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

Corporate Social Responsibility (CSR) and Sustainability metrics site CSRHub recently updated its ratings on Johnson Controls Inc. and the 114 companies in the Energy, Equipment and Services Industry.  Johnson Controls overall rating currently is 62, up three points after the most recent updates to their CSRHub page.

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

Please note, the Sustainability Ratings widget will continually update and show the latest ratings on CSRHub.

The average rating for the other companies in the Energy, Equipment and Services Industry currently is 53.  This has allowed Johnson Controls to move up four points to 7^th place on the list, using the CSRHub average user profile. Also see information about Johnson Controls at their CSRHub page here.

Johnson Controls has a particularly strong score in the Employee area of 65.  This is due to a high score in Compensation and Benefits of 69—well above the average for this industry of 56.  The area with the greatest opportunity for improvement for Johnson Controls is the Transparency and Reporting subcategory.  Here, Johnson Controls gets a 53 —which is above the average for the industry of 45.

Some highlights of the progress that Johnson Controls Inc. made in the past year include:

• Johnson Controls Recognized Globally by Dow Jones Sustainability Indices
• Johnson Controls Selected for UN Global Compact Stock Index (One of 12 U.S. companies selected for new index recognizing corporate performance on environmental and social issues.)

See Johnson Controls’ Corporate Social Responsibility website here.

CSRHub ratings are on a scale of 0 to 100, with 100 being the highest. To see more on how CSRHub creates a score and the CSRHub rating rules, visit here.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 8,900 companies from 135 industries in 103 countries. By aggregating and normalizing the information from 305+ 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 G. Benjamin Bingham

There were many reasons I took a leave of absence from Yale in 1970 after the National Guard lined the streets looking like aliens with their gas masks and camouflage -- there to keep the peace by shooting rubber bullets. I was not yet angry enough about the legal system and the Bobby Seal trial to join the dissenters, and the studios were too small for the big sculptures I wanted to create as a fine arts major. My lottery number was high and a year off would make me eligible for the draft and unlikely to be drafted. Once clear for a year I would be free. I also felt the hypocrisy when pacifism is expressed violently and wasn't certain I agreed with all the shouting, but at the same time I felt guilty for my inaction. My solution was to learn how to farm organically in England... practical, politically correct sculpture on a large scale. My feelings are similarly mixed now when I hear about the loud chanting that has been happening on at least 300 campuses across the country, even though I agree with their message. It is time to divest from fossil fuels and it can be done sanely and with full fiduciary reality. Why can't we just discuss it?

Unfortunately, the experts on the financial boards of endowments may one day look down on the smoldering remains of Earth, and comfort themselves by asserting that at least they did their "fiduciary duty" by putting profits ahead of people or planet! Their lack of willingness to consider the passionate pleas of students to divest is just as disingenuous as activism without real debate. A newspaper article at Swarthmore that divulged the talking points of an expert on why divestment would cost the endowment over $200 million in the next 10 years was full of stretched truths and hidden assumptions (read it here. Using the same kind of reasoning I came up with the following back of the envelope argument:

• Since 80 percent of oil reserves can not be burned as fossil fuels (if continued life on the planet is considered important) the value of oil stocks cannot reflect those reserves as an asset; in fact they can arguably be considered a liability since the continued depletion of our atmosphere (now at 400ppm of carbon when 350 is carbon neutral!) is likely going to result in class action lawsuits. So, projected over time, the holding of oil-related stocks, now 5 percent of their portfolio (guessing) overvalued by at least 80 percent means that they will have a likely loss of 4 percent of the value of their portfolio per year for the next 10 years or $594 million (lots of similar guesswork)!

• The bogus assumption that it will cost them dearly when leaving the best co-mingled managers now after they have done so well gives rise to another argument (a real study, but like them I am not providing the source!) that shows that over a long period of time the best 5 percent of managers in any 5-year period tend to be in the middle or tail-end of the pack in the next 5 years! If they argue that they are an exception, then I would argue that their managers are likely to be deftly shifting their portfolio anyway to stay ahead, so divestment happens regularly for financial reasons. They are used to it and should have no problem.

• Finally, the assumption that divesting within the separately managed accounts will cost them is unfounded. In fact it could benefit them greatly if divestment catches on and big oil and coal stocks crash, but even without that consideration, the challenge we are all facing is that the universe of investments any manager considers is too small and looking outside that universe will expand diversification from the status quo, not contract it (another risk mitigation strategy). I haven't seen their "recent" study (since they did not provide a source), but there are many studies that show that, contrary to their favorite study, socially responsible criteria, including negative screening cannot be shown statistically to have an impact on performance (read about Moskowitz Prize here). Researchers in general cannot say whether negative screening has any reliable impact, positive or negative because, on average, all managers underperform their benchmarks by the amount they charge in fees.

It was particularly sad for me to watch the useless interchange at the Swarthmore Board meeting where the term sophomoric came alive on the YouTube video screen.

That said, even though no one was listening and you couldn't hear what was being said through the cheers and chants, the students did get some attention and goodness knows we need to wake up. The prospects of the Gulf Stream cooling to the point of ending its streaming warmth to Europe is becoming more imaginable as winters grow longer in Ireland and Northern Europe. We are now at 400 parts per million of carbon in the atmosphere, and despite the pleasant imagination that plants will just keep getting more lusciously leafy and eat up all the carbon while we enjoy more exotic weather on our North shores; we are beyond the neutral point of 350 ppm and if we don't do something drastic soon, well -- join us in reinventing how to invest in a world that will last.

G. Benjamin (Ben) Bingham is the CEO and Founder of 3Sisters Sustainable Management. He is also the Chief Investment Officer currently focused on a Private Equity Fund called Scarab Holdings for partners in the new paradigm to foster a sustainable environment and social justice within a diverse and meaningful world culture. Read more of Ben's bio here.

By Carol Pierson Holding

According to Shell’s New Lens Scenarios, we’re headed for a carbon free future, where solar will be the dominant energy source by 2100. The report got pretty universally upbeat press, praised in business and even environmental websites and by Amory Lovins, Chief Scientist of the Rocky Mountain Institute, who seemed to endorse the report: “Shell is the most far-sighted and strategic of the majors, largely because the Scenarios informed the thinking of Shell leadership and many others in the energy ecosystem.”

And Shell gets the highest  social responsiblity rating from CSRHub of any big oil company.

But assuming that the maximum additional carbon the earth can absorb is 565 gigatons of CO2 and that study after study predicts that “carbon emissions will grow by roughly three percent a year… (exceeding the) 565-gigaton allowance in 16 years,” we’ll be facing Armageddon long before we’ve shifted from carbon-producing fuel to Shell’s scenario.

Shell’s future scenario is hardly encouraging.

Up to now, I have been a huge admirer of Shell’s scenario planning. I first heard about its brilliant insight that the Soviet Union would collapse, information it kept secret while snapping up cheap Soviet oil leases. They also predicted the 1970s oil crisis and the end of Apartheid. They have a lot of credibility.

So how can Shell’s prestigious forecasting group predict a carbon free world when its strategy is to “reinforce our position as a leader in the oil and gas industry?” When it sold its solar business in 2006 to SolarWorld once they realized that solar business profits would never match the oil and gas business? Is scenario planning really that separated from corporate communications?

Then there’s the language problem. We all recognize the difference between short term exigencies and long term “unknown unknowns” as the study’s lead Jeremy Bentham, VP Business Environment and Head of Shell Scenarios, calls it, quoting Donald Rumsfeld.  It's the phrase he used when explaining the link between Baghdad and terrorist cells.

Is Shell suggesting that like Rumsfeld, its people are smart enough to get away with a lie of monstrous proportions?

As a recovering capitalist, I tend to be overly cynical, especially when it comes to corporations using socially responsible research as promotion. But here, there is a case to be made.

Shell’s scenarios promote natural gas to ease the transition from fossil fuels. Why? 48% of Shell’s current production is natural gas and the company is spending big to increase its dominance, especially in liquefied natural gas (LNG). In addition to owning the world’s largest gas-to-liquids production plant , the $18 billion Pearl GTL in Qatar, Shell is investing in other liquefied natural gas projects:

• Just three weeks ago, Shell acquired Repsol’s LNG businesses for $6.7 billion.

• Last week, Shell announced it would build two plants, one in Louisiana and one in Ontario, to liquify natural gas for use in transport vehicles.

• Using an undisclosed piece of its $1 billion+ R&D budget, Shell is developing  technology to mine huge deposits of oil shale in Colorado and Wyoming –  as Dan Denning of The Daily Reckoning reported, where “estimated U.S. oil shale reserves total an astonishing 1.5 trillion barrels of oil – or more than five times the stated reserves of Saudi Arabia.”

What Denning, a financial journalist, doesn’t say is what will happen when Shell and others release carbon emissions from another 1.5 trillion barrels of fossil fuel, even if it’s in the form of liquefied natural gas. Because once Shell figures out a way to mine that shale without violating EPA regulations, those reserves won’t sit untapped for much longer.

Shell’s scenarios do come with a caveat: results would be altered by “major geopolitical shifts.”  Ironically, the week after Shell published its scenarios, Yale University released its 2012 report of American attitudes towards climate change: the Alarmed cohort has grown from 10 percent of the American adult population in 2010 to 16 percent in 2012. At the same time, the percentage of those who dismiss climate change have decreased, from 16 percent in 2010 to 8 percent in 2012.

Does a critical mass of outraged citizens qualify as a “major geopolitical shift”? Think of the Vietnam War. Or Apartheid, a truly global protest. We may not be there yet, but as climate change impacts get worse, so will the outrage.

Photo is courtesy of Atli Harðarson

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 nearly 7,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on nearly 7,000 companies from 135 industries in 82 countries. 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

Watching the first Presidential debate on October 3, I kept waiting for Obama to bring up

climate change. Yes, climate change is this election’s third rail. But it makes many of Obama’s strategies work. In fact, climate change may be at the center of his vision for a new economy. Old “cash cow” industries like oil are being “harvested;” low growth low return industries like coal are being allowed to be put out of business by low-priced natural gas, and new, fast-growing industries like wind and solar are “stars” where investment return will be highest.

Without climate change, Obama is open to charges of using taxpayer money to play with the sun and wind and counting on imaginary jobs to save the unemployed. A delusional demi-God claiming he’ll change the world.

Climate change can change the playing field for Obama, but he’s got to bring it up without saying those toxic words.

So why not instead couch climate change in bipartisan poll-sanctioned terms such as “clean tech” and “green jobs”?

And sure enough, at Tuesday night’s debate, Obama did just that.

While post-debate pundits focused on Romney’s through-line on jobs and Obama’s victories on women and immigration, my gut feeling told me that Obama had repositioned the debate most in the energy area.

Obama reset Romney’s positioning of oil and gas realism vs. alternative energy dreaming — as Romney framed it in the first debate, oil subsidies vs. Solyndra — to a new inclusive paradigm of “energy sources”:

“…we’ve got to make sure we’re building the energy source of the future, not just thinking about next year, but ten years from now, 20 years from now. That’s why we’ve invested in solar and wind and biofuels, energy efficient cars.”

When asked about high gas prices, Obama brought up higher fuel efficiency standards, positioning them not a “traditional source of energy” but another “look to the future.”

Obama used clean energy as a competitive weapon against Romney as short–sighted, ceding energy innovation to other nations:

“So he’s got the oil and gas part, but he doesn’t have the clean energy part. And if we are only thinking about tomorrow or the next day and not thinking about 10 years from now, we’re not going to control our own economic future. Because China, Germany, they’re making these investments. And I’m not going to cede those jobs of the future to those countries. I expect those new energy sources to be built right here in the United States.”

The two candidates went at each other about whether Obama had increased fossil fuel drilling on Federal lands, a fight Romney won, but after Candy Crawley got the two back to their corners, Obama continued to steer the debate to new energy :

“What I’m not for is us ignoring the other half of the equation. So, for example, on wind energy, when Governor Romney says ‘these are imaginary jobs.’ When you’ve got thousands of people right now in Iowa, right now in Colorado, who are working, creating wind power with good-paying manufacturing jobs.”

Obama’s mission was complete when Romney, the candidate who said “I like coal” in the first debate, became himself an advocate for an more inclusive definition of energy resources:

“ROMNEY: Candy, I don’t have a policy of stopping wind jobs in Iowa and that — they’re not phantom jobs. They’re real jobs.

CROWLEY: OK.

ROMNEY: I appreciate wind jobs in Iowa and across our country. I appreciate the jobs in coal and oil and gas. I’m going to make sure –

CROWLEY: OK.

ROMNEY: — we’re taking advantage of our energy resources. We’ll bring back manufacturing to America. We’re going to get through a very aggressive energy policy, 3 1/2 million more jobs in this country. It’s critical to our future.”

Were these quotes indicative of a real shift? I checked the numbers.

In the first debate, the word “taxes” dominated, followed closely by “jobs.”

In the second debate, the most-used word was “jobs.” But the second? Energy.

Yes, oil and gas were mentioned five times as much as wind and solar. And Obama came nowhere near condemning the fossil fuel industries, as climate change activists would have liked. But he moved the discussion to clean energy jobs and the energy resources of the future. And that’s a good place to start.

Thanks to ABC News for the October 16 debate transcript and CNN for the October 3 debate transcript.

Photo courtesy of cwwycoff1 via Flickr.

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 5,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.

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.

Is fracking benign or bad?  An opportunity to cut the cost of energy and reduce the environmental damage of oil and coal production or a threat to water resources and public health?  The controversy around this issue seems to grow daily.

CSRHub has now added fracking (some call it fracing) to our growing list of special issues.  Those who have registered or subscribed on our site can choose to either approve of fracking (green button), disapprove of it (red button), or block out ratings entirely for companies who participate in the area (white button).  The list of companies involved in this area was surprisingly long—we found that 51 companies out of the approximately 5,000 we cover participate in the area.  We have partial information on another 40 or so smaller companies.  We hope to be able to publish partial ratings on these companies, soon.

We were able to create our list thanks to the hard work of five organizations and one well known expert in the area, blogger Mike Benard.  With help from Mike, we reviewed data from FracFocus (44 companies matched our list), FracTracker (31 matches), Marcellus Shale Coalition (42 matches), Marcellus Money (26 matches), and the Pennsylvania Department of Environmental Protection (23 matches).  We combined their input with data Mike had gathered on 56 companies to create our final list.

As you can see from the sources we are citing, a lot of attention has been focused on the Marcellus Shale formation that stretches across a large part of the US central and eastern region.  We hope to add other sources soon that identify companies that are involved in fracking in other parts of the US and in the rest of the world.  We suspect that there are at least another 100 companies among those we rate who participate in this area—either directly via drilling and exploration or through supplying materials to the industry or by helping to process and transport the gas and oil fluids they extract.  We encourage our community to suggest additional sources.

The overall ratings for the companies covered by this special issue range from a low of 39 (using our average user profile) to a high of 64.  The average for each source’s list is right around the average score for our entire database—between 48 and 50.  This suggests that the companies involved in this area are not entirely positive or inherently anti-social—they may instead be ordinary companies who did not realize involvement in fracking could be controversial.

We now carry 15 special issues in our system.   For some issues (such as Labor Union Support and Gay and Lesbian Sensitivity), our users have supported companies with these practices.  On others (such as Animal Testing and  Burma Involved), the majority of our users oppose company involvement in the issue.  It will be interesting to see how our users “vote” on fracking—and how our users’ views tie to and correlate with their views on other areas of sustainability.

For more on the controversy surrounding fracking, read this recent post on the CSRHub blog>>