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 policies 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 policies from a larger number of countries and over a longer time period.
Third, we have deliberately expanded our data collection efforts to include policies that are not originally available in English. C&S now includes policies in nearly 40 different languages.
For every policy 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 policies 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 policy 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 policy 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 policy in our database. We present two different measures.
First, "Restrictiveness" gives an overall measurement for the extent to which a policy emphasizes the use of language that either compels actors to, or deters actors from, engaging in sustainable activities. It ranges from very low (0-0.26), low (0.26-0.6), moderate (0.6-0.9), high (0.9-1.3), and very high (1.3-2.5).
Second, "Restrictions on business" is similar but focuses on how directly this language of restrictiveness applies to businesses and business actors specifically. Scores range from low (0-.08), moderate (0.08-0.25), high (0.25-0.42). and very high (0.42-2).
A note on terminology:
By ‘policy’ 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”.