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February 01, 2006
Two Sides of the Same Coin: Surveys Track Growth of Interest in CSR and SRI
    by Bill Baue

Part two of this two-part article focuses on a survey by McKinsey Quarterly on increasing interest from global corporate executives in corporate social responsibility.


When assessing the significance of a survey, the questions it asks (as well as the answers listed as options) can be as revealing as the actual responses. In the case of the McKinsey Quarterly Global Survey of Business Executives, both the questions and the responses are fascinating. The survey questions begin in predictable fashion, probing 4,238 executives in 116 countries on traditional business metrics such as confidence in the global economy and employment fluctuations. From there on, however, the questions deal exclusively with corporate social responsibility (CSR), a testament to the increasing relevance of social and environmental issues in the mainstream business community.

The first question asks which role large corporations should play in society: focus solely on maximizing returns for investors while obeying all laws and regulations; or balance high returns for investors with contributions to the broader society. The vast majority (84 percent) of respondents opted for the latter.

"Unquestionably, the global business community has embraced the idea that it plays a wider role in society," states the survey. "Only one in six agrees with the thesis, famously advanced by Nobel laureate Milton Friedman, that high returns should be a corporation's sole focus."

However, shifting from the theoretical to the practical, the executives surveyed present a much different view of actual practice on CSR.

"[M]ost executives view their engagement with the corporate social contract as a risk, not an opportunity, and frankly admit that they are ineffective at managing this wider social and political issue," the survey states.

Asked which three of a list of 13 different tactics companies use to try to manage sociopolitical issues, almost half of the respondents identify both lobbying and public relations as the most popular strategies. However, when asked which tactics are the most effective, lobbying and PR rate much lower, suggesting that these oft-used strategies are not the best approach.

"A significantly higher proportion of the executives hold that the most effective tactics are policies on ethics and other corporate responsibility issues, stakeholder engagement, and increased transparency about the risks of products or processes," the survey says.

Digging down to the top three individual issues that can have a positive or negative impact on shareholder value in the next five years, respondents focus more on risks than opportunities. For example, under ten percent of respondents rated opportunities of demand for more ethically produced products among the top three issues. On the other end, job loss to offshoring, political involvement contributions, and environmental issues including climate change ranked at the top of the list of concerns for respondents.

Interestingly, the framing of the question and categorization of the answers highlights a contrast with the survey by Mercer Investment Consulting reviewed in part one of this article. The Mercer survey asked institutional investors to identify the top issues impacting shareholder value. However, it split environmental concerns into three separate categories, with environment rating high but climate change rating low.

The fact that the McKinsey lumps climate change into the environmental category prevents readers from gauging the relative importance of climate change to the respondents.

As for what motivates companies to practice CSR, the McKinsey respondents exhibit a degree of cynicism.

"Only eight percent think that large corporations champion social or environmental causes out of 'genuine concern,'" the survey says. "Almost nine in ten agree that they are motivated by public relations or profitability, or by both concern and business benefits in equal measure."


Part one of this two-part article focuses on a survey by Mercer Investment Consulting on increasing interest from institutional investors in socially responsible investing.

 

 
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