Bloomberg’s Push for Corporate Sustainability

March 30, 2011 § Leave a comment

By: Paul TullisApril 01, 2011

Making the Bottom Line Green
Why Bloomberg broke into the business of measuring other companies’ good deeds.
EnlargeMaking the Bottom Line GreenIllustration by I Love Dust

EnlargeMaking the Bottom Line GreenCurtis Ravenel spearheads Bloomberg’s program to include enviromental data on its terminals. | Photograph Courtesy of Bloomberg

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SOON AFTER Bloomberg’s sustainability director, Curtis Ravenel, launched an initiative to green the company’s operations in 2006, he began to wonder: How do other businesses measure their impact on the environment? Do they report it to the public?

Before long, he found himself perusing corporate sustainability reports, released by many firms not just to brand themselves as “green” but also to cater to socially responsible investors. A lightbulb went off: He asked his colleagues whether Bloomberg, whose business is based on disseminating corporate data to the financial sector, collected this pile of information for its clients. The answer was no.

It turned out the company had been ignoring a potentially valuable area. “It was something our European colleagues had pushed for some time, but socially responsible investing was too small [a customer base],” Ravenel, 42, explains. “It just never made it up to C-level.”

Well, he thought, I’m C-level.

Ravenel’s curiosity had drawn him into an expanding corner of financial analysis called environmental, social, and governance, or ESG. ESG traditionally hadn’t been factored into invest-ment decisions. At most, it was viewed as “extra-financial” data — whether the company has a human-rights policy, or the percentage of women or minorities on its board.

But to its proponents, ESG is less concerned with social responsibility than with profits. If a company treats its employees well, for instance, it should have less turnover and lower HR costs; if a manufacturer gets serious about safety, it can avoid expensive lawsuits. There’s increasing evidence — and, correspondingly, a growing belief among portfolio managers — that companies taking such factors into account are forward-thinking and well managed, and therefore places investors should consider.

The biggest indicator in the ESG matrix right now is environmental impact. “The financial community likes the E because it’s easy to quantify,” Ravenel says. “And within E is the big C: carbon.” And within that C is another C: cost. Some European countries, such as Sweden and Denmark, tax the carbon emissions of companies with offices there. The EPA’s rules to regulate CO2, which went into effect January 2nd, will affect many American balance sheets. If companies wake up one day to find it costs $15 to emit a ton of CO2, a financial analyst considering ExxonMobil would see it emitted 128 million metric tons in 2009. That adds nearly $2 billion to the oil giant’s operating costs — hardly extra-financial data.

Ravenel used this kind of argument to persuade Bloomberg to add ESG data to its terminals. His team spent countless hours assembling and entering data into the system (often by hand) before going live in July 2009. Today, when Bloomberg’s 300,000 market-savvy customers turn on their terminals in the morning, they can see ESG data such as greenhouse-gas intensity per sales, water usage, employee fatalities, toxic discharge, and more than 100 other indicators as part of their basic package alongside the rest of the Wall Street alphabet soup. (The ESG data does not cost extra.)

And investors are using it: In the second half of 2010, 5,000 unique customers in 29 countries accessed more than 50 million ESG indicators via Bloomberg’s screens — a 29% increase over the first half of last year. “We expect that trend to continue,” Ravenel says.

Recently, Goldman Sachs, Deutsche Bank, UBS, Merrill Lynch, and Credit Suisse launched divisions to analyze ESG data from Bloomberg and its ESG competitors. (A number of these competitors have bought one another or merged in the wake of Bloomberg’s entry into the field.) “We feel there’s enough quality data out there now that we place it on our platform in a variety of ways and from a variety of different vendors,” says Bruce Kahn, senior investment analyst of Deutsche Bank Climate Change Advisors.

To Ravenel, this is not only a business success but also potentially an environmental one, because what’s measured gets managed. If analysts are paying attention to ExxonMobil’s carbon-dioxide use, then the company may try to reduce its emissions — and maybe create a product that enables other companies to reduce their emissions. “I saw the potential for us to have an impact exponential to what we’d been doing on the operating side with making Bloomberg greener,” Ravenel says. “This would dwarf anything we could do to reduce our footprint.”

“Every Wall Street analyst has a Bloomberg and looks at it every day,” says Adam Kanzer, a managing director of Domini Social Investments, a pioneering shop for socially responsible investing. “Analysts are going to say, ‘If Bloomberg thinks this is important, maybe I ought to be paying attention.’ ”

Companies have begun to collect environmental data more vigilantly — ostensibly because it helps them identify ways to cut costs. Frank Mantero, head of corporate responsibility at GE, says the company has saved $150 million since 2005 by limiting its emissions. Private equity firm KKR estimates that eight of the companies in its portfolio pocketed $160 million of savings in two years after eliminating 345,000 tons of CO2 and 8,500 tons of wastepaper.

In February, Ravenel raced to finish Bloomberg’s ranking of banks based on their green credentials. In a rare moment of calm, he thought about how far ESG has come. “It’s gone from us pushing ESG to customers to us getting questions on how to use the data,” he says. He laments that not all of Wall Street is yet on board. “ESG ought to be in SEC-required company filings, and until it is, it won’t be viewed as material by a lot of people. “Of course,” he quips, “a lot of the financial data in there now aren’t material either.”

A version of this article appears in the April 2011 issue of Fast Company.


Top 10 Things Customers Expect from Your Online Store « Get Elastic Ecommerce Blog

March 26, 2011 § Leave a comment

This is a great post from Get Elastic on consumer behavior in the digital retail space.

Top 10 Things Customers Expect from Your Online Store « Get Elastic Ecommerce Blog.

Social media – it’s not a marketing thing…

March 2, 2011 § Leave a comment

Social Media: Changing Business

Image by Intersection Consulting via Flickr

Whether you embrace social media or not; it’s here to stay.  Social media is part evolution and part revolution.  Social media is an enabler; people have gained more control over what they consume and how they interact with content – including brands.  Consumers are now active participants on the web – they create and consume content at a breathtaking pace.

As for companies, brand management is no longer a practice of pushing the message out to a market but now requires pulling the consumer back into the brand conversation.  It’s much larger than any marketing department can possibly handle without the support of the entire organization.

Most legacy companies do not understand that social media needs to be woven into the fabric of the organization from sales to service.  The extent in which a company is limited to the use of social media is only limited to their creativity and ambition.  If a brand is serious about connecting with their customer it is essential that they create a strategy in which social media becomes a cornerstone in which to build on.

Sadly, however, most legacy companies view social media as a ‘marketing’ function and this is purely because they do not understand where and how to position social media within the organization.  In comparison, ‘new’ companies base much of their efforts around the social media platform and leverage the platform to drive the conversation between company and consumer.

To further understand the impact that social media will continue to have on businesses and their consumers one must understand the evolution of the web.  According to Andrew Braccia and Kevin Efrusky the transition of the internet age consisted of three phases:

1) Portilization of the Web

2)    Goolge-ization of the Web

3)    Rise of Social Media

Portilization of the Web was the birth of content aggregators (MSN and Lycos) and lead generation firms such as and  Google-ization of the Web was defined as a boom in ‘niche’ high quality websites and user sophistication.  It led to the realization that a search can be seen as an ad for product found in the e-commerce marketplace.  Rise of Social Media is characterized as the explosion of content and a power shift in which ‘people rank’ is overtaking ‘page rank’.[1]

So how does a brand leverage what is now being hailed as the greatest digital revolution since the invention of the web (thanks Al).  Companies have to think of social media as not simply a marketing tool but a tool to engage and converse with their customers.  First, it’s essential that companies strip the responsibility of managing the social channel from the marketing department and begin to look at the channel as an enterprise wide effort.  Similar to the evolution of e-commerce, organizations once were shy about jumping in but now have entire divisions focused on integrating their existing business practices with their e-commerce efforts.  It will be this same effort that will eventually yield the benefits of leveraging a medium that can compliment both legacy and digital business practices.

Social media is more than just a passing trend, however, it’s still unclear for most companies how to best leverage a channel that is moving swiftly.  However, watching from the sidelines is not an option – companies have to embrace social and develop a long-term strategy that will compliment their business objectives.

[1] Braccia, A., Efrusy, K. (December 2009). The Rise of the Social Web. Accel Partners

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