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

By Bahar Gidwani

As promised, we’ve talked in previous posts about the wide array of information that is available on corporate social responsibility (CSR) and sustainability subjects.  The big financial research firms, standards organizations, not-for-profits, and government sources each offer their own top-down, carefully organized version of how companies are performing socially.  What about bottom-up measures?  Are there “crowd-sourced ratings” for CSR?  If you are like me and you use the travel reviews on TripAdvisor or the product reviews on Amazon, you know how valuable this type of data can be.

We’ve been able to integrate three crowd sources so far, into our giant database of ratings information.  One of our earliest partners was a company called Jigsaw.  (Jigsaw was bought last year by Salesforce.com for $142 million!)  Its members volunteer data on the companies and people they work with.  In return, they get back information on other companies and people they are interested in.  As the data flows in, Jigsaw uses special programs to cross-check names, addresses, and descriptions.  The result is an ever-growing address book of information on thousands of companies.  This address book helped us figure out which companies to track and gave us a head start on their industries and locations.

Glassdoor is another example—and a good one—of how crowd sourcing can help with CSR analysis.  An employee who joins the Glassdoor site can upload her or his comments on the company she or he is working for.  The employee can comment on the work environment, pay scale, and on the performance of the management team (including the company’s CEO).  After a while, Glassdoor builds up enough data on a company to allow it to publish a rating of how it treats its employees—and scores for things like the performance of the company’s CEO.  Glassdoor members get to see this data, comment further on it, and then use it in their job search and career planning.  We’ve started integrating this bottom-up score into the Labor section of our data—and hope to soon have comments about how the inside view via Glassdoor compares to how company labor policies are seen by external sources.

Wikis represent a different, more collaborative approach, to crowd sourced data.  The best-known example of a Wiki is Wikipedia—one of the most-visited sites on the Web and everyone’s favorite modern-day encyclopedia.  We’ve now partnered with a Wiki called WikiPositive, that was built by the folks at 3 Sisters Sustainable Investments.  (BTW, 3 Sisters recently decided to also support and invest in our CSRHUB enterprise.)  Over the past two years, WikiPositive has recruited a large and growing group of contributors who are interested in helping investors (and others) discover the positive value that is being created by smaller publicly-traded companies.  This group felt too much emphasis was being put on the CSR activities of the top 1,000 or 1,500 public companies, when many of the most interesting new approaches to sustainable business management were being developed by smaller companies.  Their site represents a great example of how crowd input can be used to change the focus of a discussion and bring new information into a discussion.

A number of other interesting models and concepts are being explored.  For instance, MoxyVote allows individuals to get involved in the proxy process—a long-standing method for influencing corporate behavior.  Greenwala gives its users the opportunity to form communities of interest and then recommend green and sustainable products to one another.  Alonovo and other responsible shopping sites capture feedback on the products they sell from their user base of socially aware consumers.  Goodguide offers carefully researched ratings on the products it covers—and then encourages its users to add their views and advice.

We need to organize the feedback we get on the ratings we offer and help our users learn from each other.  We are working on our own system for integrating feedback from users directly into our scores.  By adding this data to the data we get from a growing list of crowd data sources, we should ensure that our ratings accurately include the views of the people who work in, buy from, and serve the companies we rate.

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.

By Carol Pierson Holding

Harvard Business Review’s cover story this month, “Creating Shared Value,” should be a celebration of how far CSR (Corporate Social Responsibility) has taken us. Just look at how much closer we are to accepting CSR as a core competitive strategy. As fans of authors Michael Porter and Mark Kramer know, these two have been proponents of CSR for years, pushing the field forward with new ideas like “Strategic Philanthropy” and now, “Shared Value.” Most impressive about their latest article is its place on the cover of this conservative business journal.

Two years after Harvard Business School ran an alumni conference on the future of capitalism (which eerily coincided with Lehman’s collapse and market’s 900+ point drop), that institution’s journal leads with this article, subtitled “How to reinvent capitalism — and unleash a wave of innovation and growth.” Finally, the argument about whether CSR is key to our future or just window dressing seems to be put to rest.

I applaud the authors. But why, aside from promoting their consulting business, would they insist that CSR is discredited and should be replaced by Shared Value? They misstate CSR’s mission as “doing good” when in fact it is “doing well by doing good,” which is the same as their concept of Shared Value. In fact, until recently, they were huge supporters of CSR. In their 2006 article, “Strategy and Society: The Link Between Competitive Strategy and Corporate Social Responsibility,” they pointed out flaws in CSR but weighed in heavily in its support.

Whether you call it Shared Value, CSR, ESG, or Corporate Citizenship, or Sustainability, or Corporate Responsibility, or Triple Bottom Line or any of the other terms people use, we are all pushing the same agenda—to do well by doing good. And the term “CSR” is well known and accepted in business.

It has been written about extensively in the business press. Most controversially, it has appeared twice on the cover of The Economist. First, to dismiss it per Milton Friedman’s “The business of business is business,” then a second time, in support of the concept. CSR has a set of metrics in place through the 20+ year old SRI ratings, a self-reporting structure in GRI, and a requirement in many companies’ RFP’s for a CSR report. Insurance, risk assessment, accounting bodies including FASB and many other industries and institutions all have “CSR” or “Sustainability” efforts underway. Porter/Kramer do a great service in lifting the issue to the front page of business, but why would we want to abandon all the progress made under the CSR rubric?

With CSR finally accepted as a core business strategy, Porter/Kramer now jump into the fray not with ideas of how to move more companies into the “Doing well to do good” camp, but with arguments about why their new name and model is better than CSR. Worse, even though they have several branding pros on the staff of their consulting firm, they dismiss the value of communications in support of CSR as mere promotion, ignoring the importance of communication in changing consumer behavior. Many of the companies Porter/Kramer cite as examples of Shared Value have used their brand to change consumer behavior for the better (think ads and promotion for GE Energy Smart CFL light bulbs). Yet Porter/Kramer fail to mention this.

Watching TV last week, I came across a great example of CSR communications’ power to increase sales while saving the planet.  The EPA confirms that in many cities, “The personal automobile is the single greatest polluter.” A key component to reducing these emissions will be the Electric Vehicle. Current ads for the Chevy Volt, the leading American-made Electric Vehicle (EV), are clearly good for Chevy’s brand reputation. But dismissing the ads as mere promotion misses the more important story: the advertising reduces fear of the EV by showing how easy it is to recharge, thereby persuading more consumers to buy EVs.  If this is CSR, I’ll take it over Shared Value any day.

Carol Pierson Holding is a writer and an environmentalist; her articles on CSR can be found on her website at  http://www.holding.com/Index%20links/articles.html.