1st Edition

Valuing Corporate Responsibility How Do Investors Really Use Corporate Responsibility Information?

By Rory Sullivan Copyright 2011

    Investors have taken a long time to pay attention to corporate responsibility. Despite the growing number of companies that were taking action to manage the social and environmental impacts of their activities and operations and that were reporting on their corporate responsibility performance, mainstream investors' interest in governance issues was, on the whole, piqued only in those situations where a major accident or scandal hit the headlines. 

    This has changed dramatically. With over 600 large investment institutions, including asset managers, insurance companies and pension funds having signed the UN-backed Principles for Responsible Investment, it can now be plausibly argued that "responsible investment" has become mainstream. This change is potentially of huge significance, and the investment community is now widely seen as one of the key audiences for the thousands of corporate responsibility reports produced each year. 

    Yet the reality is that there is a striking lack of understanding among companies of investors' interests. The consequence has been that, despite many companies identifying investors as one of the critical audiences for their corporate responsibility reports, most investors – even those that have made commitments to responsible investment – see these reports as irrelevant to their investment decision-making. The problem is compounded by the singularly poor job that investors do of explaining to companies what sort of information they are really interested in, and where corporate responsibility performance fits into their overall assessments of companies. This has led to frustrations on both sides. Investors have been accused of not paying sufficient attention to companies' corporate responsibility performance, and companies have been accused of producing information that not only has no immediate relevance to investors but, worse, seems to have no relevance to the key business challenges that these companies face. Valuing Corporate Responsibility aims to address the "dialogue of the deaf" that characterizes too many of the discussions between companies and their investors on corporate responsibility issues, through:

    1. Explaining to companies what responsible investment looks like in practice and, from this analysis, explaining what sort of corporate responsibility information investors are interested in and how this information is used in practice.

    2. Explaining to investors some of the practical difficulties faced by companies when preparing corporate responsibility reports and the implications for the quality and utility of the data provided in these reports.

    Valuing Corporate Responsibility also analyses how issues such as investors' views on materiality and investment time-frames influence the dialogue that investors have with companies on corporate responsibility matters. It concludes that there is a need for a major rethink of current approaches to responsible investment, as the manner in which most investors are implementing their responsible investment commitments is unlikely to see them making a substantial contribution to improving corporate responsibility performance or to the wider goals of sustainable development. 

    Written by one of the world's leading experts on responsible investment, Valuing Corporate Responsibility is one of the most important books to be written on corporate responsibility over the past decade. It is of relevance not only to companies and to responsible investment professionals but to all those interested in really understanding how companies and their investors relate to each other and the implications of this relationship for sustainable development.

    Preface  1. Introduction2. Investors and their interests2.1 Responsible investment: an overview2.2 Investors’ expectations of corporate responsibility reporting  3. Case studies on investment research and engagement3.1 About Insight Investment3.2 Case study: linking policy and performance in the oil and gas sector3.3 Case study: climate change disclosures in the European electricity sector3.4 Case study: taking the temperature on greenhouse gas emissions management and reporting  4. Analysing and interpreting corporate responsibility reports4.1 Does the company publish a corporate responsibility report?4.2 What is the scope of the report?4.3 How are corporate responsibility risks and opportunities identified and assessed?4.4 What governance and management systems are in place?4.5 Are corporate responsibility policies important?4.6 Issues in performance evaluation  5. Key issues in corporate responsibility reporting5.1 Uncertainty in performance data5.2 Reporting boundaries5.3 Assurance  6. Investment practice and its implications for corporate responsibility6.1 Materiality6.2 Social issues6.3 Investors are not the only stakeholder   7. Wider recommendations and proposals7.1 Recommendations to companies7.2 Recommendations to investors7.3 Public policy design and implementation  8. Conclusions8.1 The value of corporate responsibility reporting8.2 The evolution of corporate responsibility reporting8.3 Responsible investment and sustainable development  References


    Sullivan, Rory

    Rory Sullivan's new book about corporate responsibility reporting is worth a read. I have to say that the stuff I like best in it is where he is honest about the limitations of responsible investment, because few people are willing to say this stuff publicly ... Full post... - labour and capital blog, 19 May 2011 - Tom Powdrill

    Written by Rory Sullivan, one of the world's leading experts on responsible investment, Valuing Corporate Responsibility provides insights that anyone responsible for or involved in CSR reporting should know and understand ... Regardless of one's position on these two issues, Rory Sullivan's book presents a challenging and well-informed analysis of some of the key issues related to valuing corporate responsibility. As such, it is a concise and noteworthy contribution to what is often a complex and polarized debate. Full post... - CSR Europe, 6 May 2011 - Colleen M. Fletcher

    Most corporate responsibility professionals approach the task of reporting in much the same way as spending Christmas with the in-laws: they grit their teeth at the prospect, try to keep from screaming during the event, and pray they don't have to repeat it once it's all over. Social and environmental reporting is time-consuming, labour-intensive and expensive. So what's the value? Well, more than you might think, argues social responsibility investment guru Rory Sullivan ... Full post... - Ethical Corporation's Management Blog, 1 May 2011 - Oliver Balch