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

A Fresh Resource for ESG-Oriented Financial Advisors

[fa icon="calendar'] Aug 30, 2018 10:10:38 AM / by Bahar Gidwani

One of the gurus of ESG investing has recently launched a new service for financial advisors (FAs) who want to integrate Environment, Social, and Governance (ESG) factors into their investment process.  He has created a site called “Sustainable Investing” and filled it with content about ESG investing.  Those who subscribe (there is a three month free trial option) get a quarterly newsletter and access to some otherwise hidden research reports.

The site’s author is Henry Shilling, who until recently led Moody’s sustainability 

Sustainable Investing

research efforts. I believe there are several reasons it has been difficult for FAs to bring ESG into their work. (Henry was also one of CSRHub’s beta testers and an early subscriber.)  During his time at Moody’s, Mr. Shilling performed several seminal studies that connected ESG factors with corporate long-term financial performance and risk.  I recall taking so many notes during one of his talks at an S-Networks “Summer in the City CSR Investing Summit” that the fellow next to me told me to stop.  My laptop keyboard clicks were making too much noise and he also wanted to hear Henry speak.

  • The available ESG data sets are too expensive for many FAs to afford.
  • ESG data sets are complex and hard for advisors to navigate and understand. They focus on detail over substance and have “holes” in their data that make comparisons difficult.
  • FA clients have personal biases and views that demand client-specific adjustments. The correct portfolio of one client may not fit the needs of an FA’s other clients.
  • Clients have expected (and FAs have promised) that ESG-oriented portfolios will outperform those that do not take corporate social responsibility considerations into account. ESG funds have more or less performed in line with the market—but most of those currently offered have not been around that long.  We have not seen yet an ESG fund show consistent multi-year outperformance.

Henry has stated publicly that he believes investors and their advisors who care about ESG issues should seek to earn only market rate returns.  I agree with him.  He and I both believe that it is possible to construct a market-performing portfolio of investments that reflects a client’s personal values, if one uses a broad enough initial investment universe.  Henry’s new site is an attempt to provide practical advice and tools for implementing these ideas.


Bahar_Gidwani-9Bahar Gidwani has built and run large technology-based businesses for many years. Bahar holds a CFA (Chartered Financial Analyst) and was one of the first people to receive the FSA (Fundamentals of Sustainability Accounting) designation from SASB. Bahar worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. He has founded several technology-based companies and is a co-founder of CSRHub, the world’s broadest source of corporate social responsibility information. 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 18,052+ companies from 135 industries in 133 countries. By aggregating and normalizing the information from 556 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, API partners 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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Peeking Behind the Corporate Curtain With CSRHub’s Cynthia Figge

[fa icon="calendar'] Sep 22, 2017 12:00:00 AM / by CSRHub Blogging

Republished with permission.

On this edition of The Bottom Line podcast, Rick Wartzman talks to CSRHub’s Cynthia Figge.

In the just released interview with Rick Wartzman, Cynthia Figge, CEO of CSRHub, speaks about Why It Makes Sense For Companies To Be Socially Responsible. The Bottom Line podcast puts a spotlight on companies that are advancing social progress, and draws out insights into some of the most pressing issues of our time. You can listen to this dynamic and in-depth conversation on Capital and Mainhere or below.

You can also read about it on Fast Company here.

 

 

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"Hosted by the Drucker Institute’s Rick Wartzman, the author of four books, The Bottom Line puts a spotlight on companies that are advancing social progress—and those that aren’t.

B
y engaging in lively conversation with top executives and other experts, Rick draws out insights into some of the most pressing issues of our time—all through the lens of what is arguably the most powerful institution in our country: business.

The Bottom Line also features regular commentaries, as well as reported segments by veteran radio journalists. The Bottom Line is a production of Capital & Main."

 

 cynthia_figge-at-Sustainable-Brands-13.jpgCynthia 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 CEO 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.

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 17,400 companies from 135 industries in 133 countries. By aggregating and normalizing the information from 535 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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HBR Publishes List of Best Performing CEOs in the World

[fa icon="calendar'] Oct 19, 2016 8:00:00 AM / by CSRHub Blogging

The Harvard Business Review released their ranking of the world’s 100 best performing Harvard Business ReviewCEOs, based on both financial and ESG (environment, social, governance) measures of the leaders’ entire time in office to highlight those executives that have established a lasting track record. CSRHub is proud to be one of the two research providers for this year’s list.

HBR wrote in its November 2016 article covering the ranking, “one persistent criticism of ESG data is that it can be subjective, and indeed, when you examine how various research organizations rank the same firm using ESG criteria, you’ll often find significant differences.  This year HBR used ratings from CSRHub, a firm that collects and aggregates ESG data to help companies better understand what they can do to improve. By incorporating two ESG components, we hope to increase our accuracy and reduce the odds that any company may unduly benefit from or be penalized by a single firm’s rating.” (For more details, see “How We Calculated the Rankings,” page 6.) “The revised approach, along with ups and downs in world stock markets, brought 33 new CEOs onto the list. At the same time, 30 CEOs have made the list for the third year in a row.”

See which leaders and companies made the top list here, https://hbr.org/2016/11/the-best-performing-ceos-in-the-world.

 

About CSRHub

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 16,550 companies from 135 industries in 133 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.

 
Contact: Cynthia Figge, COO and Cofounder, Cynthia@csrhub.com

 

Csrhub logo

 

 

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What’s Next for ESG Metrics?

[fa icon="calendar'] Feb 3, 2016 10:17:17 AM / by Bahar Gidwani

By Bahar Gidwani

Several groups have written predictions about the future course of the Environment, Social, and Governance (ESG) measurement space.  We’ve seen stories about the importance of millennials (as both customers and employees), a sense that carbon tracking is finally an accepted part of corporate life, and that companies must watch out for a range of new legal and regulatory issues.

At CSRHub, we are exposed to all of these trends, and many more.  Our data collection engine automatically absorbs new data elements on 3,500 topics from 435 data sources.  It analyzes this information, normalizes it, weights it, and outputs ratings on more than 15,000 companies.  Each month we get a fresh look at what sustainability professionals around the world think is important.

One thing we’ve watched for several years is the shift in emphasis between interest in Environmental, Social, and Governance issues (“ESG” issues).  Governance and Environment each had their time as the top area of focus.  However, our data shows clearly that Social issues are now emerging as the focus for corporate social behavior analysis.

The overall sustainability ratings for the companies CSRHub tracks was stable or even dropped a little between 2009 and 2011.  We believe this was due to cutbacks on ESG spending, following the great recession of 2008-9.  Since 2011, we have seen steady overall improvement across companies in all industries and geographic regions.

CSRHub Sustainability Ratings

It is relatively easy to drill down into this data and pull out the average ratings across all of the companies CSRHub tracks, for each aspect of ESG.  However, our coverage has grown rapidly over the past eight years, partly due to the fact that we’ve found more data sources (we started with only 70 sources) and partly due to the fact that more companies are reporting sustainability information.  To ensure that we could focus just on trends in ESG focus, we selected 400 companies from this year’s Fortune 500 for whom we had full ratings back to 2009.

As you can see in the graph below, the ratings on Governance issues for this set of 400 companies have fallen since 2009 (probably as the legal and governmental pressures from the recession receded).  Environment had an upward spike in perceived performance from 2012 through 2014, but has now leveled off.  Social ratings have now started to move up and look likely to soon pass those for the other two areas of ESG.

Social Rating_Rising

We can also track how much information we receive from our sources for each area of social performance.  If we assume that the amount of information our sources receive ties to the amount of information that companies produce, we see evidence that the group of companies we study have generated more data in Social than in either of the other two areas.

Social Data Available_rising rapidly

CSRHub tracks six different social metrics areas: Community Development & Philanthropy; Compensation & Benefits; Diversity & Labor Rights; Human Rights & Supply Chain; Product; and Training Health & Safety.  We expect to see our clients continue to step up their efforts to benchmark their performance against that of their competitors in each of these areas.  Software firms will add more tools and consultants will write more reports on Social practices—just as they did during the 2008-09 era for the Governance space and in the 2012-14 era for the Environment space.  The overall effect should be a refocused interest on improving corporate performance on social issues, over the next few years.


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 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 435 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 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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