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