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

Keeping up with the Green Joneses – Solar and EV Adoption

[fa icon="calendar'] Nov 5, 2014 9:44:48 AM / by Carol Pierson Holding

By Carol Pierson Holding

The most recent column on “groundbreaking innovation” Co-Exist from Fast  solarCompany was titled “If Your Neighbor Gets a Solar Panel, You’re Going to Want One Too: Whether  your neighbor has a solar installation is more likely to influence your decision than politics or income level.”

The articles’ author Ben Schiller cites studies which mapped 3,843 solar units installed in Connecticut between 2005 and September 2013. What they found was “‘considerable clustering of adoptions’ in ‘wave-like centrifugal’ patterns. When they looked at the dates of the installs, they found one decision in a neighborhood tended to lead to another.”

Pretty cool, but isn’t this old news? Back in 2005, a study in San Diego compared the influence on energy consumption between potential money savings vs concern for the environment vs peer pressure. The results clearly supported social influence, which reduced consumption by 10 percent.” Influence guru Robert B. Cialdini weighed in on the remarkably effective tactic of adding a smiley face to bills for energy reduction, which further reduced energy use: “People don’t just want to conserve energy, they want to be acknowledged for conserving energy.”

Electric Vehicle (EV) adoption also spread in clusters. Not surprisingly, EV and hybrid purchases have been most concentrated in affluent communities with early-adopter characteristics. But far more interesting and perhaps even more relevant, 50.5%  of all registrations are clustered in just three suburbs, Atherton and Los Altos (in Silicon Valley), and Santa Monica in Southern California. California has created an infrastructure for EV/Hubrids and is first in ownership, but if affluence was the defining attribute, wouldn’t EV/Hybrids be spread evenly across California’s many wealthy communities?

Now that many low- and mid-priced vehicles are offered in hybrid varieties (i.e., Toyota Camry, Honda Civic, and Ford Fusion), green social influence is moving from novelty for the affluent to smart money for the mainstream. It happened before with residential solar:  the highest concentration of Connecticut solar installations clustered in middle income, Republican-voting areas of the state.

Peer influence is also having an impact in the corporate world, where renewable energy  is replacing fossil fuels in industry clusters. Benchmarking in industries and companies – comparing your sustainability performance against your peers - leads to greater adoption of renewable energy.

As reported in the solar industry’s third annual Solar Means Business, solar installations cluster by industry, with retail leading the pack. Walmart remains the top solar user overall, spurring its leading competitor Target to move from 16th to 8th ranking with the addition of 15 new solar systems. Retailers’ large flat store roofs are well-suited to roof-top solar apps and their razor-thin margins make energy cost reduction perhaps a higher priority, but other industries are following suit. Apple, which once eschewed environmental concerns, is now fourth in solar installations. Their acknowledgement? Apple appeared first alongside Google and Facebook (their data farms run on wind power) in the Greenbiz article “Apple, Facebook, Google score in Greenpeace data center ratings.”

Peer influence, whether in a corporate or a residential setting, modifies environmental behavior. Can peer shaming work too? Freakonomics economist Steven Levitt, would argue yes. In his words: “…society actually likes it when other people get shamed. … it’s actually a really incredibly efficient mechanism for punishing people who do things we don’t like.”

Another experiment tests peer shaming empirically. San Francisco and Berkeley have both passed legislation requiring that as of March 1, 2015, gas station owners must put climate change warning labels on all gas pump nozzles. The labels say how much carbon dioxide is emitted for every tank of gas burned, saying explicitly how using gas as fuel is contributing to climate change.

Reflecting in The Guardian on a University of Minnesota study that again showed the power of social influence, Adam Corner of the University of Cardiff says, “We may currently compete through demonstrations of conspicuous material consumption, but material goods are simply a marker for social status. It's the social status that's important – and the markers we use to signify it can easily change.”

“Image courtesy of Lauren Wellicome via Flickr cc”

Carol Pierson HoldingCarol 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 9,300+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 9,300+ companies from 135 industries in 106 countries. By aggregating and normalizing the information from 343 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.

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[fa icon="comment"] 0 Comments posted in Ben Schiller, energy cost, EV, Freakonomics, Robert B. Cialdini, Uncategorized, sustainability, peer pressure, social influence, solar panel installation, Steven Levitt, wind farms, Adam Corner, Carol Pierson Holding, clustering, GreenBiz, hybrids, renewable energy, solar installations

New Stock Performance and ESG Research from MSCI

[fa icon="calendar'] Feb 25, 2013 9:00:53 AM / by Bahar Gidwani

 By Bahar Gidwani

As a CFA (Chartered Financial Analyst) and past denizen of Wall Street, I am always MSCIinterested to see studies that relate data or trends to the performance of a group of stocks.  The SRI (Socially Responsible Investment) industry has been producing some interesting work in this area, recently.

For instance, our data was used as part of a study by Governance & Accountability on the relationship between sustainability and stock performance for the S&P 500.  Our friends at GovernanceMetrics put out a study that showed a connection between the Accounting and Governance Risk (AGR) data and default in the CDS market (11 times more likely for companies in the bottom decile vs the top decile).  And, our friends at Trucost have just released an extensive report on the State of Green Business (co-produced with GreenBiz).

Now MSCI’s research group has published a fascinating study that inspects three commonly-used strategies for integrating ESG (Environment, Social, and Governance) factors into portfolio management:

  • “ESG exclusion” describes a process that strips out “bad” stocks and overweights a portfolio with the top rated companies among the “good” stocks.
  • “Simple ESG tilt” underweights “bad” stocks and overweights “good” stocks.
  • “ESG Momentum” focuses on stocks that are showing changes in their sustainability performance.  It overweights companies that are improving and underweights those that are lagging behind.

If you want to see the details of MSCI’s analysis of these strategies, you should download their report.  I was surprised to learn that the momentum strategy dominated the other two over the four year horizon of the study.  It was also reassuring to see that all three ESG strategies produced active return benefits.

MSCI will host a webinar on March 21, where they will discuss their results.  You can register for it, here.  Please send me other interesting ideas in this area, and help me stay up to date on the latest development in SRI and ESG.

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.

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.


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[fa icon="comment"] 0 Comments posted in Accounting and Governance Risk, Bahar Gidwani, CSR, ESG, GovernanceMetrics, State of Green Business, stock performance, Uncategorized, MSCI, AGR, CDS, CSRHub, GreenBiz, SRI

The Virtuous Circle is Alive at Clorox

[fa icon="calendar'] Feb 21, 2011 9:05:44 AM / by Cynthia Figge

By Cynthia Figge

Unfortunately, there's no playbook for the 3521478254_f412afbb10_zsuccessful corporate merger of sustainability, growth and employee engagement. But there are living examples to help C-level executives navigate corporate sustainability.

Speaking at the recent GreenBiz Forum in San Francisco, Don Knauss, CEO of Clorox, explained how Clorox's 2007 introduction of its Green Works line successfully merged the three. Clorox wanted to grow into the green area and its employees became really engaged in the process. The line quickly grew to $100 million in sales in one year – although sales dropped in the recession to follow. The repositioning of Brita and acquisition of Burt’s Bees also contributed to growth, and enhanced Clorox’s reputation for producing sustainable products.

Clorox’s ethnographic research found that consumers want to get chemicals away from their kids and out  of the home (and then secondarily the planet). In addition to the movement toward sustainable products, Clorox committed to four goals: reduce production of solid waste, and reduce use of carbon, energy and water. These goals are now part of the Clorox executive scorecard and how executives are compensated, and part of its Board obligations.

2447600053_b9a5e4a23b Knauss seemed pleased that this push on water, energy and carbon reductions may save Clorox $25 million per year. He stressed that consumer product executives must get out of their comfort zone and talk and listen to people they wouldn’t normally. For example, Don asked Carl Pope at the Sierra Club to put the Green Works products through a rigorous testing program. Clorox also worked with Greenpeace to move their bleach plants away from chlorine—a transition they began 18 months ago. Because they are making these initiatives part of their incentive systems, Knauss says “Sustainability is becoming part of the DNA.”

I also noted last week that Clorox has become the first in its industry to offer expanded disclosure on the ingredients found in its cleaning products.  This disclosure includes information on preservatives, dyes and fragrances. As part of their Ingredients Inside program, the company publishes this information for customers on its corporate social responsibility website.

I was anxious to compare the Clorox rating on CSRHUB with the one on GoodGuide. CSRHUB rates broad performance at the corporate level, while GoodGuide provides a corporate number and also detailed ratings at the product level.  The CSRHUB rating is just average on Clorox (50), with a fairly low rating of 41 (on a scale of 0-100) for transparency in reporting. This may be because Clorox only published their first CSR report several months ago. However, Clorox does get a 65 for its Board subcategory score, which may reflect the fact that they have ten independent board members, of whom three are women and two are Latino. Also, of the CEO’s seven direct reports, three are women.

GoodGuide rates 349 of Clorox products.  Within these, the top ratings go to Burt’s Bees and Green Works products and the lowest ratings go to Liquid Plumr Foaming Pipe Snake Clog Remover and several disinfecting sprays scoring around 5 (on a 10 point scale).

Many in the sustainability area may be surprised to see these ratings and to hear Clorox’s CEO talking so passionately about making his company more sustainable. Congratulations to Don Knauss for his leadership, and to Clorox for publishing its first CSR report, going public with its ingredients list, and planning to improve another chunk of its product line to improve the health and environmental benefits. This is truly the virtuous circle at work.

Cynthia Figge, Cofounder and COO of CSRHUB is a forerunner and thought leader in the corporate sustainability movement. In 1996 she co-founded EKOS International, one of the first consultancies integrating sustainability and corporate strategy. 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.

Inset Photo: mag3737

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[fa icon="comment"] 0 Comments posted in Carl Pope, corporate social responsibility, Cynthia Figge, ESG, GoodGuide, Greanpeace, Ingredients Aside, Sierra Club, Uncategorized, sustainability, Brita, Burt's Bees, Clorox, CSRHub, Don Knauss, Green Works, GreenBiz, SRI

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