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

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.

By Bahar Gidwani

Part 1 of a 2-part series

Sustainability professionals spend hundreds of thousands of dollars and months of time developing and managing their sustainability programs.  Most dread the almost inevitable question from their manager or their manager’s manager—”How are we performing relative to our peers?  Where are we doing well and where do we need to improve?”  The iCompli CSRHub ESG Metrics Brief is designed to make it easy to answer these questions in a fact-based and authoritative way.

Why has it been hard to get answers?

Sustainability managers know their own programs—and understand the data they generate and report.  However, hundreds of outside sources each form their own opinions on a company’s sustainability performance.  They use different criteria and come to different conclusions—and both their analysis methods and their viewpoints are not always readily available.

For instance, is Wal-Mart more socially responsible than Target?  The barriers to answering this question include:

• Too much information – CSRHub contains 131 sources of sustainability information for Wal-Mart and 118 sources for Target.
• Gaps in the data - 85 of the above data sources rate both company, but many sources are unique to only one of the two companies.
• Broad range of comparable companies – CSRHub tracks 274 retail companies worldwide.  To fairly compare Wal-Mart and Target, one needs to put them into context against all of these other competitors.

Our new solution required combining two components

CSRHub’s database system maps, merges, and normalizes sustainability ratings from 425 sources.  It includes information from Wall Street firms such as Thomson, MSCI, EIRIS, and Trucost; data from non-governmental organizations such as CDP, GRI, Transparency.org and the UN Global Compact, and information from government databases, publications, and various types of certification and crowd sources.  By combining almost 80 million pieces of data, CSRHub can generate objective scores of the perceived sustainability performance for more than 15,000 companies in 132 countries.

The end result shows that Target is generally more sustainable than Wal-Mart—although Wal-Mart is seen has having better performance on environmental issues.

This perception perspective helps identify where a particular company is weak or strong.  But, most corporate managers need to also see comparable sets of facts and figures, before they can invest in new projects or change their strategy.  The new ESG Metrics Brief combines CSRHub’s insights with the hard facts contained in Bloomberg’s well-respected ESG (Environment Social Governance) Database.

Bloomberg tracks data on more than 30,000 publicly-traded companies, from around the world.  Its data set includes information not only hundreds of data items its own staff gathers from public sources and company filings but also data from other major ESG sources such as Sustainalytics and ISS.  The result is a set of comprehensive reports on 6,969 companies in 77 countries.

Look for part 2 of this series to see a concrete example of the kinds of information—and opportunities for action—that the new ESG Metrics Brief's create.

To see more now, including a full sample, go to 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.