In the old days—10 or 15 years ago, say—if businesses were interested in shining a light on data that showed how socially responsible they were, it was generally for one simple reason: to burnish their public image.
“Often if a company was focused on this area . . . they were starting with their communications director or someone within the PR group,” Cynthia Figge, the CEO of CSRHub, which rates and ranks companies based on millions of environmental, social, and governance metrics, told me on the latest episode of my podcast, The Bottom Line. “Over time, we’ve seen . . . who’s paying attention to this become more financial and operational.”
Some boards are keying in on ESG data, too, as they look to guard against the risk of scandal. After all, who wants a Wells Fargo on their hands?
Meanwhile, perhaps the largest demand for ESG data is coming from the investment community, as at least some evidence has emerged that putting money into companies that are socially responsible is not only the right thing to do, but can pay off in the long run in terms of shareholder returns. “You see Bloomberg integrating ESG on their terminals,” Figge notes.
Figge acknowledges that there’s little to be done when a company flat-out lies on self-reported measures. (Nicely done, Volkswagen.) And most companies keep plenty of information tightly under wraps—what’s known in the field as “dark data.”
But Figge expects that, before long, stock exchanges and other standards setters will push more and more corporations to release a much bigger array of ESG data. “We’ll be seeing a lot of pressure on larger companies to disclose,” she says.
You can listen to my entire interview with Figge here, as well as Megan Kamerick reporting on the growth of socially responsible investing, and Dorian Warren commenting on Silicon Valley’s “invisible workforce.”