January 13, 2004
World Economic Forum Survey Projects Mainstreaming of Corporate Citizenship
by William Baue
The report credits socially responsible investing, among other trends, for influencing mainstream
investors to take corporate citizenship more seriously.
Is corporate citizenship, also known as corporate social responsibility (CSR), entering mainstream
investors' consciousness? No and yes, according to a new World Economic Forum (WEF) report that surveys chief executive officers (CEOs), chief
financial officers (CFOs), and investor relations officers (IROs) at 26 companies from 14 different
These executives report surprisingly little current interest in CSR
expressed by mainstream investors. Over two-thirds of the respondents said their companies field
CSR-related questions from mainstream investors only occasionally, and then only around crisis
situations or "hot" topics such as climate change, diversity, obesity, and HIV/AIDS. Some of the
respondents (15 percent) never field such CSR-related questions from mainstream investors. Only
three companies--Anglo American (ticker: AAL.L), Infosys (INFY), and Deutsche Bank (DB)--state that
they are often asked CSR questions by mainstream investors.
However, over 70 percent of
the respondents, who hail from such companies as Coca Cola (KO), Diageo (DEO), Rio Tinto (RTP), and Siemens (SIEG), believe that
mainstream investors will have an increased interest in CSR issues.
"2004 might just be
the year corporate citizenship comes of age in the mainstream investment community," said Richard
Samans, managing director of the WEF, a nonprofit devoted to world improvement and funded by over
1,000 corporate members.
The report, entitled Values and
Value: Communicating the Strategic Importance of Corporate Citizenship to Investors, credits
the socially responsible investment (SRI) community, among other influences, with advancing CSR
into the mainstream. Other influences include new legal requirements such as Sarbanes-Oxley, new
international norms such as the United Nations Convention
against Corruption, and voluntary reporting mechanisms such as the Global Reporting Initiative
Almost half (42
percent) of the respondents felt there has been a major increase in the level of activism,
engagement, and sophistication from the SRI community regarding CSR.
"Many of the
companies see SRI fund managers as increasingly influential, both in terms of their influence on
policy makers and their impact on corporate behaviour through active engagement with companies and
their promotion of an investment style that takes nonfinancial performance into account," the
However, some of the respondents also offered critical commentary on the
SRI community's influence on the mainstreaming of CSR. According to one CEO, the SRI community
sends mixed messages.
"Many SRI investors invest with an ethical motive, and are prepared
to accept average returns or below if their ethical standards are upheld," he stated. "Others
believe that a portfolio of companies with strong corporate citizenship policies and implementation
should provide better than market average returns in the longer term."
"As long as these
two opposing theories sit side by side in the SRI community, its credibility will suffer and
mainstreaming will not progress," he concluded.
Another CEO points to obstacles on both
the SRI and the mainstream investors' side of the fence inhibiting the growth of corporate
citizenship as a legitimate driver of investment value.
"There is a lack of training of
many SRI analysts in basic financial and accounting issues and a relative lack of understanding of
some of these corporate citizenship risk areas on the part of many mainstream analysts," he stated.
"However, for many sectors, it is inevitable that the two perspectives will converge."
The WEF's Global Corporate Citizenship Initiative (G
CCI), which wrote the report, also sponsors the Mainstreaming Responsible Investment project in
conjunction with AccountAbility, an
international nonprofit that advances corporate accountability. The project seeks to "improve
understanding of impediments to and opportunities for broader integration of social and
environmental aspects of corporate citizenship in mainstream investment policies and practices."
Toward this goal, the project is convening a series of roundtables. Deutsche Bank hosted
the first in London in July 2003 focusing on identifying constraints and opportunities, and Swiss
Re hosted the second in New York in October 2003 focusing on the pivotal relationship between
pension fund trustees and their fund managers. The third roundtable is slated for early 2004.