Two years ago, researchers at the University of Chicago Booth School of Business started collecting data to determine the real social and
One of their goals was to pull back the curtain on
For example, some ESG disclosures by utilities were robust. The industry provided statements on company websites listing the most metrics on workforce diversity compared with other sectors. The problem was that the industry performed poorly. A
As for within industries, the lack of universal, comparable disclosure makes internal rankings less than reliable.
“While the number of CSR reports has been increasing, there still isn’t mandatory disclosures, which makes comparing companies’ performance difficult,” said Shirley Lu, who has a doctorate in accounting from Booth and was part of the three-person team that compiled the study.
Lu and her colleagues focused their research on CSR reports published by S&P 500 companies to pinpoint the most
In the end, the team gathered 69 metrics to assess companies’ social and environmental records. The social bracket included four subcategories: diversity, safety, community engagement and suppliers. The environmental data was narrowed to five items:
Among their other notable findings were:
- The
insurance industry provided the fewest details about greenhouse gas emissions, as well as energy, water and waste consumption. - The computer industry was one of the biggest consumers of energy—
just after petroleum , natural gas and chemical companies. - Food producers were some of the largest consumers of water.
- The business supplies industry, which includes companies like International Paper and 3M, placed among the top emitters of Scope 1 greenhouse gases (direct emissions from the company’s facilities).
On the social side of the ledger, the retail industry reported having the largest percentage of female employees and apparel companies had the highest percentage of minority employees. As for community engagement,
But having researchers dig around CSR reports for nuggets of actionable insight is far from a successful strategy for universal ESG rankings.
“The metrics aren’t an end point—they should be a starting point,” Lu said. “They should be used by investors to ask questions about