BLOOMBERG'S PUSH FOR

CORPORATE SUSTAINABILITY
WHY BLOOMBERG BROKE INTO THE BUSINESS OF MEASURING OTHER
COMPANIES' GOOD DEEDS.

BY PAUL TULLIS
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 appeared in the April 2011 issue of FAST COMPANY magazine.