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February 06, 2003
World Economic Forum Surveys CEO Attitudes Toward Corporate Citizenship
by William Baue
The World Economic Forum CEO survey finds much enthusiasm but less substance in the adaptation of
corporate social responsibility into core business activities.
SocialFunds.com --
At the World Economic Forum annual meeting
last month in Davos, Switzerland, the Forum's G
lobal Corporate Citizenship Initiative (GCCI) released a survey of more than 30 CEOs of global
companies regarding their attitudes toward corporate citizenship. Corporate citizenship is defined
as a company's management of its economic, social, and environmental impacts as well as of its
relationships with all stakeholders.
 The Forum considers corporate citizenship,
which is similar to the term corporate social responsibility (CSR), as a fundamental component of
core business operations and not as an optional "add on."
The report, entitled Responding to the Leadership
Challenge: Findings of a CEO Survey on Global Corporate Citizenship, was based on questionnaire
responses by the CEOs of public, private, and state-owned companies from 16 countries in 18
industries.
The report found that many of the companies surveyed had specific corporate
governance structures in place to assess and promote corporate responsibility, mostly in the form
of board sub-committees and executive committees on CSR and sustainability. However, the report
also cited research conducted by Sustainable
Asset Management (SAM) revealing that only 16 percent of the 1,336 companies SAM 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 cited 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 (ticker: C), Johnson & Johnson
(JNJ), and Wal-Mart (WMT) call for just such a
link. The report quoted one of the surveyed CEOs to illustrate this linkage.
"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," said 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."
However, this strategy is relatively anomalous
in actual practice. The SAM research found that only 9 percent of the companies surveyed reported
that more than 3 percent of their workforce received variable remuneration and compensation linked
to CSR performance, according to the Forum report.
The survey revealed that the CEOs
desire more sound empirical evidence 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," said UBS (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."
While
there is a lack of evidence of a causal link between CSR performance and market performance, the PriceWaterhouseCoopers CEO survey launched at
last year's World Economic Forum annual meeting found 70 percent of CEOs consider CSR vital to
profitability.
The report concluded by stressing the importance of reporting CSR
performance. 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. In addition to their own reporting mechanisms, corporate social
responsibility performance can be communicated through compliance with standards such as the Global Reporting Initiative (GRI) and ISO 14000. Inclusion in socially responsible
investment (SRI) indexes such as DJSI, FTSE4Good, and the Domini Social
Index also reflect well on companies' positive social and environmental performance, according
to the report.
©
SRI World Group, Inc. All Rights Reserved.
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