President and Founder
In recent years, we have witnessed the exponential growth of companies that are reporting metrics that capture their activities around environmental, social and governance issues (or ESG, for short). More and more, companies are integrating these measures into their overall corporate accounting standards. In fact, those companies that are not monitoring, measuring and optimizing their ESG performance are seen as laggards.
At CRD Analytics, we evaluate corporations through the lens of some 200 quantitative and qualitative metrics to give investors a truly holistic view of where companies fall within their industries and across different sectors on ESG and financial measures. We focus on a range of key performance indicators, from a company’s commitment to human rights and community involvement to its performance in product responsibility and environmental impacts.
About 3,500 companies worldwide produce some type of corporate social responsibility (CSR) report with quantifiable ESG metrics. But, with 60,000 multinational firms in the world, we’re not even close to hitting critical mass. A growing number of companies are issuing social responsibility reports in the United States and Asia, while Europe, which historically had been the leader in reporting, has tapered off.
Socially responsible investing has become so mainstream among institutional investors that it has now passed the tipping point. And individual investors, who make up 30 percent of all shareholders, have become more active and are thinking about CSR issues when they buy and sell company shares. Individual investors and consumers have an incredible amount of information at their fingertips and are increasingly loyal to those brands that mirror their own individual belief systems. When a company gets into trouble, consumers see the headlines almost instantly through social media. And we see this having an impact on individual purchasing and investing behaviors.
Ford, which is one of the companies my firm tracks in our analytic reports, has shown strong improvements in its ESG ratings from 2007 to 2010. The company demonstrates a nice balance between financial and ESG issues, ranking number two within the automotive industry.
Companies like Ford that have weathered the recent financial crisis have done so partly because of strong internal governance and a vision for corporate responsibility that not only originated from the top down, but also was incorporated from the bottom up. Employee engagement is a critical component in making sustainable practices part of the company’s DNA.
Ford has strong visibility within the global responsible investment community, thanks in large part to its use of the Global Reporting Initiative (GRI) G3 Reporting Guidelines, a GRI Index for its online and printed sustainability reports and the fact that the company produces a report at a GRI application level of “A.”
The most successful corporate responsibility reports tell a story and provide details of both the good and the bad at a company. That’s one of the things I believe Ford does really well. The automaker talks openly about the challenges it faces, and that makes investors feel the company is more trustworthy. Investors don’t believe companies that “greenwash” and claim that everything is rosy. Transparency is key.
Companies that can tie sustainability to their brands, and show how citizenship is woven into their DNA, will be able to differentiate themselves from their peers. Investors want to see how the company treats its employees, how diverse its Board of Directors is and how it manages in a crisis, to name just a few examples.
Ford has an amazing opportunity to really engage with its customers in a revolutionary way through technology and social media – and to define itself as a sustainable brand. To get to the next level, Ford must show that it is listening to its employees; after all, it’s the employees who can help advance sustainability by finding new ways to innovate, save money and promote the brand.
President and Founder
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