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

CSRHub's Bahar Gidwani Speaking at BattleFin Virtual Discovery Days

[fa icon="calendar'] Sep 28, 2020 12:35:40 PM / by CSRHub Blogging

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CSRHub CTO and Co-Founder, Bahar Gidwani, will be speaking at the 2020 BattleFin Ensemble & Discovery Days event. The conference will take place virtually September 29th - 30th, 2020.  

BattleFin's panel lineup is broad and current, including discussions on the recovery of the travel industry, tech and consumer stock insights, macroeconomic trends, and even a panel focusing on the current election. 

The two-day conference aims to use alternative data insights to predict some of the changing impacts Covid-19 will have on Q3 earnings.

Bahar will take part in a roundtable discussion on the Institutional Investor's Perspective sponsored by AWS on Tuesday at 11:35am ET alongside executives from:

  • Sentieo - Financial Research for a Market Edge
  • American Century Investments - Leading Asset Management Firm
  • Worldwide World Pensions Council - The Asset Owners' Think Tank

For the full agenda, a complete list of speakers, and the opportunity to register, click here.

Bahar.Gidwani Bahar 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 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.

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New Wave of ESG Demand

[fa icon="calendar'] Jul 22, 2020 9:37:25 AM / by Bahar Gidwani

This past year of social and environment pressures (Covid-19, racism inequity, climate change, global risks) has created a new wave of demand for ESG data and insight. A growing number of corporates, professional firms and financial asset owners and managers are interested in ESG.

For example, more than 2,800 investors, representing 90% of world financial assets have now committed to the UN Principles for Responsible Investment (UNPRI). In response, companies are clarifying and harmonizing their reporting methodologies. More companies are reporting sustainability information. Around 50,000 entities have shared information about their sustainability performance either directly (about 12,000 have incorporated sustainability data in their public filings) or through participating in sustainability-related organizations or reporting systems.

ESG data providers are participating in this new wave of investor interest by offering:

  • Broader coverage of entity types (i.e., public, private, not-for-profit) and coverage of more types of investments (e.g., equities, debt, REITs)
  • Comparable, stable scores with enough history that an ESG factor can be used in a quantitative model or automated screening process
  • Methods for integrating ESG with other financial and market return data sets

In previous articles we have referred to this new wave as “third-era” investors are driven to integrate ESG data by three themes:

  • Marketing. In order to attract and retain assets, investors highlight their ESG methodology and follow it, even if it may result sometimes in underperformance.
  • Risk avoidance. Asset managers who prioritize safety and downside reduction may see ESG data as an additional tool for identifying and avoiding risk.
  • Materiality. Quantitative analysts have been using “alternative” data sets for years. ESG data may provide a new opportunity for algorithm-driven alpha generation.

ESG data is being integrated into investment processes through direct purchase of individual data sets. They are also being integrated into various types of data curation and distribution systems. ESG data used to be a subcategory of “alternative data.” It has now become its own category and the number of providers and variety of data sets available has grown. 

The new wave or “third-era” investment strategies will rely on data sets that have these characteristics:

    • Broad, deep coverage. To be useful in an investment process, a data set should cover not only the equities an investor already holds, but also most if not all equities in similar entities. In some industries, there are large privately held competitors. ESG-oriented analysts should like data sets that also cover private companies.
    • Streamlined factors, complete coverage of the factors, and a long stable history. Some ESG data sets offer two hundred, one thousand or even several thousand indicators. This amount of detail can overwhelm investors who are relatively new to ESG issues. It is also difficult to fill in all of “slots” in a data set. Many major ESG sources cannot complete 70% or more of their bottom level of indicators. Finally, most financial analysts are used to being able to study market patterns over long time horizons. No ESG data set goes back further than the 1990s—so analysts still cannot see how ESG factors relate to stock performance through a wide range of market conditions. Still, it is helpful if an ESG source has at least ten years of history and if it has made few or no changes to its methodology during this time.
    • Works well when combined with other data sets. Many ESG data users purchase more than one type of data. They extract value from combining these data sets to examine different aspects of a company’s sustainability performance. It is important to pick data sets that have enough identifying information (e.g., ticker codes, ISINs, name variations) that they can be combined. It helps too, if it is easy to pull data from a data provider’s site or application programming interface (API).

These investors will demand ESG data sets that give them marketing differentiation, ways to reduce risk, and opportunities to generate alpha. They are likely to use several data sets and combine them in a proprietary way, as they seek to make their understanding of ESG data part of their competitive advantage in the investment marketplace.

CSRHub ESG Business Intelligence

For more information on accessing ESG ratings via the CSRHub ESG Business Intelligence data feed, please visit the Open:FactSet Marketplace.

 

 

Bahar.GidwaniBahar Gidwani is CTO and Co-founder of CSRHub. Bahar 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 is the largest ESG and sustainability rating and information platform globally. We aggregate 230 million data points from 650+ data sources including leading ESG analyst databases. Our patented algorithm aggregates, normalizes, and weights data to rate 18,000+ companies in 141 countries across 134 industries. We track 97% of world market capitalization. We cover 12 subcategories of ratings and rankings across the categories of environment, employees, community and governance. We show underlying data sources that contribute to each subcategory’s ratings. CSRHub metrics are a consensus view (any 2 sources may have about a 30% correlation so we make sense of the disparate data). We tag companies for their involvement in 17 Special Issues. We provide Macro-enabled Excel dashboard templates, customizable dashboards, and an API. Our big data technology enables 85% full coverage of data across our rated companies and robust analyses. We provide historical ratings back to 2008.

 

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CSRHub and Intrinio Announce Partnership

[fa icon="calendar'] Jun 24, 2020 9:51:55 AM / by CSRHub Blogging

CSRHub Intrinio

CSRHub, a leading provider of ESG (Environment, Social, Governance) consensus ratings, is pleased to announce it has partnered with Intrinio, a financial data marketplace that provides fintech data and applications for developers and investors. ESG data is becoming an important component of investment decision processes. Intrinio has partnered with CSRHub to help combine signals about corporate ESG / sustainability performance with the many other data sets it has curated for its system.

Both CSRHub and Intrinio are committed to making financial and ESG data affordable and easy to access so investors and analysts can save money and time building meaningful outcomes.

Investors and researchers increasingly want to integrate their financial data with ESG data for more efficient and impactful analysis. CSRHub data can be used to benchmark ESG performance, increase corporate market value, uncover portfolio opportunities and risks, back-test theories about ESG behavior, and integrate ESG trends into other Business Intelligence data sets.

Using a patented algorithm that aggregates and harmonizes disparate data from 690+ ESG sources, CSRHub generates a consensus score for the ESG performance of 19,000 companies from 134 industries in 143 countries. With many disparate sources of ESG information available, centralizing and interpreting ESG metrics has become burdensome for many firms. CSRHub streamlines ESG data and makes it useful and powerful.

“Partnering with Intrinio to deliver both their analytics and CSRHub’s ESG data to clients will enable investors to leverage powerful insights and enhance their decision-making processes,” said Cynthia Figge, CEO of CSRHub.

“Many of our customers see us as their dedicated data partner and one-stop shop for a variety of financial data feeds. Joining forces with CSRHub to offer their innovative data is a crucial step for us when it comes to serving our clients as they develop cutting-edge apps, algorithms, platforms, and websites,” said Rachel Carpenter, CEO of Intrinio.

For more information, see https://intrinio.com/products/csrhub-esg-ratings.

 

About CSRHub

CSRHub offers one of the world’s broadest and most consistent set of Environment, Social, and Governance (ESG) ratings, covering 19,000 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 Intrinio

Intrinio is a financial data partner powering innovation by providing high-quality data, cutting-edge tools, and world-class support to quant funds, fintech companies, and academic institutions. Intrinio’s powerful application programming interface (API) is designed for the needs of engineers and developers and supported by more than 200 financial data feeds that can be easily integrated into applications, websites, algorithms, and other financial tools. Learn more at https://intrinio.com.

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CSRHub's Cynthia Figge Speaking at Skytop Strategies CSR 2.0 Conference

[fa icon="calendar'] Apr 7, 2016 9:58:00 AM / by Cynthia Figge

Skytop CSR 2.0

Join Skytop Strategies CSR 2.0 Conference, where our
Co-founder and COO, Cynthia Figge, will be moderating the Performance Drivers: Big Data, Transparency and CSR panel. This conference will be held on April 20th in San Francisco, California.  CSRHub will also be a strategic partner of this conference.

Skytop’s CSR 2.0 Conference will be attended by Corporate Responsibility Officers, Heads of Marketing and Strategy, and Human Capital Executives, with the goals of engaging, discovering as well as applying corporate social responsibility strategies.

For more information, please click here to visit Skytop Strategies website for the conferences agenda.

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Will SASB succeed in putting nonfinancial reporting on the map?

[fa icon="calendar'] Nov 12, 2014 9:56:12 AM / by Bahar Gidwani

As previously seen on GreenBiz.com

By Bahar Gidwani

ShutterstockHurst Photo

This is the second in a two-part series about the use of SASB standards as a safe legal harbor for U.S. public companies.

The Sustainability Accounting Standards Board is more than halfway through its initial standards setting process. It has received American National Standards Institute accreditation as a standards-setting body. It boasts big names on its board and has created a “social norm” that will encourage many publicly traded U.S. companies to consider its guidance when making disclosure decisions.

So, what happens next? Will SASB succeed in building a safe harbor for nonfinancial disclosure? If so, what will this mean to the rest of the metrics area?

There are two ways for SASB to succeed. First, if a modest fraction — 10 percent to 20 percent of the country’s roughly 30,000 public companies — start conforming to the SASB standard, its issues will become de facto standards.

For example, both GRI and CDP remain below this level, with fewer than 1,000 companies reporting under either system over the past three years. Based on the number of companies that have participated in its working groups and the number of times its standards have been downloaded (3,800 times), SASB could be adopted by more than 3,000 companies over the next three years.

Second, a shareholder might file a lawsuit against a major company over the accuracy or quality of its nonfinancial reporting. The company could claim that it conformed to SASB standards and therefore should not be blamed for any omissions or deviations, or the plaintiffs could win because a company failed to follow SASB.

Should both events occur, SASB’s victory could mean good news long-term for sustainability metrics.

The long view on metrics

Investors, for example, will get better quality data. Investors have supported SASB because they want uniform, well-described sets of data across all companies within an industry. These data sets could appeal to mainstream investors who had not previously incorporated sustainability factors into decision-making. Note that investors who already include sustainability in their thinking may find it harder to get an edge over competitors.

Another plus: Metrics suppliers that rely on assessments by human analysts should continue to be in demand. For instance, environment, social and governance research firms, such as MSCI, Thomson Reuters, EIRIS, Vigeo and Trucost, should be able to dig out facts and form opinions that go beyond what companies report under SASB.

In addition, government agencies, including the SEC, should be encouraged to press for data to suit their own agendas. There are already requirements to disclose greenhouse gas emissions and use of conflict minerals. Other agencies may decide to impose their own “unfunded mandate” and justify it as similar to SASB’s work.

Sustainability practitioners also will be included in quarterly SEC reporting. In most public companies, quarterly reporting is a tortuous, stress-filled process that any sane manager would seek to avoid. However, being involved in quarterly reporting should raise the profile of sustainability professionals.

Finally, SASB will stay ahead of emerging risks. It updates its standards, as needed, to reflect new issues that are likely to be material. SASB flags emerging issues for each industry it reviews. These are issues that do not yet have sufficient evidence of financial impact or investor interest, but might become material given impending regulation or other developments. Each time SASB reviews its standards, it asks its working groups to consider if these issues have reached the threshold of materiality. As a result, I expect to see a steady increase in the scope of SASB’s standards.

Potential downsides

With success could also come some issues. Companies, for example, could reject more requests for information from outside stakeholders. Even if the sustainability folks in a company want to fill out a survey or publish a press release, both the company’s in-house lawyers and auditors may object. But I doubt that companies will shut down their sustainability area or stop measuring and reporting sustainability factors.

Also, groups that rely primarily on surveys may get lower responses rates. For instance, companies may be less willing than in the past to complete Robeco’s extensive Dow Jones Sustainability Index questionnaire. Nonfinancial stakeholder groups, such as supply chain auditors, NGOs and government agencies, also may see lower response rates when they ask for information. Metrics users may have to rely more heavily than in the past on crowdsources that pull data from individuals and other anonymous sources.

Software providers may not generate much revenue from integrating SASB reporting into their tools.  Each industry has only eight to 12 issues to track, and the methods for measuring each have been well defined. This may make a new SASB reporting module a “giveaway” item that will be bundled into broader suites of more internally focused sustainability measurement and reporting tools.

Standardization might reduce innovation. Given that SASB’s working groups tend to choose issues that are already well understood and widely reported, SASB’s issues are backward-looking and “conservative.” SASB, however, has attempted to avoid this risk by explicitly including innovation in business models as one of its objectives.

SASB’s approach is industry-centered rather than issue-centered. Outside stakeholder groups, such as Climate Counts or Transparency.org, examine the reported policies and performance of the companies they cover. Their measurements cross industry and geography boundaries. They look for good or bad performance, relative to an absolute standard of behavior. In contrast, each industry within a SASB industry group decides its own list of issues that are likely to be material. It defines how it will report data on these issues and one industry could report an issue differently from the way another industry reports it.

Finally, companies may issue fewer separate CSR reports. Legal and auditor pressure may curtail the information companies release on the CSR area of their corporate websites. About 45 percent of the 9,296 companies we track have a CSR area on their website. Companies could instead focus an excessive amount of attention on the issues that SASB’s standards cover. Both these changes would reduce the amount of “primary” information available to those of us interested in company sustainability performance.

On balance, the downsides of SASB’s success seem to be outweighed by the benefits. Many companies will appreciate the reduction of risk and costs that a SASB regime may create.

Should we stay put or sail back into the storm?

SASB’s success could disrupt many aspects of sustainability reporting. A few changes it prompts may not be positive, and a focus on SASB-related issues could inhibit or reduce the release of data that is important to noninvestor stakeholders.

SASB seems likely to drive more than U.S. nonfinancial reporting. Foreign groups carefully will examine SASB’s standards. Many who download SASB standards are outside the U.S. Large foreign companies with securities that trade in the U.S. are subject to U.S. security law. Groups such as the World Federation of Exchanges may decide that SASB standards are akin to Generally Accepted Accounting Principles for nonfinancial reporting, and mandate conformance to SASB for the companies they list. As they do this, SASB’s influence quickly could spread beyond the confines of the U.S. market and penetrate into reporting for public companies in other world markets and private companies.

SASB has created a safe harbor in which I expect to see many of corporate America’s “boats” moor soon. But to move corporate reporting forward, we need to find ways to brave the storms and reach distant, more sustainable shores.

I believe that outside groups will continue to push for broad disclosures that cross industry and geographic boundaries and for specific data on each company’s social performance. I also believe that corporate sustainability managers will continue to push for internal reporting and metrics that go far beyond what SASB requires. To sail the ocean, we need both harbors and maps for finding them.  There is still a lot of open ocean for us to explore.


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. Bahar is a member of the SASB Advisory Board.  He plays bridge, races sailboats, and is based in New York City.

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