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

CSRHub is pleased to announce that it is now integrating data from Arabesque S-Rayâ into its consensus ratings. Using quantitative data techniques and a rules-based approach, Arabesque S-Ray provides technology that is used by some of the world’s largest investors, corporations and consultancies to assess the sustainability performance of listed companies globally. S-Ray data will now directly contribute to CSRHub’s sustainability analysis of more than 7,000 companies, and will enhance the ratings for all 36,000 companies that CSRHub covers.

Arabesque S-Ray systematically combines over 250 ESG long-term metrics with news and NGO signals from over 30,000 sources to provide dynamic and responsive scores. Covering over 85% of global market cap and drawing from over four million ESG data points daily, S-Ray utilises an ever-expanding and diverse range of data to create quantitative metrics for the assessment of corporate performance.

The chart below compares the S-Ray ESG Score of 6,263 companies with CSRHub’s own ratings, captured on 1 December, 2019. The data shows a rating correlation of 58%, which is particularly striking given that CSRHub’s ratings were published two months after those of S-Ray, and highlights the effectiveness of S-Ray’s daily scoring approach.

Arabesque S-Ray joins other major ESG data and ratings providers who supply data to CSRHub, such as MSCI, Vigeo Eiris, ISS, and S&P Trucost. Each of these providers offers a unique perspective on the ESG performance of the companies they cover—perspectives that CSRHub combines with crowd, non-profit organization, and government datasets to create its consensus rating.

Todd Arthur Bridges, Global Head of Sustainable Investing and ESG Research at Arabesque S-Ray, said; “CSRHub is a truly unique company that knows the importance of systems-level thinking, and has brought the sustainable finance ecosystem together in a systematic way through their Consensus Ratings. Information is critical to well-functioning and efficient markets, and the leadership team of CSRHub has been able to break down the ESG paywalls across commercial organizations to help innovate and advance progress. The CSR Ratings and Rankings are well designed and allow for proper ESG consensus calibration – which can easily be understood by many users across the sustainable finance stakeholder community. Arabesque S-Ray is proud to be part of CSRHub and their mission.”

Bahar Gidwani, Cofounder and CTO at CSRHub said; “We were very pleased when our analysis showed that our methodology and results were closely aligned with those of S-Ray. S-Ray data appears to offer a current and forward-looking view of company ESG performance that matches well with CSRHub’s backward looking perspective.  By combining our work, investors and other researchers may be able to better understand and predict how perception of company ESG ratings will change.”

About CSRHub

CSRHub offers one of the world’s broadest and most consistent set of Environment, Social, and Governance (ESG) ratings, covering 20,000 companies. Its Big Data algorithm combines millions of data points on ESG performance from hundreds of sources, including leading ESG analyst raters, to produce consensus scores on all aspects of corporate social responsibility and sustainability. CSRHub ratings can be used to drive corporate, investor and consumer decisions. For more information, visit www.CSRHub.com. CSRHub is a B Corporation.

About Arabesque S-Ray GmbH

S-Ray® is a leading analytics tool developed by Arabesque that assesses the sustainability performance of over 7,000 listed corporations using self-learning quantitative models and data scores. The technology systematically combines over 250 ESG metrics with news signals from over 30,000 sources across 170 countries. It is the first tool of its kind to rate companies on the normative principles of the United Nations Global Compact (GC Score). Additionally, S-Ray provides an industry-specific assessment of companies' performance on financially material sustainability criteria (ESG Score), together with an assessment of how companies report their emissions (Temperature™ Score). These scores are combined with a preferences filter that assesses a company's business involvements. S-Ray daily data products and services are used by some of the world's leading financial institutions, investors, corporations and consultants.

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:

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.

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.

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.

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.

A second factor could be the perception that Ford’s CEO compensation is out of line with that of its peers.

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.

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 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.