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Corporate Social Responsibility (CSR) is an idea that corporations have to consider the interests of customers, employees, shareholders, communities, and ecological considerations in all
Socially responsible investing (SRI) describes an investment strategy which combines the intentions to maximize both financial return and social good.

green@work : Magazine : Back Issues : May/June 2004 : Headlines


Coming of Age
Why corporate citizenship matters to shareholders.

Over 70 percent of CEOs surveyed by the World Economic Forum (WEF) believe that mainstream investors will have an increased interest in corporate citizenship issues, according to a report released by the WEF in January. Developed by the WEF’s Global Corporate Citizenship Initiative (GCCI), in partnership with the International Business Leaders Forum (IBLF), the report explores how CEOs, CFOs and investor relations officers (IROs) from 14 market sectors and headquartered in 14 different countries communicate the strategic importance of the social and environmental aspects of their firm’s performance to investors. It examines how these companies are articulating both the business case and the “leadership” or “values” case for global corporate citizenship, highlighting some of the challenges of communicating often intangible, but nevertheless quite relevant issues to owners.

“We see increased interest in the social and environmental aspects of corporate performance by pension funds, insurance companies and other shareholders,” said Richard Samans, WEF managing director, who added, “2004 might just be the year corporate citizenship comes of age in the mainstream investment community.”

Based on the experiences recounted directly by many of the CEOs and CFOs questioned, the report, Values and Value: Communicating the Strategic Importance of Corporate Citizenship to Investors, makes note of a number of effective practices and offers a set of recommendations for those seeking to communicate the importance of corporate citizenship to shareholders and investors. Key findings include:

1. Signs of change in the financial sector:
In a limited, but interesting number of cases, during 2003 some of the world’s major institutional investors started to flex their muscles on issues related not only to improved corporate governance and ethics, but also broader issues of corporate citizenship. At the same time, the Socially Responsible Investment (SRI) movement, while still representing a tiny percentage of global funds under management, continues to grow in terms of size, sophistication, geographic scope and influence.

2. Obstacles to overcome: The CEOs, CFOs and IROs surveyed identified five interrelated types of obstacles to mainstream investors showing more interest in how corporations address the risks and opportunities related to corporate citizenship:

* Problems of definition of corporate citizenship/corporate social responsibility.
* Problems of making and measuring the business case.
* Problems with quality and quantity of information.
* Problems of skills and competence in managing and measuring CSR.
* Problems of time horizon for measured impact on business performance.

3. Four golden rules: Survey respondents identified four “rules” for communicating the importance of corporate citizenship to investors:

* Frame corporate purpose, principles and values with clarity. Even when speaking to investors, corporate citizenship needs to be about more than simply “making a business case” that links it directly to bottom line benefits. It should also be a statement about what the company stands for and would stand by, even if this sometimes incurs costs or results in a lost business opportunity.

* Emphasize the social contribution of core business. At the same time, business leaders need to be less defensive about their core role in society. They need to be able to demonstrate the societal contribution made by their economic multipliers such as employment and income generation, technology transfer, training, supply chain development, innovation and wealth creation.

* Present a credible and measurable business case for corporate citizenship.
Each board of directors and executive team needs to be able to define, explain and, ultimately, measure the ethical, social and environmental risks and opportunities faced by its company and industry sector including both intangibles and their impact on reputation as well as the measurable.

* Ensure consistency and coherence of message. A major cause of distrust, among investors as well as other stakeholders, is inconsistent messages and incoherent policies from business. Corporate leaders need to apply a similar rigor and analysis to their social and environmental reports as they do to their annual report. They need to ensure that their social and environmental commitments extend to all aspects of the company, from the boardroom to the mailroom, from public policy positions to pension fund options, and from headquarter functions to far-flung operations.

To view the report, visit or For further information on the Global Corporate Citizenship Initiative, the report and the initiative’s CEO statements, contact Caroline Bergrem, GCCI project manager, at

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