (we report 12 detailed ratings subcategories, as well), News Corporation is fairly good on Energy & Climate Change and Environment Policy & Reporting (a 58 on both or about 10th out of 57 Broadcasting & Advertising companies we follow).  However, it is weak on Resource Management (a relatively poor score of 45 that suggests the company does not control its actual use of resources well) and a weak 47 on Leadership Ethics (confirming that it may have inconsistent internal policies).  We certainly don’t put News Corporation at the top of its industry and we show fairly clearly that the company’s recent focus has been primarily on environment and governance issues, rather than on achieving broader social goals.

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One reason our ratings are more tempered in their praise is probably that our base of data is very broad.  We have 2,944 data elements in our system for News Corporation, drawn from 23 sources.  Our sources each do their own independent research, so we have 23 opportunities to detect inconsistencies and a lack of commitment. We have another 115+ sources who don’t comment on News Corporation. The absence of their approval (or criticism) also informs our system.

For instance, unlike other major global companies, News Corporation is not a member of Business for Social Responsibility (BSR), Ceres, or the Committee Encouraging Corporate Philanthropy (CECP). The company did not endorse the Copenhagen Communique on climate change issues, did not participate in the Environmental Defense Fund’s Climate Corps, adopt the Equator Principles, commit to using the Global Reporting Initiative (GRI) reporting standards, issue a CSR report, commit to support the UN Global Compact (UNGC), or join the US Climate Action Partnership (USCAP).

We believe it is possible to avoid the kind of ratings failure that the HBS authors point out—or at least to gather enough data to predict and indicate that it may be occurring.  A company that doesn’t join, support, and interact with groups who support positive change, is probably not fully committed to change.


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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