Can Environmental and Social Performance Be Included In Company Valuation?

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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Sustainability Performance Benchmark for Newmont Mining Corporation

Sustainability Ratings

 

Corporate Social Responsibility (CSR) and Sustainability metrics site CSRHub recently updated its ratings on Newmont Mining Corporation and the 74 companies in the Mining, Quarrying and Oil & Gas Extraction industry.  Newmont Mining’s overall rating currently is up four points to 58 after the most recent updates to their CSRHub page.

 

Please note, the Sustainability Ratings widget will continually update and show the latest ratings on CSRHub.

 

The average rating for the other companies in the Mining, Quarrying, and Extraction industry dropped one point to 49. This drop along with the improved overall rating, allowed Newmont Mining to move to 7th place on the list, using the CSRHub average user profile. You can see more information about Newmont Mining at their CSRHub page here.

 

Newmont Mining has a particularly strong score of 65 in the Employees area.  This is due to a high score in the Training, Health and Safety of 75—well above the average for this industry of 54.  The area with the greatest opportunity for improvement for Newmont Mining is the Product category.  Here, Newmont Mining gets a 43 —which is above the industry average of 37.

 

Some highlights of the progress that Newmont Mining made in the past year include:
 

  • Newmont Named to Dow Jones Sustainability World Index for Seventh Consecutive Year
  • Newmont Appoints Dr. Elaine Dorward-King as Executive Vice President of Sustainability and External Relations

 

See Newmont Mining Corporate Social Responsibility website here.
 


 

CSRHub ratings are on a scale of 0 to 100, with 100 being the highest. To see more on how CSRHub creates a score and the CSRHub rating rules, visit here.

 

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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8 Pieces of Advice on Sustainability Entrepreneurship

CSRHub Cofounder Cynthia Figge shared her thoughts at Founders’ Friday sponsored by Women 2.0.

 
Relentless, Filled With Hope
 

I have been an entrepreneur since I could first conceive of business. I cofounded my cynthia_figge at Sustainable Brands '13college’s Coop and with the consulting firm New Ventures, wrote the business plan for dozens of nonprofits starting for-profit subsidiaries. I was early-in to saving the world through business, which we now call “social impact” enterprise. I also worked for large companies starting new businesses. As an officer of LIN Broadcasting (owned by McCaw Cellular), I developed new mobile data services. When McCaw sold to AT&T, I felt it was time to be an entrepreneur, for good.

 

In 1996, I began a journey toward blending my two passions – startups and sustainability. I cofounded the consulting firm EKOS, a pioneer in helping companies integrate sustainability into their core business strategy. While that may sound a little “so what’s new” today, 18 years ago most businesses did not embrace the notion that they needed to integrate human capital and natural capital with manufactured/financial capital into a single system. EKOS calls this “operating at the nexus.” Then in 2007, I cofounded CSRHub, a sustainability big data platform. CSRHub has built the largest database of sustainability ratings and information in the world. We cover nearly 9,000 companies in 103 countries, and aim to be the go-to source on every company’s social and environmental performance data.

 

I’ve grown in my understanding of being an entrepreneur, and will share eight insights.

 

First – do the work you are called to do. You must feel that somehow the world will fall apart if you do not apply your unique set of skills, passion, knowledge and intuition to the work you do. During this difficult economic time many of us are just grateful to have paid work . Can we afford to worry about hearing a call for our lives? I think the answer is we cannot afford to ignore finding our true selves and the vocation that we long for, especially in this liminal time. The earth and people on it are at a crossroad.  The global population is predicted to grow to about 9 billion people. Social equity, climate change, the need for clean water and clean energy, and planetary survival offer us lots to do in answering our unique call.

 

Second – there is no such thing as immediate gratification. Even if you are doing engineering time studies for a thunderous piece of equipment in 100 degree+ heat in a tiny northern Michigan town, if you think you are on the train track to the work you are called to do, hang in there. Entrepreneurs build progress one hard day at a time, and it adds up.

 

Third – celebrate early and often. Despite the absence of immediate gratification you must celebrate whatever small and large victories come your way. You have a graduate student use your service and publish their PhD thesis using your data – celebrate. You raise $100,000 from an angel – celebrate. You raise it from a woman – celebrate enthusiastically. There will be plenty of bad days when the memory of the good moments tide you over.

 

Fourth – pursue partnerships with would-be competitors. This is like making love, not war. At every turn, figure out how to collaborate with the competition and develop partnerships wherever possible to leverage the collective work. Who I do business with is deeply guided by my intuition as well as analysis, and desire to expand the pie for all. We are one big system.

 

Fifth – own your ability to “see ahead”. You would not be an entrepreneur if you didn’t see ahead the trends and shifts that others cannot see. I realize that my gift is seeing ahead, coming back to tell the story, and continue co-creating our world. You will make bets on what you see way down the road and others will think you are crazy. You may be crazy, but stay the course, because you may be right. Think Elon Musk and Tesla.

 

Sixth – when the going gets rough, find like-minded angels. Angel investors can be angels – they support and guide you. Put time and effort into finding the right sources of capital to grow your business. And when you are wildly successful, join an angel network and give back.

 

Seventh – humility is the new swagger. Swagger is very important, but not the old school type.  Thomas Friedman wrote a NY Times Op-Ed recently on how to get a job at Google. You need learning ability, emergent leadership, humility and ownership. He says you can be a zealot about your point of view, but when a new fact arises, you say ‘Oh, well, that changes things; you’re right.’ “You need a big ego and small ego in the same person at the same time.” As a Harvard Business School grad with years of being an entrepreneur, I love this advice. BTW, women are really good at this!

 

Eighth – hope is an entrepreneur’s asset. I believe hope and dreams are inextricably linked. There’s some combination of belief, knowledge, foolishness, and persistence that leads one to radical hope. Hope is not optimism. Optimism is moving toward a positive outcome in ways we can see. Hope is the fulfillment now, hope is realized by making the life giving choices – every day we can do this. Hope is not measured by an endpoint. We are moving into hope every day as we live out our call and dreams. There’s something in the dream – the ambiguity, uncertainty, unknown outcome, giving something you’ve imagined some real form in the world.  There’s no promise of success. But it is the work of the entrepreneur to be relentless, filled with hope.

 

Best wishes on your path of being an entrepreneur.

 


 

Cynthia FiggeCynthia Figge is a forerunner and thought leader in the corporate sustainability movement. She is COO and Cofounder of CSRHub, the world’s largest database that aggregates and organizes data and knowledge on the social, environmental, and governance performance of 8,900 companies to provide sustainability ratings to the marketplace. In 1996 she co-founded EKOS International, one of the first consultancies integrating sustainability and corporate strategy. Prior to founding EKOS, she was an officer of LIN Broadcasting / McCaw Cellular, and led new businesses and services with Weyerhaeuser, New York Daily News; and with New Ventures. Cynthia is Board Director of the Compassionate Action Network International. Cynthia received her bachelor’s degree in Economics and an MBA from the Harvard Business School. She lives in the Seattle area.

 

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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GE’s Ecomagination Lacks Eco and Imagination

By Carol Pierson Holding

 

Remember back in 2005 when General Electric (GE) launched its Ecomagination contaminated tap waterinitiative? Its purpose, as the liberal news site Grist put it at the time, was “to ramp up development of clean technologies and lighten the company’s Goliath-like environmental footprint.” A noble effort indeed.

 

Many of the products highlighted in the Ecomagination launch were focused on renewable energy, such as wind turbines and solar voltaic panels. GE’s CEO Jeffrey Immelt announced major investments in eco-friendlier technologies, pledging to double GE’s research-and-development for Ecomagination to $1.5 billion in 2010.

 

World Resources Institute (WR) then-President Jonathan Lash called Immelt “not only a visionary, but in the absence of coherent national policies…just plain gutsy.” Lash even supported Ecomagination’s clean coal technologies: “Five years ago, I had to struggle to suppress my gag response to terms like ‘clean coal,’ but I’ve since faced the sobering reality that every two weeks China opens a new coal-fired power plant. There is huge environmental value in developing ways to mitigate these emissions.”

 

Despite many environmentalists insistence that there is no such thing as clean coal, Ecomagination believed it had a winner and sent its advertising staff off to promote it. The result was GE’s 2006 TV spot “GE’s Coal Miners.” In it, gorgeous half-clad male and female models with sweaty, soot-covered bodies pretend to toil in a coalmine…while a narrator intones about GE’s clean coal being beautiful.

 

It’s so shocking I thought it must be a parody (seriously, take a look), but its production values reveal the kind of wildly expensive commercial only a huge company can afford.

 

Today, climate change has ascended to the “worst problem facing the world today” as Senate Majority Leader Harry Reid said last week and coal’s heavy emissions are acknowledged as the climate’s number one enemy.

 

Who knew in 2005 that 10 years later, China would be the world’s largest solar market, even shutting down its existing coal plants. “Investments in new coal plants (in 2011) weren’t even half the level they were in 2005” Justin Guay of the Sierra Club reported in Huffington Post.

 

In hindsight, Ecomagination’s focus on clean coal seems more delusional than visionary.

 

Immelt is still at the helm of GE. And the new Ecomagination is again straining credulity with environmentalists for so profoundly getting it wrong.

 

At least this time its not clean coal or, God forbid after Fukushima, nuclear power. No, this time Ecomagination is focused on natural gas.

 

Appropriately, I first saw the announcement of GE’s new Ecomagination initiative on the branding website BrandChannel, which headlined “GE Renews Ecomagination Initiative, Commits $25B to CleanTech R&D by 2020.”

 

Sounds like 2005 all over again.

 

It’s not that I begrudge the company for trying to make a buck. What gets me hot is that it’s using natural gas as a panacea for the eco set. Really? What we’ve been reading is that the methane leaked from natural gas drilling is worse – some say 20-100% worse – than the emissions released by burning coal. Fracking to release natural gas may cause earthquakes, taints water (remember the video of the farmer lighting his gas-contaminated tap water on fire?) and kills livestock.

 

Worst of all, natural gas delays the transition away from fossil fuels and into a survivable future at a critical moment.

 

But maybe GE’s message is designed for a different audience than environmentalists. Maybe Ecomagination is pure lobbying?

 

Friday’s New York Times editorial “Natural Gas as a Diplomatic Tool” makes that seem a possibility. The piece encourages the U.S. State Department to respond to the crisis in the Ukraine by opening natural gas exports to Europe, where they’re currently banned. The goal is to reduce Europe and the Ukraine’s dependence on Russian gas. Of course that would require “more facilities to liquefy and ship gas…that would cost billions of dollars.” And guess what business GE is in?

 

Now that’s amazing timing.

 

Photo is courtesy of http://bit.ly/1dNZNYH


Carol Pierson HoldingCarol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council’s Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 8,900+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

 

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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Join Cynthia Figge at the Sustainable Business Oriented CSR Awards & Summit 2014 Event

Sustainable Business-Oriented CSR Summit 2014
 
Our co-founder Cynthia Figge has been invited to speak in Shanghai at the 2nd Annual Sustainable Business Oriented CSR Awards & Summit 2014 (SBC 2014). Hundreds of top CSR professionals from Asia (and the rest of the world) will convene in China on April 21-24, 2014, and hear Cynthia’s take on how “big data” will affect sustainability reporting. Other speakers will address issues of shared values, sustainable construction, and interesting ideas such as artificial islands. Learn more at http://dconnector.wix.com/csrsummit2014. To enjoy a special 15% registration discount, please write to support@csrhub.com.

 

Conference: 21-22 April, 2014
Post-event Workshop: 23-24 April, 2014
Shanghai, China

 

This event will help you get a deeper understanding of Social Media and Big Data Strategies for CSR projects.

 

Key Themes of the Conference:

  • Cause-related marketing case study: new challenges, new tools, most advanced international case study
  • Identify the key global and local CSR challenges and emerging trends: key issues, hot topics, opportunities, risks to your future business
  • How to effectively champion CSR within your organization? Transform the culture, strengthen competitiveness and meet your business needs
  • What constitutes CSR best practice and how is it applicable to your organization?
  • Global solutions for local problems: efficient tools, methods, techniques to improve CSR performance to boost sustainable business
  • Partnership and project identification: key techniques to choose the NPO partner and project that fits with business and brand image.

 
Benefits of Attending:
From this two-day conference and two-day workshop you will be able to:

  • Gain in-depth analysis on compliance risks, financial rewards and the leadership strategies of CSR which will make an impact on your corporate’s bottom line
  • Fresh insight on latest development and future trends of CSR in China and how regulators, corporate leaders and international intellectuals evaluate CSR’s value to business, society and environment and how they respond to the changing environment
  • Cause-related marketing: How can we help government, customers and other critical audiences understand the full value of the contributions we make and leverage CSR benefits by successful marketing campaign
  • Learn the latest international reporting principles and know what the readers want to see: deliver excellent reports by using effective framework and guidelines
  • Best practices in integrating CSR system into business strategy to deliver sustainable products, make consumer-driven branding strategy, enhance corporate soft power in the new age of transparency
  • Skills and techniques to successfully communicate, implement and evaluate your company’s CSR program
  • Find out tools, solutions, practical advices and useful connections to help you dealing with the challenges and difficulties in the process of implementing CSR in 2014 and beyond
  • Network with key regulators, powerful NGO representatives and potential investors to design higher value CSR initiatives and support future projects

 
You will also be able to meet:
CEO, CRO, CMO, CSR Managers/ Directors/ CFO/ Managers who are responsible for:
• Corporate Social Responsibility
• Corporate Communications
• Public Relations/ Branding/ Marketing
• Sustainable Development/ Environmental Affairs
• Corporate Governance
• Community and Investor Relations
• Strategic Planning
• Human Resources/ Risk & Compliance
• Supply Chains

 


 

Cynthia FiggeCynthia Figge is a forerunner and thought leader in the corporate sustainability movement. She is COO and Cofounder of CSRHub, the world’s largest database that aggregates and organizes data and knowledge on the social, environmental, and governance performance of 8,900 companies to provide sustainability ratings to the marketplace. In 1996 she co-founded EKOS International, one of the first consultancies integrating sustainability and corporate strategy. Prior to founding EKOS, she was an officer of LIN Broadcasting / McCaw Cellular, and led new businesses and services with Weyerhaeuser, New York Daily News; and with New Ventures. Cynthia is Board Director of the Compassionate Action Network International. Cynthia received her bachelor’s degree in Economics and an MBA from the Harvard Business School. She lives in the Seattle area.

 

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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