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

Understanding the Just 100

[fa icon="calendar'] Dec 15, 2016 9:40:43 AM / by Bahar Gidwani

Just Capital was established in 2015 by two successful and well-known investors: Paul Tudor Jones and Martin Whittaker.  Its mission is to use “the power of markets to drive positive change on the issues Americans care most about.”  After two years of research and reflection, Just Capital has now published a list of the 100 best “corporate citizens.”

We’ve been interested in this project from its inception and provided the Just Capital research team with access to our ratings and other data.  Unlike other ratings systems that attempt to decide what things are good behavior or bad behavior, Just Capital sought the opinion of ordinary citizens about what defines good corporate citizenship.  When they released the first readings from these surveys last year, it caused a stir within the sustainability community by showing that social and ethics issues were more important to most Americans than environment or other governance issues.

We suspected that Just Capital’s approach would generate ratings that differ from those of the other 491 ratings sources we integrate into CSRHub’s data set.  A simple comparison between the top 100 company ratings and CSRHub’s ratings shows there is about an 8% R Squared between Just Capital’s perspective on corporate social responsibility (CSR) and that of CSRHub’s aggregate of all other sustainability rating sources.

Just 100 and CSRHub Correlation.png

 

For this first review, Just Capital chose to focus on components of the Russell 1000 Index.  They pointed out that this group of companies has a large market capitalization and that most are headquartered in the US.  (Only around 40 of the current members of the Russell 1000 Index have non-US headquarters.)  One of the planned uses for the Just ratings is to encourage US investors and consumers to support “just” companies.  Investors may find this first list useful, but US consumers and businesses buy products and work with hundreds of large foreign companies that have not yet been evaluated.

Just Capital looked at about 90% of the companies in the Russell 1000 Index.  It sought to discover how these companies performed across 67 different metrics.  CSRHub covers 969 companies from this Index and has access to around 3,000 different metrics on these companies.  Just Capital had to make a number of assumptions and adjustments to account for missing data.  CSRHub’s system automatically adjusts for missing data issues through its normalization and weighting algorithms.  Despite these methodological differences, there is some agreement between our systems.  In particular, the 100 companies Just Capital picked did have better average performance using CSRHub’s rating system than the other 869 companies we rate in the Index.

CSRHub Rankings comparison.png

 

On the other hand, there were some major differences between our rating systems.  19 of Just’s top 100 companies had overall CSRHub ratings that were in the bottom quintile (lowest 20%) of the 16,500 companies we track.  69 of the 869 companies that didn’t get into the Just 100 were in the top quintile of CSRHub’s ratings system.  To put it another way—the five top-scoring companies in the Just 100 had an average CSRHub rating of 59.  More than 100 of the other 869 that didn’t make the list had CSRHub scores above 59.

In order to better understand the difference in our results, we looked at individual examples.  Companies like Accenture, Intel, Cisco, Johnson & Johnson, and Microsoft were both in the Just 100 and at or near the top of CSRHub’s ratings.  (The average overall CSRHub percentile rank for these five companies was 96%, which means they were perceived in our system to perform better than more than 15,000 other companies.)  As we would expect, these companies had especially strong average scores in the Employee area (average 90% performance) and somewhat lower average scores on Environment and Governance issues (83% and 76%).

CSRHub and Just Capital high scores.png

 

The other end of the spectrum was more puzzling.  Here are five examples of where CSRHub’s view diverged with those of Just Capital.

high and low csr scores.png

 

Both Just Capital and CSRHub attempt to remove the influence of issues such as company size.  The ratings we have been using from Just Capital are their “relative” ranking—the measure of a company’s performance compared to others in its industry.  CSRHub’s rankings are also relative (since most of CSRHub’s sources take an industry-centric view of performance) but span all entities rather than just those in one industry.  Many of our sources overlap (and Just Capital had access to CSRHub’s ratings during its research process).  So, why are these five companies included in the Just 100?

The Just Capital folks deserve huge credit for transparency.  There is a tear sheet report on each of the companies in the Just 100—so it is fairly easy to see what factors swayed them to feel that a company deserved to be included.  CSRHub has a similar level of transparency—our users can inspect which sources we used and most of the data details that underlie our scores.

For instance, CSRHub has 62 sources and more than 1,200 ratings indicators for Discovery Communications.  Our systems show below average performance for all aspects of sustainability performance when compared to all of the companies we track (top section), the 128 Broadcasting and Advertising industry companies in our system (middle section), and the 6,374 US companies we have ratings for (bottom section).

 

Discovery Communications CSRHub drilldown.png

 

In its drill down, Just Capital gives Discovery an above average score on Worker Pay & Benefits based on 7 subscores.

 

Just Capital performance.png

CSRHub’s rating for this labor/pay topic are informed by 20 sources.  There are many negative reports, including:

  • No same-sex benefits (IW Financial).
  • No tie of compensation to overall climate performance (CDP).
  • Poor career management and promotion policies (Vigeo).
  • Low pay relative to global standards (MSCI ESG Governance Metrics).
  • Lack of Employment Quality monitoring systems (Thomson/Asset4).

These reports are offset somewhat by a positive score from Glassdoor regarding employee satisfaction (this 3.7 score is about 70th percentile) and 2014 awards from Forbes (Best Workplace), Best Workplace for Commuters, and Working Mother Magazine.  (Note though that only Working Mother repeated its award for 2015.)  It is hard to prove that Discovery deserves a poor score on this topic—but it is easy to see why others might disagree with Just Capital’s assessment.

Just Capital is well supported, media savvy (its launch events have been well attended and its article in Forbes received an “editor’s choice” star), and has a mission that resonates well with the general public.  It has taken a fresh approach to the challenge of evaluating corporate social behavior and its staff spent months forming its opinions.  Just Capital also reached out to the companies it was evaluating and invited them to contribute information.  For instance, Just Capital indicates in its tear sheet that Discovery plans to add same sex benefits for its employees in 2017.  When this is confirmed (and incorporated into the research done by CSRHub’s partners), it may “flip” some of the negative indicators we mention above.

CSR managers for companies who appear on the Just 100 should celebrate their good fortune.  Companies who did not should ask Just Capital to share the details that drove its assessment of their performance.  The CSR managers in these companies may then find facts that could be updated or corrected or areas where new programs could respond to Just Capital’s concerns.  As Just Capital expands its coverage and continues publicizes its ratings, we hope we will see benefits from its work for both corporations and consumers.  CSRHub plans to start incorporating Just Capital ratings into its analysis with its November data set, so that CSRHub users will be able to integrate this new perspective into their broader CSR communications program.

 


Bahar Gidwani

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 16,000 companies from 135 industries in 133 countries. By aggregating and normalizing the information from 491 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.

 

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CSRHub Simplifies Sustainability Benchmarking: An Interview with CSRHub Co-founder Cynthia Figge

[fa icon="calendar'] Nov 4, 2014 9:35:51 AM / by CSRHub Blogging

As previously seen in the WiznessBlog.

benchmarking

Wizness and CSRHub have joined forces to simplify sustainability benchmarking against Cynthia Figge, Co-founder and COO of CSRHubcompetitors. CSRHub co-founder Cynthia Figge answered questions about her company and how the new benchmarking product will benefit users.

Q: What is CSRHub’s goal and purpose?

A:  CSRHub aggregates information about corporate social performance into one place so companies and individuals can track sustainability worldwide. It’s the first easy way to discover how companies perform and compare on sustainability and CSR issues.

 

Q: What was the genesis of CSRHub?

A: My partner Bahar Gidwani and I founded CSRHub in 2007 to solve the CSR data problem. Back then, there were many often conflicting data sources – sound familiar? We were the first company to recognize that the growing body of CSR information would soon require a Big Data solution. We figured out how to combine the data into a single rating that incorporates an ever-growing number of sources. We started with the premier environment, social, governance, the ESG firms, also known as socially responsible investment or SRI — we aggregate nine now — and added data from 300 sources so far and counting, NGOs plus government agencies, social networking groups, indexes and publishers. Our proprietary tools combine more than 60 million pieces of data on sustainability and CSR performance into a consistent set of ratings.

Q: Who are CSRHub major ESG/SRI data sources?

A: Our sources include premier ESG organizations ASSET4 (Thomson Reuters), CDP (Carbon Disclosure Project), EIRIS, GovernanceMetrics International, IW Financial, MSCI (ESG Intangible Value Assessment and ESG Impact Monitor), RepRisk, Trucost and Vigeo.

Q: What is the CSRHub schema?

A: Our data schema lays it out in detail, but generally our ratings are based on four categories: Environment, Employees, Community, and Governance. Each category has three subcategories. For example, within the Environment category there are Environmental Policy and Reporting, Energy and Climate Change, Resource Management. For Employees, Diversity and Labor Rights, Compensation and Benefits, Training Health and Safety, and so on.

Q: How are people using CSRHub ratings?

A: The market uses us for six applications:

First, for benchmarking. Our ratings and analysis tool covers 9,296 companies across 135 industries to track competitors over time.

A lot of our users analyze performance by stakeholder for CSR and Sustainability Reports. We offer a, single powerful interface to over 348 sources of information.

Professors and students conduct academic research and projects. Our tool analyzes six years of data and over 60 million data points, and is currently used in hundreds of universities globally.

Sustainability is increasingly important to company brand. Companies use us to build authentic brand values and increase customer loyalty.

CSRHub is used to build a world-class sustainable supply chain. Our APIs can map into a company’s supply chain network across 106 countries.

Finally, we find that sustainability performance is increasingly a factor in economic decisions. People search for places to work, brands to buy, and partners to support based on their values.

Q: How does CSRHub enable comparisons between companies? Can we really integrate apples and oranges?

A: The CSRHub schema maps data elements from all these data sources into the twelve subcategories, then aggregates and normalizes the data for comparability. The schema isn’t unique, but the aggregation and normalizing absolutely is. Bahar and I together had the perfect skillset to attack this challenge. We met at Harvard Business School. I went on to cofound EKOS International, one of the first consultancies to integrate sustainability and corporate strategy, way back in 1996 if you can believe it. Bahar has a CFA and built and ran Web-based and technology-based businesses on Wall Street with Kidder, Peabody and for McKinsey.

Q: Why is knowing my CSRHub rating and ranking in my industry important?

A: Benchmarking is key to competing successfully and creating value. Knowing your CSRHub rating and ranking enables your company to gain an independent perspective about how well you perform compared to other companies, identify specific areas for improvement, and monitor company CSR performance over time. Integrating CSRHub benchmarking across divisions enables a company to prioritize improvements and provide greater transparency of progress.

Q: How will CSRHub and Wizness work together?

A: CSRHub and Wizness are collaborating to create a Benchmark Template Report available on the Wizness Publisher website. Our reports will be streamlined, digital, social and mobile solutions for key stakeholders interested in sustainability data and progress.

Q: When will this benchmarking tool be available?

A: An early preview of the report is available now in PDF form at the following address: https://publisher.wizness.com/csrhub

Photo courtesy of Wizness.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 9,200+ companies from 135 industries in 106 countries. By aggregating and normalizing the information from 348 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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A Big Data Approach to Gathering CSR Data

[fa icon="calendar'] Oct 28, 2014 9:19:20 AM / by Bahar Gidwani

The following is part 2 of a 3-part series on “Big Data.”

By Bahar Gidwani

We have previously defined “Big Data” and shown how we feel a Big Data system built by CSRHub could help address some problems that exist in collecting corporate social responsibility (CSR) and sustainability data on companies.  We have also further described the problems with the currently dominant method of gathering this data—an analyst-based method.

CSRHub uses input from investor-driven sources (known as “ESG” for Environment, Social, and Governance or “SRI” for Socially Responsible Investment), non-governmental organizations, government organizations, and “crowd sources” to construct a 360 degree view of a company’s sustainability performance.

The illustration below shows the steps in our process.

CSRHub Ratings

The steps are:

  •  Convert measurement from each data source into a 0 (low) to 100 (high) scales.  This  requires understanding how each source evaluates company performance.
  •  We next connect each rating element with one or more of our twelve subcategory  ratings.  (Some elements may also map partially or exclusively to special issues such as  animal testing, fracking, or nuclear power.)
  •  We compare each source’s ratings with those for all other sources.  Each company we  study gives us more opportunities to compare one source’s ratings with another.  The  total number of comparisons possible is very large and growing, exponentially.  We  use the results of our comparison to adjust the distribution of scores for each rating  source so that they fall into a “beta” distribution that has a central peak around 50.
  •  Some sources match up well with all of our other data.  Some sources don’t line up.  We add weight to those who match well but continue to “count” those who don’t.

We then repeat steps A to D as many times until we have found a “best fit” for the available data.  Each time we add a new source, we go through an initial mapping, normalization, and weighting process.

An Example

It may help explain our data analysis process by using a specific example.  Hewlett Packard is a heavily tracked company.  We have 154 sources of data for this company that together provide 17,571 individual data elements.  Only 62 of these data sources provided data for our July 1, 2014 rating—the rest of the data sources provided data for previous periods (our data set goes back to 2008).  The 62 current data sources provided 575 different types of rating elements and a total of 610 different ratings values that do not affect/apply to special issues.

After their conversion to our 0 to 100 scale, we map the rating elements into our twelve subcategories.  We now have 1,403 ratings factors.  We selected our subcategories to allow an even spread of data across them. You can see that we have a reasonably even spread for Hewlett Packard:

CSRHub Category

Number of Data Elements

Board

95

Community Dev & Philanthropy

78

Compensation & Benefits

63

Diversity & Labor Rights

95

Energy & Climate Change

149

Environment Policy & Reporting

154

Human Rights & Supply Chain

77

Leadership Ethics

205

Product

93

Resource Management

156

Training, Health & Safety

48

Transparency & Reporting

190

Total

1,403

Before we can present a rating, we need to check first that we have enough sources and enough “weight” from the sources we have, to generate a good score.  In general, we require at least two sources that have good strength or three or four weaker ones, before we offer a rating.  As you can see, we have plenty of sources to rate a big company such as HP.

CSRHub subcategory sources

Even after normalization, the curve of ratings for any one subcategory may have a lot of irregularities.  However, we have enough data to provide a good estimate of the midpoint of the available data, for those ratings we report.  Below you can see that some sources have a high opinion of HP’s board while others have a less favorable view.  The result is a blended score that averages to less than the more uniform Leadership Ethics rating.

CSRHub subcategory rating variations


The overall effect of our process is to smooth out the ratings input and make them more consistent.  As you can see in the illustration below, the final ratings distribution is organized well around a central peak.  The average overall rating of 64 is below the peak, which is around 80.  The original average rating was 61.

analysis charts part 2

By making a few assumptions about how the errors in data are distributed, one can assess the accuracy of ratings.  In a previous post, we showed that CSRHub’s overall rating accurately represents the values that underlie it to within 1.8 points at a 95% confidence interval.

In our next post, we will discuss the benefits and drawback of using this complex and data intensive approach to measuring company CSR performance.

See part 1, Using “Big Data” to Rate Corporate Social Responsibility: One Company’s Approach.


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 9,200+ companies from 135 industries in 106 countries. By aggregating and normalizing the information from 348 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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CSRHub and CRedit360 Announce Service Partnership

[fa icon="calendar'] Apr 29, 2013 9:14:43 AM / by CSRHub Blogging

CRedit360 and CSRHub partnership

FOR IMMEDIATE RELEASE

CSRHub and CRedit360 Announce Service Partnership

NEW PALTZ, NEW YORK and CAMBRIDGE, UK — April 29, 2013

Leading providers of sustainability information services CSRHub and CRedit360 are pleased to announce a new partnership. Through the collaboration, CSRHub and CRedit360 will provide an integrated service that allows CRedit360 users to incorporate organizational benchmarking data from the world’s largest database of sustainability ratings directly into their CRedit360 sustainability performance management solution.

In addition to measuring key sustainability metrics and implementing ambitious sustainability initiatives, it is also important to measure sustainability performance against peers and competitors and across industries and geographies. CSRHub’s embedded tools and data allow for access to the ratings information of over 7,000 companies from 200 sources, including leading sources such as the CDP, EIRIS, Asset4/ThomsonReuters, GovernanceMetrics (GMI), MSCI, IW Financial, Trucost, and Vigeo.

With access to more than 20 million data points in CSRHub, CRedit360 users can evaluate and compare their external ratings to objectively assess where they are leading and/or lagging.

CRedit360 enables organizations to integrate all of their sustainability data into a single system with built-in accuracy checks, extensive audit capacity, powerful reporting functions and easy access from anywhere in the world.  This helps improve data quality, enables quicker and easier collection of sustainability data, and equips organizations to keep one step ahead of trends in sustainability.  The CRedit360-CSRHub partnership allows organizations to evaluate their ratings and those of their peers, and then use the information to improve their company rankings.

“CSRHub is excited to partner with CRedit360 to help customers improve their CSR and sustainability reporting and benchmark their performance.” said Cynthia Figge, Chief Operating Officer and Co-Founder of CSRHub.

“CRedit360 provides our clients with cutting-edge tools to manage sustainability performance.  We are excited to partner with CSRHub to enable organizations to monitor and compare ratings across the world’s largest corporate social responsibility and sustainability ratings and information database,” said Mark Shields, Managing Director, CRedit360.

About CRedit360

CRedit360 is a specialist provider of sustainability software. Founded in 2002 by a group of sustainability professionals and an innovative IT company, CRedit360 has developed software from the ground up to handle the complexities of managing sustainability data. We maintain strong client relationships and manage every aspect of product development and support with in-house technical teams and sustainability experts.

CRedit360’s vision is to help companies incrementally manage the full spectrum of sustainability issues in a single system. Companies aren’t limited to single issues, so neither is CRedit360. Supply Chain, Energy & Carbon, CSR, EHS, Compliance – we want to give our clients the 360 degree view of their sustainability performance.

For more information, visit www.credit360.com or contact Jeremy Fenderson, Marketing Manager, CRedit360:

jeremy.fenderson@credit360.com
or +44 1223 237 200
or +1-312-884-989

 

About CSRHub

CSRHub creates simple, direct comparisons of Corporate Social Responsibility (CSR) and Sustainability performance among competitors and across supply chains, industry, and regions. It reinforces third-party standards and encourages transparency and responsible behavior. Our comprehensive database of CSR information provides a complete set of sustainability metrics and tools. We support and serve the decision-making needs of corporate managers, researchers and activists.

For more information visit www.csrhub.com or contact Cynthia Figge, COO and Co-Founder, CSRHub, Cynthia@csrhub.com.

# # #

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A Big Data Approach to Gathering CSR Data

[fa icon="calendar'] Sep 26, 2012 9:45:50 AM / by Bahar Gidwani

The following is part 2 of a 3-part series on “Big Data.”

By Bahar Gidwani

We have previously defined “Big Data” and shown how we feel it could help address some problems that exist in collecting corporate social responsibility (CSR) and sustainability data on companies.  We have also further described the problems with the currently dominant method of gathering this data—an analyst-based method.

CSRHub uses input from investor-driven sources (known as “ESG” for Environment, Social, and Governance or “SRI” for Socially Responsible Investment), non-governmental organizations, government organizations, and “crowd sources” to construct a 360 degree view of a company’s sustainability performance.  To better understand this process, let’s consider an example.

Hewlett Packard is a heavily tracked company.  We have 56 sources of data for this company that together contribute 494 different rating elements.  We map each of these elements into one of twelve different CSR subcategories.  For instance, here are mappings for 20 of the elements that contribute to the Hewlett Packard rating:

Description of Data Element

Subcategory Mapping

Source

Participant in the Walmart Sustainability Assessment Environment Policy & Reporting Carbon Disclosure Project 2010 Full Data
Better World product rating Product Better World Companies
Board Structure/Board Diversity Board Thomson Reuters Asset4
Commitment to Society and to Human Rights Protection Policies Leadership Ethics ISOS Group Assessments
Committed to improving sustainability performance Human Rights & Supply Chain BSR Member
Corporate Governance Rank Transparency & Reporting CR’s 100 Best Corporate Citizens 2011
Green House Gas (GHG) Footprint Energy & Climate Change Trucost
Human Rights/ Child and Forced Labor Issues Community Dev & Philanthropy MSCI ESG Intangible Value Assessment
Member of the Electronic Industry Citizenship Coalition Human Rights & Supply Chain Electronic Industry Citizenship Coalition
Most Admired Companies for Minority Professionals in 2011 Diversity & Labor Rights BlackEngineer Most Admired Companies 2011
North America 300 Carbon Rank Energy & Climate Change Environmental Investment Organisation
Number of corporate sustainability reports issued Transparency & Reporting CorporateRegister.com
Number of EPEAT certified products Environment Policy & Reporting EPEAT
On FCPA Corporate Investigations List Leadership Ethics FCPA Corporate Investigations
Same-sex benefits Compensation & Benefits IW Financial
Statement references corruption Leadership Ethics UN Global Compact 2010
Top 100 most accountable companies according to AccountAbility Transparency & Reporting AccountAbility
Top 50 Socially Responsible Environment Policy & Reporting Top 50 Socially Responsible
Supports UN Drugs and Crime Anti-Corruption Measures Leadership Ethics UN Office on Drugs and Crime Anti-Corruption Measures
Working Mother list 2010 Compensation & Benefits Working Mother List 2010

Some of these data elements could map to more than one subcategory.  For instance, a company that is on the list of “Best Workplaces for Commuters” would get credit both for its energy saving effort (in “Energy & Climate Change”) for the benefit its programs bring to its employees (in “Compensation & Benefits).

The list above includes examples of each of the three main contributors to the system: Investment-related sources (Asset4/Thomson Reuters, Carbon Disclosure Project, GovernanceMetrics International/Corporate Library, IW Financial, MSCI, Trucost, Vigeo); Activists and NGOs (Accountability, BSR, CorporateRegister, CR 100, EIO, FCPA, Top 50 Socially Responsible); and Government & Consumer (Better World, Black Engineer, EICC, EPEAT, UN Global Compact, UNODC, Working Mother).  The completed mapping process connects the 494 data elements from the 56 sources for HP into our twelve subcategories in 971 different ways.

Subcategory

Investment-Related

Activists & NGOs

Government & Consumer

Total By Subcategory

Board

67

12

1

80

Community Dev & Philanthropy

39

16

10

65

Compensation & Benefits

34

6

6

46

Diversity & Labor Rights

51

8

13

72

Energy & Climate Change

37

44

15

96

Environment Policy & Reporting

46

69

14

129

Human Rights & Supply Chain

40

19

8

67

Leadership Ethics

80

27

14

121

Product

56

8

6

70

Resource Management

46

31

11

88

Training, Health & Safety

30

6

2

38

Transparency & Reporting

51

30

18

99

Total By Type

577

276

118

971

While investment-related sources contribute more data elements than the other types, there are at least some of each type present in each subcategory.  Another way to look at this is to see that many sources contribute to each subcategory:

Subcategory

Number of Sources

Total Elements

Board

11

80

Community Dev & Philanthropy

21

65

Compensation & Benefits

18

46

Diversity & Labor Rights

23

72

Energy & Climate Change

24

96

Environment Policy & Reporting

25

129

Human Rights & Supply Chain

23

67

Leadership Ethics

29

121

Product

14

70

Resource Management

24

88

Training, Health & Safety

13

38

Transparency & Reporting

25

99

Each value from each data element is converted into a zero to 100 rating (zero = lowest, 100 = highest).  These scores are then adjusted by comparing them to each other.  In the example above, there are 11 sources for HP’s board performance.  Suppose three of them gave it a great rating, six a medium rating, and two a poor one.  Computer analytics would guess that the six scores that agree are correct and that HP’s board rating is in the medium range.  The assumption is that three sources tended to be biased towards high scores and two towards low scores.  This chart shows the actual distribution of scores at the subcategory level, along with a calculation of the “normal” error curve that results.

CSRHub big data

When the analysis is repeated across thousands of companies, a picture emerges as to which sources tend to be overly positive or negative and which tend to predict the “mean” of the other sources.  All sources can be adjusted, based on this feedback—moving them up or down so they more accurately match the opinion of all other sources.  After a large number of iterations in this process, there is a consensus score for each subcategory for each company analyzed.

CSRHub ratings process

By making a few assumptions about how the errors in data are distributed, one can assess the accuracy of ratings.  In a previous post, we showed that CSRHub’s overall rating accurately represents the values that underlie it to within 1.8 points at a 95% confidence interval.

In our next post, we will discuss the benefits and drawback of using this complex and data intensive approach to measuring company CSR performance.


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.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on nearly 5,000 companies from 135 industries in 65 countries. By aggregating and normalizing the information from over 170 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 Accountability, Asset4/Thomson Reuters, Bahar Gidwani, Better World, Big Data, Carbon Disclosure Project, CorporateRegister, CR 100, EICC, EIO, EPEAT, ESG, FCPA, GovernanceMetrics International/Corporate Library, Government & Consumer, social, Investment-related sources, UN Global Compact, Uncategorized, Working Mother, IW Financial, MSCI, socially responsible investment, Top 50 Socially Responsible, Trucost, UNODC, Vigeo, Activists and NGOs, and Governance, Black Engineer, BSR, CSRHub, environment, Hewlett Packard, SRI

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