Measuring corporate environmental impacts with ESGAUGE 

Standardized financial reporting was introduced in the United States because of the country’s experience during the Great Depression: investors needed adequate information to bolster their confidence in financial systems. As yet, there hasn’t been a similar watershed period for standardized environmental reporting. Instead, Environmental, Social, and Governance (ESG) reporting has gradually evolved over the past few decades, influenced by growing investor interest. While there are standards related to impact reporting that cover certain categories like those from GRI and the Sustainable Accounting Standards Board (SASB), the diversity of both participants and measures has made the information landscape around ESG reporting, also known as Corporate Social Responsibility (CSR) reporting, ripe for innovation. 

ESGAUGE is a relatively new player in this information ecosystem and has been an innovator in collecting and includes information on emissions tracking, green building policies, and whether executive compensation is linked directly to ESG factors. Their primary customer base is not academic libraries, but consulting, financial, and law firms that advise clients on ESG-related topics, and companies interested in benchmarking their own performance in these areas. In fact, the Penn Libraries was ESGAUGE’s first academic library customer, and the University of Pennsylvania is the first institution to have the product available to the entire campus as a tool to support Penn’s objective to “lead on the great challenges of our time,” such as climate change. The product was introduced to the Libraries by Professor Jill E. Fisch at the Penn Carey Law School, who thought ESGAUGE had unique and interesting data which she used for the paper Shareholder Proposals and Debate over Sustainability Disclosure.  

ESGAUGE’s tagline is “intangibles AI.” They use artificial intelligence to find and extract data from non-standardized ESG reports, as well as more conventional company disclosures like proxy statements and 10-Ks. ESG reports are generally published in PDF format and vary quite substantially from company to company in both design and content, particularly for different industries, as demonstrated in these recent examples from General Mills, which relies heavily on infographics, and Otis Worldwide Corporation, which is more text-oriented and tabular. 

ESGAUGE has several screening tools available that address different aspects of sustainability as well as corporate governance topics. These make it easy to spot overall trends in sustainability practices. The Corporate Environmental Practices in the Russell 3000, S&P 500 and S&P Midcap 400 option aggregates data and provides a simple visualization across companies that are constituents of these indices. It is also possible to limit results to specific industry sub-segments. There are some interesting differences in disclosure patterns. For example, over 60% of companies in the Russell 3000 disclose climate change risk factors. However, if you further break things down by industry, there are large discrepancies between industries like real estate, where weather events and global warming are increasing risks in the short- and long-term, while other industries like information technology are not yet regularly disclosing this information. 

The broader Environmental Screener allows you to make selections by subjects which include atmospheric emissions, energy, waste and material use, water, environmental policy and compliance, and sustainability reporting. Additional options include selecting a data source (specific type of document) and peer group by index, industry, and/or financial factors like revenue or market cap. 

The results view provides a table, downloadable in Microsoft Excel format, with information about how each company performed by category. In some areas, it may include a number, such as metric tons of waste or materials used. In others, the information is a simple yes or no, such as whether the company has a specific policy. Items in green on the table are linked to the original document. When you click to view the document, the parts of the text that are associated with that subject are highlighted in yellow, as illustrated below for Alphabet’s sustainable packaging policy.  

Last but not least, the ESG Incentive Plan Metrics Screening Tool focuses on how executive pay may be influenced by ESG factors. It provides a wide array of options to search by executive role, metric categories, level of performance (absolute/relative), and more. The results in this section also link to the original disclosure documents, as well as providing specific disclosure language which can be very different from company to company. For example, in the Waste Reduction/Packaging and Toxicity category, Chipotle has tasked executives to "increase the number of stores that compost waste" while Starbucks focuses on "reusables." 

Resources like ESGAUGE support curricular offerings aligned with the Wharton ESG Initiative, including new Wharton majors and concentrations in addition to faculty research coming out of that initiative. For students interested in identifying employers who are leaders in ESG areas, ESGAUGE offers valuable data to support informed career decisions. 

ESGAUGE is one of many resources that address different aspects of ESG information. For other business resources related to sustainability topics, see our Business FAQ on ESG data.