For as long as companies have been communicating their CSR efforts, analysts and investors — and concerned individuals, of course — have been asking whether stronger reports lead to better companies. In the course of a recent study we conducted at CSRHUB, we think we’ve found a conclusive answer.
We recently compared the perceived CSR performance of 630 corporations who have committed to the Global Reporting Initiative (GRI) reporting standard with the perceived CSR performance of more than 4,000 corporations who have not, based on scores from CSRHUB’s CSR ratings system.
Not only did we find that GRI-committed companies have higher overall ratings in the CSRHUB system, but they also receive more attention from socially responsible investment (SRI) firms and receive more awards from NGOs and activist groups.
Although it’s difficult to determine whether compliance actually causes better performance, GRI-conforming companies did score better overall (at a 53.7 average score), than those who released CSR reports (as reported by Corporate Register), but did not embrace the GRI standard. The latter group received an average score of 50.1. This suggests that outside observers may respect CSR reports that conform to the GRI standard.
The Study Universe
CSRHUB’s ratings schema is an aggregation of corporate social responsibility (CSR) information from more than 100 data sources. As of December 31, 2010, the database contained ratings on 4,836 companies located in 65 countries and drawn from 135 industries.
In 2010, CSRHUB became an Organizational Stakeholder (OS) in the GRI, ingesting two lists of companies: those who announced their commitment to support the GRI reporting standard in 2009 and those who did so in 2010. GRI companies release information on their internal sustainability management principles and processes. GRI’s website provides details of its G3 reporting standard and CSRHUB has explained how G3 information maps to its own ratings.
514 of the 1,334 organizations on the 2009 GRI list and 630 of the 1,451 organizations on the 2010 list were also in the main CSRHUB database. The remaining companies on these lists were either private, government organizations, too small to be rated by CSRHUB’s sources, or were subsidiaries or divisions of companies. CSRHUB rates only parent organizations.
Compared to companies rated by CSRHUB, the geographic distribution of GRI-committed companies is biased strongly towards North America, Europe and Asia. Finance, real estate and durable goods companies are over-represented in the GRI set, relative to CSRHUB’s company universe (see figure below). Though we didn’t have access to information about the size or profitability of GRI companies, an informal review of the GRI list didn’t reveal any evidence of bias in these areas.
CSRHUB’s overall rating for a company is based on four category scores. When calculating a company’s overall score, the relative importance of these category and subcategory scores is adjusted based on the topical preferences of an individual CSRHUB user or group of users. Therefore, all overall scores must be expressed as based on the framework reference settings of a user or group of users.
Source: GreenBiz.com
By Bahar Gidwani