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

I’ve always been clumsy.  There were many broken dishes and glasses in my childhood.  My Mom was always kind about it.  She’d say, “Tears don’t mend broken China.”  She had other similar phrases I remember (e.g., “If you get a load of lemons, it is time to make lemonade!”), but the lesson was always Midwestern positivism.  Don’t sit around moaning about what can’t be fixed—keep moving forward and don’t let your own failures hold you back.

Our recent election broke dishes for those of us in sustainability.  Many of my friends in the field and a number of our clients have asked if US corporate sustainability programs will be put on hold for the next four years.

I’m not as good as my mother was, at mending dishes (or comforting someone who is crying!).  But I do see some reasons for hope:

• Well-run corporations care about profit, reputation, and mission. If their sustainability programs generate a profit, reduce risk, or help them accomplish their longer-range goals, they should continue to pursue them.
• Young folks soon take over. We get requests daily from students around the world who need data for a sustainability study or project.  For every student who majors in CSR there are ten other young people who care passionately about the world’s future.  Unless something dramatically changes how young people view the future, we will continue seeing a generation-driven rise in interest in sustainability.
• US companies trade with the rest of the world—and the rest of the world won’t backtrack on sustainability. If a US company wants to be successful in Europe, Asia, the Middle East, etc. it must adhere to a high standard of ethics, respect indigenous peoples, avoid polluting local water supplies, combat climate change, etc.
• US companies have the same stakeholders they did on November 7. Managers, employees, communities, suppliers, customers, and investors will continue to remind companies about the risks that companies will face if they do not behave responsibly. It will remain important to have a “social license to operate.”
• Momentum matters. Corporations are big ships that turn slowly.  They have put money and time into corporate social responsibility (CSR) programs.  They won’t shift these resources into other things, without good reason and a lengthy analysis process.

What types of changes may occur?  Don’t expect stringent new guidelines from US regulators (e.g., the SEC, the EPA, OSHA, etc.).  Look for more boycotts and “buycotts.”  (Several groups are boycotting Trump-related brands and there seems to be a countervailing push to punish firms that won’t advertise on Breitbart.)  Some companies may offer less-sustainable alternatives in certain product areas.  (E.g., muscle cars, heavily-sugared cereals, and other “retro” products.)  Corporations may put on hold major new green investments until things “settle down.” None of this is long-term stuff.  We can mend these pieces and fix these holes.

We at CSRHub see our data and tools as a way to improve how a company communicates its progress and a means to reduce the cost of and improve the effectiveness of sustainability reporting. My mom once put the lid of a tea pot I’d smashed under my pillow and told me that it would give me sweet dreams.  Let’s remember what we’ve been through and all that we’ve accomplished so far.  Then, let’s move forward and dream again, about a better future.

Photo courtesy of  Ruth Edwards

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 16,800 companies from 135 industries in 133 countries. By aggregating and normalizing the information from 500 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.

Donald Trump’s election has sent the global climate community into a tailspin.

It seems every climate change action supporter is making lists of the awful things he’s planning to do, so I’ll turn to the very succinct one I received in a Sunday morning email from Michael Brune, Executive Director of the Sierra Club:

End of Paris Climate deal. End of the EPA. End of the Clean Power Plan. More drilling. More coal. More pipelines. More lives destroyed. More wildlife bulldozed.

I’d add to Brune’s list of deplorable actions Trump’s choice to lead the EPA transition,  Myron Ebell, who Scientific American calls our “top climate skeptic.”

But we can’t forget what Neal Leary at Dickinson College’s Center for Sustainability Education reminds us in the Huffington Post the scariest fact of all: “Mr. Trump has asserted that climate change is a hoax.”

Leary refuses to give up: “I put my hope and efforts in action at state, local and institutional levels to keep and build momentum toward a clean, low-carbon U.S. energy system.”

Top on my list of Professor Leary’s institutional efforts would be American businesses, especially those that have turned away from fossil fuels and towards renewable energy for the most American of reasons — profit.

With the help of non-profit organizations such as the Carbon Disclosure Project, the Environmental Defense Fund, The Climate Group and the Center for Climate and Energy Solutions which set standards and rate companies’ environmental performance, our businesses are killing demand for coal by making energy efficiency a top priority and solar and wind the energy systems of choice. As eco-consultant Andrew Winston writes, “It’s flat out more profitable” to use renewables.

Another reason: renewable energy reduces a company’s risk.

How can renewable energy mitigate risk? The direct answer is that by installing their own solar power — either by building solar plants, as Google and other firms are doing, or via rooftop solar to supplement the energy they draw from the grid — these companies ensure access to power without the risk of price fluctuations endemic to fossil fuels.

But there are other reasons why renewable energy lowers risk. For one, investors are becoming increasingly concerned with business’ environmental practices as Corporate Social Responsibility (CSR) becomes common practice. Charles Schwab features Socially Responsible Investing (SRI) on its Mutual Funds web page, commenting that it is “emerging as a significant trend in the financial markets” and noting that SRI increased 28% between 2012 and 2014, when total SRI assets topped $4.3 trillion. More investors reduces a company’s cost of borrowing in tough times, when raising money can otherwise be expensive.

But the even greater risk of not participating in environmentally sound policies is the potential damage to the brand. CSRHub, the sponsor of this blog and the world’s largest CSR database, analyzed its CSR ratings against data on brand strength and finds significant correlation.

Download presentation slides:
How the Correlation between Sustainability and Brand Strength has Changed in the Last Few Years, More Proof that Sustainability Drives Operating Performance

In other words, what a company does for its community, including environmentally, affects the value of its brand. And that means customers are more loyal. And that translates into how much a company can charge for its products and its profitability.

Not everyone is a fan of CSR. But despite some bad actors using CSR to “green-wash” their reputations, the concept is embedded in American business and may provide a bulwark against climate deniers now coming to power. And who knows. If Trump does what he’s said he wants to do, eliminating the Affordable Care Act and drastically reducing social services, he might find himself in need of a boost to his reputation. And what could be more effective than saving the planet.

Photo courtesy of  SCA Svenska Cellulosa Aktiebolaget

Carol Pierson Holding is President and Founder, Holding Associates. Carol serves as Guest Blogger for CSRHub. Her firm has focused on the intersection of brand and social responsibility, working with Cisco Systems, Wilmington Trust, Bankrate.com, the US EPA, Yale University’s School of Environmental Sciences, and various non-profits. Before founding Holding Associates, Carol worked in executive management positions at Siegel & Gale, McCann Erickson, and Citibank. She is a Board Member of AMREF (African Medical and Research Foundation). Carol received her AB from Smith College and her MBA from Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and rankings information on 16,495+ companies from 135 industries in 133 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.