Dear Reader,

Welcome to the 2019 Sustainability Yearbook.

This year, the 20th anniversary of the Corporate Sustainability Assessment (CSA), we make history and at the same time we bring back a little bit of history, by re-introducing the “SAM” brand. Going forward, SAM is our brand for activities connected to companies, and is distinct from the asset management business. A familiar friend of ours, and of those companies that have known the CSA since the beginning, SAM has been with us for many years. (Click here to read more about the SAM brand)

Over the past 20 years, the CSA has continued to evolve, identifying and adapting to changes at the intersection of business and society. With this in mind, we have chosen to focus the 2019 Sustainability Yearbook on social capital issues — the “S” in ESG.


Sandwiched between Environmental and Governance — “S”, which measures sustainability’s social dimension, is sometimes overshadowed by the attention afforded to its sustainability siblings. This is perhaps understandable given the devastating impact of environmental pollution and the climate crisis on a global scale (measured by E), combined with a preference of the investment community for metrics that focus on company leadership, board oversight and executive compensation (measured by G). But the significance of the social dimension in sustainability investing is rapidly escalating. This past year especially, social sustainability issues have grabbed their fair share of headlines.

Beyond human resources

At the company level, managing social capital goes well beyond the human resources department. It involves all aspects of how a company takes care of the human assets within its walls (i.e. employees) as well as how it manages the impact of its products, services and actions on the groups of individuals outside its walls (i.e. consumers, communities). Given the worldwide reach and scale of many companies, this can mean the social impact even extends to all of society, globally.

The debate on minimum wages and working conditions in the US resurfaced after a well-known retailer was attacked for low worker pay even as they and employees benefitted from generous tax subsidies. Other US retailers have also raised baseline worker wages in the past year as a result of employee complaints and public outcry. 

Cases like these underscore the reputational damage that can follow when companies fail to protect their “human assets,” but it also accentuates the debate on what constitutes adequate wages and how companies, facing real-world cost constraints, can effectively and responsibly respond. In this Yearbook, Professor Daniel Vaughan-Whitehead of the University of Geneva and co-chair of the Fair Wage Network gives evidence that shows why a fair wage framework promotes not only employee well-being but also corporate profitability.

1  “Why Did Amazon Raise Its Minimum Wage to $15? Public Pressure”, E. Sherman, Forbes, October 2, 2018. “The Truth About Amazon, Food Stamps, and Tax Breaks”, L. Matsakis, Wired, September 6, 2018

2  “Nike Will Raise Wages for Thousands After Outcry Over Inequality”, S. Cowley, The New York Times, July 23, 2018.

Extreme symptoms of an unseen bias

Social capital issues were also brought to the forefront as a result of the #MeToo movement that swelled to a peak in 2018. Although the movement was not primarily centered on corporate behavior, significant business leaders were forced to resign, highlighting the prevalence of sexual harassment and abuse still present within all levels of business and society. Despite the negative circumstances, it helped bring renewed attention and focus on gender bias and equality in the workplace.

A contributing article from our SI Research team takes a fresh look at data from the 2018 Corporate Sustainability Assessment (CSA) and offers its own revelations on gender issues in the workforce. Reducing gender bias is an important corporate issue as more and more studies reveal the positive value of gender diversity for company leadership and stock performance.

Mapping investment portfolios to the future

The importance of intangible assets like gender diversity and fair/living wages are prominently positioned in our SI Research article, “No Firm is an Island,” which argues that net present value (NPV) calculations in modern portfolio management are flawed because of insufficient inclusion of ESG variables.

Incomplete data and analyses will ultimately lead to inaccurate portfolio valuations, poor environmental and social capital management, and possibly irrevocable natural and social resource crisis for future generations. Conversely, incorporating ESG variables into investment portfolios now will improve their robustness in the future.

Fiscal revenue and social infrastructure

Though corporate tax is typically treated as a governance issue within ESG measurement, it too has important social implications. Its interconnectedness with social capital through its impact on community infrastructure is undeniable. Fiscal revenue from corporate taxes gives countries and communities the resources to build physical, social, and educational infrastructure — infrastructure that is needed to support present and future growth and development. Yet many companies are incentivized by short-term profits to minimize tax bills via loopholes and even tax havens.

We were among the first to recognize the importance of a transparent tax strategy to an evaluation of corporate sustainability performance and introduced our tax criterion as early as in the 2014 CSA campaign.

In the article, “Five Years of Pushing for Change,” we revisit the “tax question” for insights into how company tax disclosures have changed as well as whether these disclosures are meaningful indicators for predicting companies’ ability to successfully withstand increasing regulatory scrutiny and future policy actions.

Compound social interest yields larger payoffs for all

From equal and adequate worker pay, to equal recognition and access to professional opportunities, extending all the way to the quality of public infrastructure and services, how corporations treat their human assets and “social” obligations via taxes, has significant and long-term ramifications for individuals, communities and greater society. These intangible assets too can yield a “social interest” which can compound into the future.

Companies don’t operate in isolation. They are part of a larger interconnected system where their actions across all ESG dimensions have deep and long-lasting effects for future generations. Firms that recognize the potential of all their assets, and which invest now in protecting and enhancing them, will be able to realize the compounding effects of these tangible and intangible investments in the years to come – effects that accrue not just to the firm but to greater society.

We hope you enjoy reading these articles and the results of our CSA in this 16th edition of the Yearbook, presented to you under the SAM brand.

2018 Annual Corporate Sustainability Assessment

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