Publishing its first corporate social responsibility report back in 2014, Verisk Analytics was a bit of a trailblazer. Back then, screening investments through an environmental, social and governance (ESG) lens wasn't mainstream, and ESG companies were outliers.
"ESG and sustainability weren't the cool words at the time," said Patrick McLaughlin, the company's chief sustainability officer.
But planting the ESG flag early paid off. Verisk Analytics is now one of the top ESG companies.
Based in Jersey City, N.J., Verisk Analytics ranks third on IBD's 100 Best ESG Companies for 2022 list, behind Worthington Industries and J.B. Hunt Transport Services.
Verisk Analytics made the top three with a Dow Jones ESG score of 72.8 on Aug. 24. It also had an IBD Composite Rating (which gauges a stock's strength) of 84 out of 99 on Aug. 31. To make the 2022 100 Best ESG Companies list this year corporations needed an IBD Composite Rating above 81. To see current VRSK ratings and its chart visit IBD's Stock Checkup page.
The company outpaced tech giants Texas Instruments and Apple, which finished fourth and fifth respectively on this year's IBD ESG Companies list.
ESG Companies: Verisk Shows ESG Principles, Plus ROI
Verisk Analytics, a data-driven company, analyzes billions of records and then provides insights to its customers. This analysis helps insurers and energy firms, as well as communities and other organizations, manage risk.
The company's commitment to ESG principles is driven by a desire to maximize long-term shareholder value, McLaughlin says. "You have to do what's best for your company," he said.
Its business is about making all its stakeholders — and the planet — more resilient and sustainable.
"Our ESG journey reflects our approach toward innovation," said Verisk CEO Lee Shavel. "We focus on what matters most and develop plans that are actionable and will deliver the greatest impact over time."
That can be "helping clients better understand the impacts of climate change, or being responsive to the needs of our own workforce or enhancing the diversity of our board of directors," said Shavel.
He added: "We view each (action) as one more step in building a sustainable future."
Top Priorities In Verisk's Responsibility Report
In its most recent Corporate Responsibility Report, which ran 64 pages in 2021, Verisk outlined five key sustainability priorities. It aims to deliver services that empower business and society. Its goal is to be the world's most responsible data analytics company. And Verisk is helping its stakeholders become stronger ESG companies by addressing their impacts on the climate and their energy challenges.
Additionally, Verisk is focused on being a great place to work. And lastly, that effort includes promoting a diverse and inclusive corporate culture.
ESG is embedded in the company's DNA. Verisk Analytics' business model and ESG initiatives are about mitigating risks. It helps property and casualty insurers, for example, manage claims related to severe weather events. And it invests heavily in its own cybersecurity efforts to protect data and thwart hackers.
Data is a tool that "helps call out the types of risks companies need to acknowledge and address," McLaughlin said. "Some people just want to bury their head in the sand. But you can't do that. You have to get out ahead of things, (review) the data, interpret it and innovate."
There isn't a one-size-fits-all approach to ESG, McLaughlin says. The ESG issues that are important to his firm are different from those a consumer-facing company might deem critical.
The two company-specific issues that top McLaughlin's list are protecting the company's vast trove of data and responsibly managing its most important asset — its workers.
"Data security and integrity are really important to us," McLaughlin said. "We also need to focus on attracting great candidates and keeping them once they get here."
Verisk Receives High ESG Marks From Fund Manager
Investors view shares of Verisk Analytics positively, despite the hit it has absorbed during the bear market. The company's strong ESG profile is seen as both a key investment pillar and bullish factor, says Matthew Gershuny, deputy chief investment officer at Parnassus Investments, which specializes in responsible investing and owns Verisk stock. "ESG is key," he said.
Verisk Analytics shows strength in all four pillars that the mutual fund company looks at when scanning for stocks to buy, Gershuny says. The company is relevant in its business area and gaining market share. Verisk has a protective moat around its business, thanks to its strong brand and data assets, which makes it hard for competitors to invade its turf. It has a strong management team. And Verisk has embedded ESG throughout its business.
"This is one of the highest quality companies you can own," Gershuny said.
Verisk Analytics is also a top ESG stock, Gershuny says. For one, its data-intensive business means it has a minimal carbon footprint. "That is a pretty great thing," Gershuny said.
The company also gets high marks for treating its employees well. For six straight years, Verisk Analytics has been certified in the U.S. by "Great Place to Work." Eight of 10 (83%) employees say it is a great place to work compared to 59% of employees at a typical U.S.-based company.
McLaughlin stresses that the accolade comes from employees surveyed by an independent firm. "We don't put that crown on ourselves," he said. "You have to earn it."
Governance And Board Diversity
From a governance perspective, Gershuny applauds the company for its recent move to boost board independence by splitting the CEO and board chair roles, as well as increasing board diversity and making a board committee responsible for ESG.
Five of 13 board members at Verisk are women. "Studies show that board diversity leads to better decision-making," Gershuny said.
Still, McLaughlin admits that the company isn't perfect on all ESG measures. Verisk has yet to make a public commitment to net zero emissions by a certain date. But the key, he says, is Verisk is constantly strengthening its ESG resume.
To reduce its carbon footprint, Verisk embraces remote work, which reduces the need for commuting and energy-gobbling offices. That's enabled it to shrink its real estate imprint by consolidating offices. Also, more than 50% of its total leased office space is in LEED-certified green-friendly buildings. Last year, it made a commitment to reduce by 21% its Scope 1 and 2 greenhouse gas emissions by 2024, versus the 2019 level.
Externally, the company has been working with recycling firm Scepter to develop a small constellation of small satellites to monitor methane leaks. It has also produced studies on how climate change will affect corn crop yields. Plus, its extreme event models help stakeholders prepare for natural disasters.
"We're happy with our progress," McLaughlin said.
