The Role of Data in Today’s Environmental, Social & Governance (ESG) Programs

By Matt VanTassel, Global Disclosure Services, Business Wire Matt VanTassel

Last month I had the opportunity to attend a Sustainability Practice Network discussion at Baruch College here in New York. The topic, Under the Hood: Corporate Sustainability 2014 was a broad-based discussion of Environmental, Social & Governance (ESG) programs including their development, implementation and the data that is derived from them.

As someone still learning the intricacies of ESG, it was reassuring to note that this topic, or better,  this idea, is truly still a work in progress. Why? Because today’s corporations are implementing ESG-based programs differently across industries, and the data that is created is being used in a multitude of ways.

Citi’s Assistant Vice President of Sustainability, Davida Heller laid out an impressive array of information on Citi’s programs and how they weigh social and environmental concerns when making investments. Citi tracks risks associated with anything from social discussions to environmental risks, for clients and their internal initiatives. You can review their numerous programs and stances on each topic here.

As a former Bloomberger, I always like to know what’s brewing at Bloomberg. While the company has a long-standing environmental policy (their forks are made out of potatoes!), there is also a department and functions that cater to culling and analyzing this data. Senior ESG Analyst Su Gao provided interesting statistics on how ESG-related data is being consumed by Bloomberg terminal users. There has been a nice uptick in data usage (48%), confirming that analysts and investors are looking beyond balance sheets and cash flow statements when making opinions and investment decisions.  ({ESG } on the terminal)

Domini’s Tessie Petion, lead research analyst for the Funds’ social and environmental standards, introduced a novel point that not all data is relevant for each investment and Social Responsible Investing (SRI) can (and should) have very focused concerns (such as treatment of animals or energy usage, etc.). SRI data is also being consumed beyond the typical ESG investor. One example of this is the use of SRI data when analyzing CEO pay packages (Say-on-Pay rules under the Dodd-Frank Act).

Turner Construction’s VP & Chief Sustainability Officer Michael Deane gave an interesting narrative on how he made the business case for Turner’s decision to ‘go green’. As of today, 50% of the buildings constructed by Turner are LEED-certified (Leadership in Energy and Environmental Design) and they had 364 LEED-certified projects and 261 LEED-registered projects completed or under way as of May 2014.

One of the most compelling takeaways from this discussion came from Lorraine Smith, Senior Director at SustainAbility. She explained that it is extremely difficult for companies to quantify the environmental cost of their business. To better visualize this difficulty, she asked the audience about the food we ate that day and how much it cost us out-of-pocket. She then asked us what it would cost the environment to provide us that same amount of food. For example, she mentioned Greek yogurt, while delicious, creates a serious environmental repercussion in the form of acid whey.  Acid whey as it turns out is a very difficult to recycle byproduct of making and consuming this yogurt.

Professor David Rosenberg, Director, The Robert Zicklin Center for Corporate Integrity  added, “Nothing should be more important to today’s corporate leaders than understanding the impact their businesses have on the environment and on the communities that sustain them.  As speakers at our event demonstrated, to be good stewards of the planet and good partners to their various stakeholders, corporations first need good data.  That is why exploring the potential for better reporting on sustainability is central to our mission of promoting corporate integrity,” commented Professor David Rosenberg, Director, The Robert Zicklin Center for Corporate Integrity.

As ESG initiatives become more and more prevalent in corporations, the amount of data generated continues to grow. How the data is measured or interpreted and then utilized to build successful ESG programming continues to be the largest hurdle for both the companies and their investors.  Companies who take the time to analyze their data will be able to build the groundwork for successful ESG programs.

Interested in reading additional corporate social responsibility related news?  Follow us: @BWCSRNews and @BW_CSR.

 

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