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Speaking the Same Language - Communications on SR - Arthur D. Little

Speaking the Same Language - Communications on SR - Arthur D. Little

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Published by: aesoler on Mar 24, 2012
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Improving Communications between Companies andInvestors on Corporate Responsibility 
 Key findings from a research study by Arthur D. Little on Socially Responsible Investment dialogue carried out for Business in the Community and the UK Social Investment Forum
June 2003A report prepared by Arthur D. Little
Arthur D. Little
Corporate Responsibility (CR) has taken hold among major corporations. 90 FTSE 100companies now publicly report on their social or environmental performance, a rise of 35% a year in the last two years. Yet the subject is still treated by most companies as pri-marily a Corporate Affairs issue — something which has an impact on intangibles, such asreputation and image, but which has little direct effect on the core financial health of thecompany. Communications between investors and companies on CR and shareholder value appear to be fraught with difficulties, with CR "experts" and mainstream investorsseemingly talking different languages. But the good news is that there is a great desire onboth sides for improvement. This study has identified the changes that need to be made before the potentialbusiness value of CR can be understood and realised. Intuition tells us that "shareholder value" and "value to society" should be deliverable together, but our current methods of assessment are not good enough to support our intuition. Finance and strategy directorsshare the responsibility with institutional investors to make the necessary changes, so thatour knowledge on this subject can improve for the benefit of all.Richard Clarke Managing Director
Business in the Community
 This report marks another key step in developing our understanding of the issues thatunderpin the quality of communication between business and the City.For me this research highlights the critical challenge facing business, how to overcomethe chicken and egg syndrome - "the City doesn’t ask about Corporate Responsibility so we don’t provide anything on it". All our research to date shows that responsible businesspractice is not receiving due recognition or reward in the City. We know there areBusiness in the Community members making significant progress in this area and aredoing so by firmly placing responsible business practice at the heart of their businessstrategy. But we challenge many more businesses to do the same. We need to encourageand support more companies on an annual basis to raise the CR issues that are material tothem with their mainstream analysts. Only by bringing these to the fore, and by placingthem alongside the financials, can analysts fully appreciate the quality of management thatexists within these businesses.I am delighted that Business in the Community in association with UK Social InvestmentForum has been instrumental in commissioning Arthur D. Little to undertake this timely research. I look forward to hearing from our members that the City is listening and isrewarding integrated thinking that spans economic, environmental and social perform-ance. Julia Cleverdon CVO, CBEChief Executive
UK Social Investment Forum
 The rapid expansion of assets managed within a Socially Responsible Investment(SRI) framework has highlighted the need for improved information flow between com-panies, analysts and investors. As an increasing number of investors seek informationabout material social and environmental issues, I’m sure we will see significant changes inhow this information is communicated and analysed. In short, identifying and respondingto material social and environmental issues should be part of business as usual for all par-ties concerned.I’d like to thank Arthur D. Little for their thought-provoking report which is based ondetailed consultations with all the interested parties, but also HSBC and Context Group who helped organise the UK Social Investment Forum roundtable which started theprocess last November.Helen WildsmithExecutive Director

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