Monday, April 30, 2007

CSR Initiatives in the UK

David Grayson, Director of Business in the Community, visited the Kennedy School this afternoon. I was lucky enough to have some flexibility today to make it there for his seminar. BITC has been active in the CSR arena for 25 years, one of the true pioneers in the CSR movement. I have to admit, though I know the UK is far ahead of the United States when it comes to CSR/ESG activities, I had not heard of BITC until today.

David went on to speak about the role of business in society, from UK and global perspectives. One contributor to the increased interest in CSR/ESG is the continued privatization of many institutions that used to be government owned. That makes an incredible amount of sense when profit-driven entities control what are necessities of life. Businesses comprise a much larger segment of society than they used to, meaning their reach and influence is that much greater as well. Perhaps many of the middle-income people in cultures around the globe will start realizing this and pay more attention to businesses' activities.

According to David, there are five critical success factors to creating successful corporate responsibility programs:

1) Leadership: engaging the highest level managers in a CSR/ESG program
2) Entrepreneurship: Be prepared to experiment
3) Showmanship: Show-off what you have accomplished
4) Apprenticeship: Create tools to engage various constituencies
5) Partnership: Work with organizations from all sectors and all levels

I look forward to reading the final version of David's paper, with preliminary title, "Engaging Responsible Business - Learning From the Example of Business in the Community in the UK".

When I spoke with David after his talk about my desire to integrate sustainability into my career (meaning the company I work for) his response was to inquire gently with people that may be interested. In other words, start easily and gently; probe the lines before launching the full frontal assault.

Then, as I made a routine stop at Staples to pick up HP ink cartridges, what did I notice but the April issue of Fast Company with the article, Measured Progress, focusing on the growing interest in ESG issues and their impact on company performance. As more attention is given to ESG issues, investment professionals smell the market opportunity and create analytical companies to capitalize on it. That's good, it is the market working and supporting the investor demand for these services. It will be interesting to see how these companies shake out in this emerging market as competing analytical methods are bought and followed.

This short excerpt illustrates the distance we still have to travel before ESG/CSR is a standard part of investment decisions:
About 75% of institutional investors believe that ESG issues can affect investment results, according to a recent Mercer survey. Yet fewer than half of those institutions plan to assess whether such factors are considered as part of their investment process.

That finding signals the reality that still governs Wall Street: For most investors, it's still all about the numbers--and mostly, it's about the short term. Even contemplating the measurement of human impact implies an investment horizon far longer than the average I-bank analyst is trained to contemplate.
It would certainly be nice to be part of this process, and I will.

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