In 2008 CSRHub began measuring performance in corporate social responsibility (CSR). Using ten years of history, we are now starting to answer questions such as:
- Has CSR performance improved over time?
- What area of CSR is improving the most?
- Is the universe of companies for which ratings are available expanding beyond the large public corporations?
- How strong is the alignment between CSR performance and company CSR reporting on CSR?
Is the universe of companies for which ratings are available expanding beyond the large public corporations?
CSRHub’s ratings incorporate the input of virtually every major source of opinion about how companies treat environment, social, and governance (ESG) issues. Our patented methodology weights and combines these opinions in a way that makes them comparable both between companies and over time.
The chart below on Average CSRHub Ratings shows that since 2008, average ratings increased by almost 9 points to a peak in 2016. They fell somewhat over the last two years, but have still ended up by 6 points over ten years. Even from 2008 to 2010, through the worst of the Great Recession, ratings rose. The year-to-year changes are modest and gradual over time, suggesting there have been fundamental changes in business strategy for these companies during this period.
Growth in the universe of rated companies may have diminished this improvement
Our overall ratings are based on twelve subcategory ratings that in turn feed four different category scores. We’d written previously about the fact that the emphasis between our four category scores seemed to shift over time.
These shifts appear to be continuing. Governance rose sharply during the 2008-10—probably as a response to the 2008 financial crisis. Environment ratings surged in between 2012 and 2016, as companies responded to pressure on climate change and water issues. Employee issues have remained the most highly rated area since 2010 while Community ratings started as the lowest in 2008 and have stayed near the bottom. The idea that companies are more concerned about their employees than the community they live in is something we believe other ratings groups have not yet noticed.
More Data on More Companies
A dramatic increase in ratings sources beyond Wall Street-driven and research companies has expanded the field of companies for which ratings can be developed. For example, the number of companies and other entities studied by CSRHub has increased from 2,000 in 2008 to 18,000 in 2018. In 2008, the major sources of data were the analyst research houses which covered only large public companies. While this data produces rich consistent opinion matrices and remains a vital component of the CSRHub system, other crowd sources, not-for-profit groups, publications, and government regulators helped expand the covered universe to include smaller companies, not-for-profit organizations, and government entities.
Still a Disconnect Between Reporting and Performance
One of the reasons we developed CSRHub was because we felt there was a disconnect between reporting (what companies said about themselves) and performance (what companies actually do). We could not find a way to pierce the veil and determine performance directly. This is why we created a proxy based on the aggregate opinion of how a company is performing on ESG (environment, social, governance) issues, from a wide range of expert sources. Our scores build a feedback loop so that companies can see how their performance and reporting are perceived. We hope they will use this feedback to improve both the truth about their corporate social behavior and what they tell their stakeholders about themselves.