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

By Bahar Gidwani

CSRHub recently extended the historic data available to its subscribers back to 2008.  Our users can now study the month to month change in sustainability performance for thousands of companies from December 2008 to the present.

We current rate 7,200 companies, using data drawn from more than 200 sources.  Our data set has been growing steadily at about 100 new companies rated per month.

We use the wide range of data types and perspectives our sources give us to adjust and normalize our data.  We used normalization factors based on our robust 2010 to 2012 data sets to adjust the more limited data sets we had for 2008 and 2009.  As a result, our ratings have remained remarkably stable.

Any registered CSRHub user can see a chart that shows the corporate social responsibility (CSR) performance of the companies we track, since 2008.  In many cases, the chart will show partial ratings for a number of months, and a gradual build towards a full rating.  The consequence of a CSR problem can often be tracked visually.  For instance, see these charts for BP following the Gulf Oil spill and the effects on Tepco’s ratings of the Fukishima meltdown.

The Deepwater Horizon oil spill occurred in April of 2010.  By October, all of BP’s ratings had begun to fall.  The worst damage occurred in its Community category score—which fell from the low 60s to the low 40s.  BP’s overall score stabilized in the middle 50s by early 2011 and has remained in that area since then.

Japan was struck by a major tsunami on March 11, 2011.  Tepco’s Fukishima reactor became a worldwide center of attention in the weeks that followed.  Tepco’s environmental score took an immediate hit, followed by drops in its governance and employee scores as more details emerged of how the company had handled the event.  A number of governance changes in late 2011 and 2012 have brought that score now to a new high.

CSRHub professional level subscribers can “roll back” our system to any month in the period.  They can see which sources were available for each company in the system at any point in time.  They can also do historic benchmarks and analysis of long-term trends in corporate social responsibility (CSR) performance.

Several university researchers have already launched studies, using this newly expanded data set.  We expect their work to reveal many insights that we can share with you, as they become available.

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 7,000+ companies from 135 industries in 91 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

Amidst all the hoopla around Aaron Sorkin’s new series The Newsroom, one surprising fact seems to have been lost: of all the once-in-a-lifetime news events of the recent past — the economic collapse and the Arab Spring to name just two — Sorkin chose an environmental story, the BP Oil Spill, as the centerpiece for his premier.

In case you’ve missed the non-stop hype, The Newsroom revisits the outrage we saw in Broadcast News, Network and parodied in Anchorman, where the requirements of corporate news organizations drive anchors or their producers over the edge in desperate search of “real news.”

Each episode of the series is based around a major news event, and Sorkin chose the Gulf Oil Spill as the heart of the all-important launch. Which is amazing. Think of all the other far more visually interesting news stories of the past few years. Sorkin could have chosen 2008’s Wall Street crash or Bernie Madoff’s confession or the 2008 Presidential election, or 2009’s Arab Spring or Fort Hood massacre. If he was determined to place the series in 2010, why not use the Haitian Earthquake, the top story of that year?

In choosing an environmental story for his premier, Sorkin elevated that issue to what environmentalists believe should be its proper place as the issue of all issues, even in this election year. Soon, many more citizens will agree: just last week, CNN reported that all-time temperature records were broken in 1,000 cities across the U.S.

But some of the most vitriolic criticisms about the series were about its coverage of the BP Oil Spill, many from environmentalists themselves. the clunkiness of real events rather undoes Sorkin. A year on, we see that the BP oil spill, while devastating for some in Louisiana, has largely been settled as a case and is not yet the ‘greatest environmental disaster of our time’, as a producer promises it might be.”

A Swamplandbloggerquoted environmental writer Kate Sheppard’s assessment:

 “Two years later, it’s clear that there were some environmental impacts (from the BP Oil Spill) — to crabs, to birds, even to marshes. Oil spills do not promote ecosystem health. But there’s no evidence to suggest that the BP disaster was the worst ecological disaster in history, or an ecological disaster at all. It’s certainly not the worst ecological disaster in the history of the region; coastal erosion — which, incidentally, is caused in part by the oil industry — has obliterated over 2,000 square miles of southern Louisiana.”

Granted, the degree to which the BP Oil Spill was the worst environmental disaster ever depends on how you measure it. One might argue that spilling 4.9 million gallons of oil should at the very least be a strong warning in a treasured part of the US, where, according to The Newsroom, 35,000 oil wells are allowed to continue drilling. (Fact-checking could not verify that number, but the New Orleans Times-Picayune reported there are 27,000 abandoned wells alone.) But I agree with Noah Gittell at Reelchange, who points out what a gift it was for Sorkin to have chosen an environmental event that has largely gone underground:

“I realized that I had not thought about the spill in probably a year. In the midst of a presidential campaign, with its attack ads, surrogate drama, and politically motivated executive orders, it was as if – in my mind – the biggest environmental disaster in American history had not happened just two years ago. This was amazing to me. I consider myself an environmentalist and an animal advocate. And I had forgotten that this occurred.”

Surely, many Americans watching had the same reaction. For whatever reason, Metacritics users rated The Newsroom higher than any of Aaron Sorkin movies, even The Social Network. Maybe Sorkin is working his magic again. It’s not the news media that is ignoring our impending environmental collapse, but our politicians and citizenry. Perhaps the searing heat in our capital, combined with this “must-see” series premier, will have some effect, if only to remind us of the horrifying possibilities when corporate interests outweigh the environment.

photo courtesy of Caroline Treadway, Flickr creative commons

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.

By Carol Pierson Holding

BP is putting a lot of money behind a TV commercial that opens with “This was the Gulf’s best tourism season in years.” In the sixty-second spot, businesses in Gulf cities like New Orleans and Panama City Florida invite tourists to come back. The ad is gorgeously filmed. Sparkling blue water. Giant flocks of birds. Sumptuous dishes of local fish. It’s the second wave of a campaign to restore tourism hurt by the BP oil spill and just one of BP’s efforts at restitution for regional businesses.

Wow, I thought, they actually saved the Gulf! It seemed like there has been plenty of time to clean up the mess. After all, the leak, even though magnitudes greater than the Exxon Valdez, was capped back in September 2010 and the clean-up effort was massive. Right?

But then an environmental colleague called to tell me a different version of the story, one based on a documentary she’d seen at a private screening called The Big Fix: A Film That Exposes the Biggest Environmental Coverup Ever.

Though the movie has not yet been released, interviews with The Big Fix filmmakers Josh and Rebecca Tickell at Huffington Post and on a LivingECO YouTube video describe the catastrophic damage. One example: the Gulf’s seafood stock has been virtually obliterated, with the shrimp catch reduced by 99%. Dean Blanchard, the largest US shrimp processor before he lost his business, saw employees who worked with the catch suffer from respiratory illness, sore throats, migraines and seizures. Rebecca Trickell experienced the effects first hand, contracting “tar-smarting” from the oil-Corexit mixture which made the skin on her feet peel, gave her bloody urine and blisters and severe photosensitivity on her chest.

The Trickells point out that the spill and many of the nasty effects of the clean-up were avoidable were it not for the poisonous interdependencies of big oil’s drive for profits and the US government’s need for oil and oil revenues. The Horizon Deepwater had plenty of precautions and the alerts were mostly working. But the warning systems were turned off so the rig could be pushed to the breaking point, even after receiving 18 citations for safety violations from the Coast Guard. The New York Times reported that the Minerals Management Service of the US Interior Department granted the BP well an exemption from the assessment process because company officials assured regulators that it carried little hazard.

The EPA allowed spraying of the toxic chemical dispersant Corexit over surface oil after BP assured them that there was no safer, more effective alternative, despite the fact that Corexit is so toxic that it was banned in the UK. BP was not only allowed to use the chemical on the water surface but also at the leak’s source on the ocean floor, a practice that had not been tested. Why did BP need that allowance? Because the dispersant reduces the quantity of measurable oil by breaking it into smaller modules and BP’s fines are based on measurable oil spilled.

Corexit has since spread the toxin out 200 miles around the rig.

Many of the government agencies involved are bending over backwards to make sure that BP and oil extraction in the Gulf do not suffer. BP in particular gets special treatment as the largest supplier of oil to the US military. In an interview at The Big Fix’ press conference, Jean-Michel Cousteau noted that revenues from US oil leases are second only to those collected by the IRS. Losses in tourism revenue to the Gulf States could essentially shut the state governments down, resulting in enough liability to bankrupt BP, whose stock is the most-owned by UK pensioners.

Scariest of all, the oil is still leaking.

What can be done? On one side is the US government and the world’s largest oil producers; on the other, environmental activists and The Big Fix. Doesn’t seem like a fair fight, even though producers of The Big Fix did everything right: premiered on 11/11/11 in New Orleans; got a special screening at Cannes; lined up celebrity producers including Timothy Robbins and Peter Fonda; and arranged for widespread distribution later this year.

Still, hardly an “Occupy the Gulf.”

But BP’s karma appears to be changing. Last Thursday, Fox News reported that U.S. prosecutors are preparing criminal charges against BP employees for giving regulators false information about the risks of drilling.

BP has already set aside $20 billion for reparations and $40.9 billion for the clean-up. If rumors of legal actions against employees come to pass, there will be even more severe punishments coming. And even pretty commercials won’t help. At some point, failure to adhere to safety regulations will become too painful for oil producers. Environmentalists like the Trickells hope for even more radical results: the BP oil spill becomes the turning point that finally moves the US off its dependence on oil. A fairy tale come true? I sure hope so.

Source: Nalco Corexit 9500 MSDS sheet from http://www.msds.com

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.

By Bahar Gidwani

In the Jewish Passover service (a holiday that ends this Tuesday at sundown), there is a song called “Dayanu.”  The word means “it is enough” and the song suggests that God has been sufficiently kind to us and that we should be grateful and not ask for more. A concept that is common across many faiths around the world.

I thought of this song when I read a Wall Street Journal opinion page article by Bob Dudley, the CEO of BP.  It was titled “The Lessons of Deepwater Horizon,” and it recounted the steps BP has taken since the disaster that occurred a year ago, in the Gulf.

These steps included:

• Paying claims ($20 billion set aside for this so far, but only $5 billion paid).
• Cooperating with investigations.
• Adding a central safety and risk-management organization that, in theory, has the power to stop unsafe behavior.
• Linking management and employee rewards to safety.
• Reviewing working platforms and platform designs to try to bring them up to a consistently higher standard of performance and safety.
• Contributing $500 million to research on the effects of the spill.
• Joining the Marine Well Containment Corporation, a group that aims to prevent future spills.

Should those who track BP be singing, “Dayanu?”  Has it done enough?

I looked at the comments made about this article on the WSJ site.  There were only 18 threads and 35 comments (a surprisingly small number, given the importance and controversial nature of both the event and the article).  My simplified summary of the reaction is:

• Some feel BP is employing standard PR means to smooth things out; some feel it has made significant changes.
• Some feel the event could have been prevented; some feel it couldn’t.
• Some blame BP; some blame our regulatory system.  Interestingly, some feel our regulatory system was too weak, while others feel that we pushed BP into dangerous territory by preventing it from drilling more in shallower waters.

In a way, the response fits back into Passover. There is a famous section during the service where participants list various reactions that children could have to God’s rescue of the Jews from Egypt.  The lesson is not that one reaction is correct, but that we should listen to all answers and views, learn from them, and be more attentive as a result to the benefits of freedom.

In our system, the CEO of BP has the right to speak, anyone who wishes has the right to comment, and each of us has the responsibility to listen to the discussion and learn from it.  Perhaps some other companies that have significant environmental and safety risks will pay attention to these conversations and avoid making similar mistakes in the future.  If so, then we can tell BP, Dayanu.

Inset photo courtesy of SkyTruth.