How the research is conducted:

The marked expansion of the C&S database in 2023 is the result of three factors.

First, we have expanded the scope of the database beyond disclosure requirements to include the broader suite of corporate sustainability policy initiatives and resources. We now include instruments issued by international organizations (such as the GRI or the UN) as well as regional organizations (such as the European Union or the Association of Southeast Asian Nations).

Second, we have increased the scale of the database through rigorous data collection efforts, adding more instruments from a larger number of countries and over a longer time period.

Third, we have deliberately expanded our data collection efforts to include instruments that are not originally available in English. C&S now includes instruments in nearly 40 different languages.

For every instrument included in the database, we provide a downloadable PDF and text file. All documents are available in their original language as well as in an English translation. Users of C&S now have reliable access to all instruments listed in the database.

If you would like to inform us of significant and/or new sustainability reporting or disclosure provisions that are currently missing from the Carrots & Sticks database, please do so using the form here.

Text analysis:

A new feature of the updated C&S is that we provide an analysis of each instrument listed on C&S using advances in natural language processing (NLP) and machine learning (ML). This provides novel insights into the contents and characteristics of all instruments in the database.

First, we use a variation of Latent Dirichlet Allocation (LDA) to accurately categorize instruments in terms of their relative focus on: Environmental, Social, and Governance (ESG) priorities; the sectors of economic activity in which businesses operate; Sustainable Development Goals (SDGs) since their inception in 2015, and the Global Reporting Initiative’s Taxonomy since 2012.

Second, we use text-mining methods combined with statistical analyses to determine the relative "restrictiveness" of instruments in our database. We present two different measures.

First, "Restrictiveness" gives an overall measurement for the prevalence of the language used by issuers as it pertains to compellence and deterrence versus suggestion and recommendation. The higher the "Restrictiveness" score, the more an instrument uses restrictive language.

Second, "Restrictions on business" is similar but focuses more on how directly this language of restrictiveness applies to businesses. Here we estimate the collocation of restrictiveness language with mentions of businesses, firms, corporations, and all cognate terms. The higher the score, the more "Restrictions on business".

A note on terminology:

By ‘instrument’ we include both disclosure requirements (i.e., instruments, mandatory or voluntary, that require, encourage and/or support organizations to report on their non-financial or sustainability performance) as well as the broader suite of corporate sustainability policy initiatives and resources. This includes all guidelines and legislation pertaining to “corporate responsibility”, “corporate social responsibility”, “environment, social, governance”, “ESG”, “materiality”, “non-financial materiality”, “shared value” and “social value”. Crucially, it excludes broader notions of labour-related governance policies, such as “industrial relations”, “labour reforms” and “labour regulation”.