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

Can Environmental and Social Performance Be Included In Company Valuation?

[fa icon="calendar'] Mar 20, 2014 9:00:50 AM / by Bahar Gidwani

By Bahar Gidwani

In January, I fought through piles of snow to get to Providence, Rhode Island, to join a group of accountants and valuation experts.  The goal was to discuss how sustainability-related intangibles could be included in company valuation processes.  The meeting was arranged by Joy Pettirossi-Poland of Building Bridges.  She was supported by XPX Boston and RISCPA and R. Paul Hermann was also there to share insights from the great work he does at HIP Investor.

Although I’m a CFA and I’ve done a fair amount of company valuation work, I didn’t feel qualified to jump into the meeting’s core discussion.  (I believe Joy intends to expand her program and that she will host further meetings on the same subject in other venues in the Northeast.  Contact her or me if you want to know more about these plans.)  My assigned task was to give the participants a sense for how much sustainability data might be available for companies in the area—specifically those in Rhode Island, Connecticut and Massachusetts.  After all, if few or no companies are collecting data on their sustainability performance, it would be impossible to bring these factors into a valuation study.

I found that our CSRHub database has ratings for 287 companies in these three states.  While this is a small fraction of all companies in the region (there are at least 300,000 companies in Connecticut, alone), it is a high percentage of larger, listed companies.  For instance, there are 131 publicly-traded companies in Connecticut and we have ratings on 77 of them, or about 60%.  We had enough rated companies for all three states to show that the average perceived sustainability performance of companies in the three states was pretty similar.

 

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The data we had on these companies came from ESG (environmental, social and governance) raters (we aggregate data from eight of these investor-serving firms), non-governmental organizations (NGOS), and various media and crowd sources.  We use data from 308 different resources in our ratings.  However, I feel that there are four voluntary forms of reporting that are good indicators of whether or not a company is producing information for its own internal use.  They are CDP (formerly known as Carbon Disclosure Program), GRI (Global Reporting Initiative), UNGC (UN Global Compact), and the presence or absence of a corporate social responsibility (CSR) area on a company’s web site.  (Every company we studied had a corporate web site.)  This table shows that only relatively few of the companies in the region did any of these reports—with the highest percentage of self-reporting coming via a company web area (73 out of 287 companies, or 25%).

 

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Unfortunately, if only 25% of big companies are gathering sustainability information, the percentage of all companies in the region who are both gathering and publicly reporting CSR data is likely to be miniscule.  The only thing we could offer to offset this bad news was evidence that more disclosure does seem tied to a better perception of a company’s social performance.  As you can see, companies that do two or three reports from the CDP/GRI/UNGC area get much better CSRHub sustainability scores than those who do no or only one report.

CDP, GRI, UNGC Reports
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An analogous pattern is present for those who have a CSR web area versus those who do not.

This result is consistent with other studies we’ve done across the full list of 8,900 companies that we rate.  Companies who create sustainability-related information about themselves are perceived to have better social performance.  Our audience of valuation and accounting experts seemed to appreciate that this better social performance could create a boost to the value of a company.  They also seemed to agree that they would use data that fits into a standard structure and schema, if they wanted to include sustainability factors in their valuation work.

An article in the March 2014 edition of The CPA Journal by one of the other speakers, at the event, Providence College professor, Michael Kraten, reviewed and summarized our discussion.  If they had the data, I think the accounting and valuation profession would start to include sustainability factors in their valuation work.  If they did, it could encourage more companies to gather and report information on their social performance.


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.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 8,900 companies from 135 industries in 103 countries. By aggregating and normalizing the information from 300+ 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 change the world.

 

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Global ESG Regulatory and Voluntary Reporting: Most Important 2013 Developments, Radar 2014, and Key Policy Issues and Players

[fa icon="calendar'] Jan 27, 2014 9:16:00 AM / by CSRHub Blogging

CSRI

Global ESG Regulatory and Voluntary Reporting:

Most Important 2013 Developments, Radar 2014,

and Key Policy Issues and Players

JANUARY 30, 2014, 11:00am-12:30pm ET

An Unmissable Comprehensive Briefing and Annual Wrap-Up by Experts

For Corporate Management, Boards, Asset Owners/Managers, Analysts, Risk Managers, Auditors, Attorneys, Policymakers, Regulators, and NGOs

 

New York, NY – Global ESG Regulatory Academy™ and CSR Insight™ LLC are hosting the first annual wrap-up and analysis of the key 2013 Global ESG Regulatory and Voluntary Reporting developments and initiatives, and the must-watch 2014 developments and issues, with expert analysis and commentary.  Please join us for this highly informative and unique educational Webinar, from the leading worldwide expert on Global ESG Regulation and Reporting.  In 90 succinct minutes you will have the knowledge you need to understand:

  • The most influential 2013 developments worldwide in ESG regulation and ESG voluntary reporting;
  • What should be on your radar screen and board agenda for 2014; and
  • The critical policy considerations, and the main power brokers, to move the world forward on harmonized global ESG reporting as a key facilitator of planetary sustainability.

A live Q and A session will give you the opportunity to ask questions of the Speakers.  After the Webinar, you receive the recording and the Speaker presentations to review at your leisure.

Registration is now open.  Capacity is limited and early registration is recommended.  Please note that all Registrants, whether or not you attend the live Webinar, will receive the Webinar recording and the Speaker presentations.

PROGRAM AGENDA and SPEAKERS are set forth below.  See EVENT SITE for full details:  http://www.cvent.com/d/f4q9zg?refid=csrwp.

PROGRAM AGENDA:

  • International Scan of 2013 ESG Financial Regulatory and Voluntary Reporting Developments: Regulatory Reporting: European Union, China, South Africa, SEC Enforcement, and more. Voluntary Reporting: GRI, CDP, UNGC, IIRC, SASB, SSE, and more.
  • Benchmarking the World’s Composite Stock Exchanges for Sustainability Disclosure:  Key Findings, Analysis, and Recommendations.
  • Key Policy Issues and Players:  What critical ESG reporting issues and problems need to be addressed now; what is the role of financial regulators and who are the main power brokers worldwide for ESG financial reporting.

SPEAKERS:

* Linda M. Lowson, Esq., CEO and Chief Counsel, Global ESG Regulatory Academy™

* Stathis Gould, Senior Technical Manager and Head of PAIB, IFAC

* Toby Heaps, CEO, Corporate Knights and CK Capital

* Chris Fowle, V.P., Investor Initiatives, CDP

The 20% Registration Fee Discount has been extended for a limited time:  US$199 for U.S. registrants, US$219 for non-U.S. registrants; contact us for 3-or-more group registrations.

For registration, Speaker, or Sponsor queries, contact Linda M. Lowson, Esq. at inquiry@globalregulatoryacademy.com

3 Reasons Why You Should Attend This Independent Professional Education on Global ESG Regulation and Reporting:

  • Gain Essential Knowledge to Avoid Serious Liabilities:  ESG regulatory and voluntary reporting are now strategic, stakeholder, and regulatory imperatives, and represent a whole new world of requirements and liabilities that is here to stay.  This is the future of financial reporting, affecting every global capital market participant. Be proactive, not reactive, and you will reap the professional and financial rewards.
  • Receive Important Guidance to Better Manage ESG issues and Fulfill Internal and External Stakeholder Expectations: Whether you are a C-Suite, Board Member, Finance, Legal, Audit, Risk,Compliance, Strategy, Sustainability, Analyst, Researcher, Asset Manager, or Asset Owner executive, our educational events provide expert knowledge, insight, and guidance at nominal cost, so that you can better understand and manage these two important reporting worlds for maximum benefit and efficiency.
  • The Only Authoritative Source and Venue for Independent Professional Education on Global ESG Regulatory and Voluntary Reporting:  We are the only independent provider of Global ESG Regulatory and Voluntary Reporting Education, and completed a comprehensive 5-year, US$5.5 million Global ESG Regulatory and Voluntary Reporting Research Program to develop the Knowledge Base that underpins our expert education.

CSR Insight
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MEDIA PARTNERS:

CSRwire, Governance & Accountability Institute, CSRHub

 

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[fa icon="comment"] 4 Comments posted in CSR Insight, Linda Lowson, UNGC, Uncategorized, sustainability disclosure, Toby Heaps, CDP, Chris Fowle, ESG reporting, GRI, Stathis Gould

Turning ‘we don’t report’ into ‘we do’

[fa icon="calendar'] May 21, 2013 10:23:52 AM / by Bahar Gidwani

By Bahar Gidwani

We were recently invited by our friends at Trucost to moderate a webinar with the above title.  Our shared goal was to encourage more companies to start reporting their sustainability performance.

You can download the webinar from the Trucost site, here.  However, I thought I’d share a few of the things I learned from preparing for the talk and from the other panelists.

I started the webinar by sharing some figures from the CSRHub database.  I showed the audience that only 30% of companies in developing countries outside the US are using one of the three main reporting systems (the Global Reporting Initiative (GRI), the Carbon Disclosure Project (now CDP), and the UN Global Compact or UNGC).  US companies lag far behind—with only about 10% of the companies we track reporting via these systems.

I didn’t spend a lot of time during the webinar bragging about this data.  However, I was pretty proud to see that our coverage has now grown to the point where we can start to make broad, worldwide statements about corporate social performance.  We currently cover more than 7,300 companies in 93 countries.  Other sources have claimed that “reporting is rising rapidly” and that “90% of large companies are reporting.”  If we take the term “large company” to include those over $100 billion in revenue, these statements are true.  However, when we look at companies between $100 million and $1 billion (which most people would still consider “large”), reporting remains quite weak.

The next speaker was Lorinda Rowledge, who is one of the founders of EKOS International.  Over the past 17 years, Lorinda has helped many large companies take their first steps towards reporting their performance.  Among other things, she offered this set of insights into the benefits of making an initial report.

Our third speaker was James Salo of Trucost.  Jamie uses Trucost’s proprietary models (some of which he helped build) to improve company understand of their environmental performance.  He showed the audience this great example of how a company could use the data it gathers through a reporting process to help visualize its competitive position.

After we shared our slides, we took questions and comments from the audience.  In particular, there remains confusion about new standards for reporting such as those being proposed by SASB and the IIRC.  We agreed that we are happy to see the quality of reporting improved by these efforts—as long as they don’t discourage or confuse companies who are just starting on their journey into reporting.


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

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 7,300+ companies from 135 industries in 93 countries. By aggregating and normalizing the information from 200 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 change the world.

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[fa icon="comment"] 1 Comment posted in Bahar Gidwani, Carbon Disclosure Project, CSR, EKOS International, UNGC, UN Global Compact, Uncategorized, IIRC, Lorinda R. Rowledge, James Salo, SASB, sustainability performance, Trucost, CDP, Global Reporting Initiative, GRI

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