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

Altruists in Action

[fa icon="calendar'] Jan 14, 2011 10:36:28 AM / by Bahar Gidwani

The Role of NGOs & Non-Profits in CSR

 

by Bahar Gidwani


This post is the latest in Crowds of Ratings, a Triple Pundit guest series about the CSR ratings field.

 

4092374825_9df7bf3a04 There are more than 1.5 million US organizations—and many more overseas—that have put addressing a  social issue or need above the goal of making money.  More than 2.3 million people work (again, the US figure) in these “not for profit” (NFP) organizations.  Hundreds of thousands more work for NGOs (non-governmental organizations) such as universities and hospitals.

 

These dedicated altruists help the poor and sick, lobby for legislation, protest, persuade, and discuss important social issues.  They also contribute a ton of useful information on corporate social responsibility (CSR).  NFP groups have the patience and enthusiasm necessary to track a company’s behavior over a long period of time, make lists of companies who do and do not support their cause, and mount public campaigns aimed at changing both consumer perception of a company’s brand and company management and employee awareness of how their company is behaving.

 

We have found these sources most useful for understanding specific, controversial issues (what we call “special issues”).  For instance, should companies test products on animals?  People for the Ethical Treatment of Animals (better known as PETA) feel they generally should not.  They maintain a list on their Web site of companies who do animal testing and encourage others to refer to this data.

 

A dedicated animal-loving researcher named Alex Poulos keeps his own list of “good” (no testing) and “bad” (testing) companies on a site called “Vida Compassion” or “Alex’s List.”  A third group called Understanding Animal Research offers a list of companies who have published statements on their internal policies and regulations on animal testing.  Their view is that when performed responsibly, animal testing contributes to safer products and better human health.

 

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Another list comes from the American Anti-Vivisection Society (AAVS)—which now has set up a “Leaping  Bunny” certification programIf you areinterested in the animal testing issue, you should probably explore the information on these sites and many others listed here. You can also cross check the data on each company these sites mention, using two of our SRI sources—Asset4 and IW Financial.

 

NFP sources give us information on things like mercury in fish (Oceana), involvement in Burma (The Burma Campaign and Global Union Burma), and a list of who is in the coal industry (Coal Mining Engineer’s List).  We’ve integrated many of these sources into our CSRHUB rating project—but we’d like to have more.  What holds us back?

 

  1. Many NFPs do not target corporate behavior.  For instance, of the six current “Take Action” suggestions from the Natural Resources Defense Council (NRDC), only one involves company behavior.
  2. Many NFPs believe they can most effectively change corporate behavior via private interactions.  Corporations sponsor a particular NFP program, adjust to a request from an NFP to change a policy, or respond directly to a letter or position.  For instance, The Nature Conservancy does not share its corporate discussions with outsiders like us.
  3. Many NFPs do one-time studies.  For instance, Greenpeace did a wonderful study on the effects of cattle breeders on the Amazon. But, our system needs long-term, broad-based data—so that we can track over time and across many industries and countries.
  4. By its nature, the data from NFPs is not independently reviewed and verified.  We tend to favor data that can be verified or confirmed.

 

Many NFPs have become justly famous for the quality of their CSR reporting.  For instance, Wood Turner’s ClimateCounts has been publishing corporate climate change Scorecards since 2007.  His small group of analysts assesses and publicizes the climate performance of more than 140 companies across 22 different areas.  We all benefit from this kind of selfless service to our community.

 


 

Bahar Gidwani is Cofounder and CEO of CSRHUB. 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, worked on Wall Street with Kidder, Peabody, and with McKinsey. Bahar has consulted to companies including Citibank, Banco Portuguese do Atlantico, Crane Co., Sperry, GE, General Dynamics, Computer Associates, Oracle, Microsoft, Computer Sciences, EDS, Cerner, and Acxiom. He has an MBA from Harvard Business School. Bahar is based in New York City.


CSRHUB is a corporate social responsibility ratings tool that allows managers, researchers, consultants, academics and individual activists to track the CSR performance of major companies. We aggregate data from more than 90 sources to provide our users with a comprehensive source of CSR information about 5000+ publicly traded companies in 62 countries. Browse our ratings at www.csrhub.com.

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[fa icon="comment"] 0 Comments posted in Alex Poulos, Alex's List, Asset 4, Bahar Gidwani, corporate social responsibility, CSR, Global Union Burma, non-profits, Uncategorized, Oceana, PETA, sustainability, IW Financial, Leaping Bunny, National Resources Defense Council, NFP, NRDC, ratings, The Burma Campaign, AAVS, animal cruelty, animal rights, ClimateCounts, Coal Mining Engineer's List, CSRHub, environment, Greenpeace, NGOs, The Nature Conservancy

Crowds of Ratings: The Financial Folks

[fa icon="calendar'] Dec 15, 2010 11:54:00 AM / by Bahar Gidwani

By Bahar Gidwani

 

The best-known and best-established sources of information on corporate social responsibility (CSR) performance are probably socially responsible investment (SRI) researchers. These firms are also called ESG (environment, social, and governance) analysts.  At CSRHUB, we use data from six major SRI houses, including ASSET4, GovernanceMetrics International, IW Financial, MSCI, Trucost, and Vigeo.  Other well-known sources in this area include EIRIS, SAM, and SIRIS.

 

SRI firms primarily serve investors—mutual fund managers, investment advisors, brokerage houses, etc.  They try to help them:

  1. Make money.  SRI firms hope either they or their clients will discover connections between CSR-related factors and stock performance.
  2. Create and maintain special mutual funds.  Around $6 trillion has been invested so far into mutual funds that have a social theme or purpose.  Most of the major fund groups are now involved, including Calvert (one of the first movers in this area), Parnassus, Van Eck, T. Rowe Price, and Vanguard.
  3. Measure their performance.  Investors want to know if their investment manager or mutual fund is doing a good job.  The easiest way to find out is to compare the return from a particular investment strategy against that of an index such as the Dow Jones Sustainability Index, the FTSE for Good, or the NASDAQ OMX Global Sustainability Index.

Do CSR-oriented investors do better or worse than those who don’t care about the social behavior of the companies they invest in?  Many studies have probed this question, but there is still no definite answer.  You can follow the discussion on Lloyd Kurtz’s SRI Studies site and form your own opinion.

 

SRI data is not cheap.  The annual fee for a data feed from one of these firms can run from $20,000 per year to over $100,000 per year.  Some firms specialize in certain areas (e.g., Trucost offers data on carbon and water use, GovernanceMetrics tracks corporate governance) and some firms offer more than one approach to measuring social performance (MSCI offers data under the KLD, IVA/Innovest, and Global Compact+, and RiskMetrics Carbon Beta brands).  Some firms sell individual reports or industry reports—but these prices are also high (between $200 and $2,000 per company).

 

Recently, the SRI area has consolidated.  Thomson Reuters bought ASSET4, MSCI bought RiskMetrics (which in turn had bought both Innovest and KLD), and The Corporate Library and Audit Integrity merged with GovernanceMetrics.  Several forces may be driving this trend.  Investment firms cut back on all types of costs—including research and data feeds—during the recent downturn.  New entrants such as Bloomberg have encouraged players in the broader market for trading data and indices (such as Thompson and MSCI) to enter the CSR area.  It takes a big capital base to support the high-speed infrastructure and programming dollars involved in creating and maintaining indices.

 

Many SRI participants and many of their customers are worried that our society could lose some of the strength, diversity, and richness of the data that SRI firms produce.  CSRHUB shares this concern and we hope that our site will introduce these wonderful data resources to many new users.  Our next post in this series will look at the organizations who are trying to improve ESG/CSR reporting.

 


 

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.

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[fa icon="comment"] 1 Comment posted in ASSET4, Bahar Gidwani, CSR, EIRIS, FTSE for Good, GovernanceMetrics, Uncategorized, Van Eck, sustainability, IW Financial, MSCI, NASDAQ OMX Global Sustainability Index, SAM, SIRIS, Trucost, Vanguard, Vigeo, Calvert, corporate responsibility, CSRHub, Dow Jones Sustainability Index, Parnassus, T. Rowe Price

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