Corporate social responsibility: Where's the beef?
The Forum's Global Corporate Citizenship Initiative (GCCI) released a survey of more than 30 CEOs of global companies regarding their attitudes toward corporate citizenship - how a company manages its economic, social and environmental impacts as well as of its relationships with all stakeholders.
Many companies have specific corporate governance structures in place to assess and promote corporate responsibility, mostly in the form of board subcommittees and executive committees on CSR and sustainability.
But the report also cites research conducted by Sustainable Asset Management (SAM) revealing that only 16 percent of the 1,336 companies assessed in 2002 have established specific board committees on CSR and sustainability. A mere 29 percent of the companies assessed by SAM had boards that have taken formal responsibility for CSR or sustainability. SAM Group is an independent, Switzerland-based financial services firm that focuses exclusively on sustainability.
The Forum report cites several specific examples of companies linking executive compensation to CSR performance. Social investors are particularly interested in this issue; shareowner resolutions filed this year at Citigroup, Johnson & Johnson, and Wal-Mart call for just such a link.
"Indicators related to health, safety, environment and employee satisfaction are included, among others, in my performance contract, and are thus used for determining my bonus and form part of my performance review," says Statoil CEO Olav Fjell in the survey. "So far, there are no indicators covering bribery and corruption, security and human rights, and community development, but these topics are on the Board's agenda and are thus indirectly part of the review of the CEO."
But this strategy is a rarity. Only nine percent of the companies surveyed by SAM report that more than three percent of their workforce received variable remuneration and compensation linked to CSR performance, according to the Forum report.
What's the hold up? CEOs want more proof linking CSR performance to financial and market performance.
"UBS has just launched a project to investigate the impact of corporate responsibility issues on UBS share price," says UBS Chairman Marcel Ospel. "The project has two components: analysis of share price movements in the aftermath of certain events; [and] survey among UBS key investors to assess the extent to which they incorporate consideration about UBS's corporate conduct in their valuation of the company."
Despite the lack of hard evidence, a PriceWaterhouseCoopers CEO survey last year found 70 percent of CEOs consider CSR vital to profitability.
Almost half (48 percent) of the companies surveyed produce a CSR or sustainability report separate from the annual report. Others include CSR information on their Web sites and in their annual reports.
Key messages from the survey: