Socially responsible investing

From Wikipedia, the free encyclopedia

 

Alternative Energy: One of many forms of sustainable investing

Socially responsible investing (SRI), or social investment, also known as sustainable, socially conscious, "green" or ethical investing, is any investment strategy which seeks to consider both financial return and social/environmental good to bring about a positive change.

Recently, it has also become known as "sustainable investing" or "responsible investing". There is also a subset of SRI known as "impact investing", devoted to the conscious creation of social impact through investment.

In general, socially responsible investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity. Some avoid businesses involved in alcohol, tobacco, fast food, gambling, pornography, weapons, contraception/abortifacients/abortion, fossil fuel production or the military. The areas of concern recognized by the SRI practitioners are sometimes summarized under the heading of ESG issues: environment, social justice, and corporate governance.

"Socially responsible investing" is one of several related concepts and approaches that influence and, in some cases govern, how asset managers invest portfolios. The term "socially responsible investing" sometimes narrowly refers to practices that seek to avoid harm by screening companies included in an investment portfolio. However, the term is also used more broadly to include more proactive practices such as impact investing, shareholder advocacy and community investing. According to investor Amy Domini, shareholder advocacy and community investing are pillars of socially responsible investing, while doing only negative screening is inadequate.

History

The origins of socially responsible investing may date back to the Religious Society of Friends (Quakers). In 1758, the Quaker Philadelphia Yearly Meeting prohibited members from participating in the slave trade – buying or selling humans.

One of the most articulate early adopters of SRI was John Wesley (1703–1791), one of the founders of Methodism. Wesley's sermon "The Use of Money" outlined his basic tenets of social investing – i.e. not to harm your neighbor through your business practices and to avoid industries like tanning and chemical production, which can harm the health of workers. Some of the best-known applications of socially responsible investing were religiously motivated. Investors would avoid “sinful” companies, such as those associated with products such as guns, liquor, and tobacco.

The modern era of socially responsible investing evolved during the political climate of the 1960s. During this time, socially concerned investors increasingly sought to address equality for women, civil rights, and labor issues. Economic development projects started or managed by Dr. Martin Luther King, like the Montgomery Bus Boycott and the Operation Breadbasket Project in Chicago, established the beginning model for socially responsible investing efforts. King combined ongoing dialog with boycotts and direct action targeting specific corporations. Concerns about the Vietnam War were incorporated by some social investors. Many people living during the era remember a picture in June 1972 of a naked nine-year-old girl, Phan Thị Kim Phúc, running towards a photographer screaming, her back burning from the napalm dropped on her village. That photograph channeled outrage against Dow Chemical, the manufacturer of napalm, and prompted protests across the country against Dow Chemical and other companies profiting from the Vietnam War.

During the 1950s and 1960s, trade unions deployed multi-employer pension fund monies for targeted investments. For example, the United Mine Workers fund invested in medical facilities, and the International Ladies' Garment Workers' Union (ILGWU) and International Brotherhood of Electrical Workers (IBEW) financed union-built housing projects. Labor unions also sought to leverage pension stocks for shareholder activism on proxy fights and shareholder resolutions. In 1978, SRI efforts by pension funds was spurred by The North will Rise Again: Pensions, Politics, and Power in the 1980s and the subsequent organizing efforts of authors Jeremy Rifkin and Randy Barber. By 1980, presidential candidates Jimmy Carter, Ronald Reagan and Jerry Brown advocated some type of social orientation for pension investments.

SRI had an important role in ending the apartheid government in South Africa. International opposition to apartheid strengthened after the 1960 Sharpeville massacre. In 1971, Reverend Leon Sullivan (at the time a board member for General Motors) drafted a code of conduct for practicing business in South Africa which became known as the Sullivan Principles. However, reports documenting the application of the Sullivan Principles said that US companies were not trying to lessen discrimination in South Africa. Due to these reports and mounting political pressure, cities, states, colleges, faith-based groups and pension funds throughout the US began divesting from companies operating in South Africa. In 1976, the United Nations imposed a mandatory arms embargo against South Africa. From the 1970s to the early 1990s, large institutions avoided investment in South Africa under apartheid. The subsequent negative flow of investment eventually forced a group of businesses, representing 75% of South African employers, to draft a charter calling for an end to apartheid. While the SRI efforts alone did not bring an end to apartheid, it did focus persuasive international pressure on the South African business community.

The mid and late 1990s saw the rise of SRI’s focus on a diverse range of other issues, including tobacco stocks, mutual fund proxy disclosure, and other diverse focuses.

Since the late 1990s, SRI has become increasingly defined as a means to promote environmentally sustainable development. Many investors consider effects of global climate change a significant business and investment risk. CERES was founded in 1989 by Joan Bavaria and Dennis Hayes, coordinator of the first Earth Day, as a network for investors, environmental organizations, and other public interest groups interested in working with companies to address environmental concerns.

In 1989, representatives from the SRI industry gathered at the first SRI in the Rockies Conference to exchange ideas and gain momentum for new initiatives. The name has since changed to The SRI Conference which meets annually at Green Building certified establishments and has attracted over 550 persons annually since 2006. This conference is produced by First Affirmative Financial Network, an investment advisory firm that works with advisors nationwide providing portfolios specialized in sustainable and responsible investing.

The first sell-side brokerage in the world to offer SRI research was the Brazilian bank Unibanco. The service was launched in January 2001 by Unibanco SRI analyst Christopher Wells from the São Paulo headquarters of the bank. It was targeted at SRI funds in Europe and the US, although it was sent to non-SRI funds both in and out of Brazil. The research was about environmental and social issues (but not governance issues) regarding companies listed in Brazil. It was sent for free to Unibanco's clients. The service lasted until mid-2002.

Two good things came out this research:

1. The idea was picked up by Mike Tyrrell, who worked at Jupiter, an SRI fund manager in London, and who developed it into something much bigger and better at HSBC and then Citigroup.
2. ABN AMRO's operation in Brazil used this research to create the first SRI fund in an emerging market, launched in November 2001. As of late 2008, this fund, called Fundo Ethical, was the Brazilian operation's biggest and best performing stock fund of any kind. (ABN AMRO's operation in Brazil was bought by Santander in 2007.)

Drawing on the industry's experience using divestment as a tool against apartheid, the Sudan Divestment Task Force was established in 2006 in response to the genocide occurring in the Darfur region of the Sudan. Support from the US government followed with the Sudan Accountability and Divestment Act of 2007.

More recently, some social investors have sought to address the rights of indigenous peoples around the world who are affected by the business practices of various companies. The 2007, SRI in the Rockies Conference held a special pre-conference specifically to address the concerns of indigenous peoples. Healthy working conditions, fair wages, product safety, and equal opportunity employment also remain headline concerns for many social investors. In the mid-2010s, some funds developed gender lens investing strategies to promote workplace equity and general welfare of women and girls.

Current strategies

Socially responsible investing is a growing market in both the US and Europe. In particular, it has become an important principle guiding the investment strategies of various funds and accounts.

Government-controlled funds

Government-controlled funds such as pension funds are often very large players in the investment field, and are being pressured by the citizenry and by activist groups to adopt investment policies which encourage ethical corporate behavior, respect the rights of workers, consider environmental concerns, and avoid violations of human rights. One outstanding endorsement of such policies is The Government Pension Fund of Norway, which is mandated to avoid "investments which constitute an unacceptable risk that the Fund may contribute to unethical acts or omissions, such as violations of fundamental humanitarian principles, serious violations of human rights, gross corruption or severe environmental damages."

Many pension funds are currently under pressure to disinvest from the arms company BAE Systems, partially due to a campaign run by the Campaign Against Arms Trade (CAAT). Liverpool City Council has passed a successful resolution to disinvest from the company, but a similar attempt by the Scottish Green Party in Edinburgh City Council was blocked by the Liberal Democrats.

Mutual funds and ETFs

Socially responsible mutual funds counted by the 2014 Trends Report increased in number to 415 in 2014, up from 333 in 2012, 250 in 2010, 173 in 2005 & 2007, 189 in 2003, and 167 in 2001. The overall number of mutual funds incorporating environmental, social and corporate governance (ESG) has increased four-fold increase since 2012. Additionally, 20 exchange-traded funds (ETFs) that incorporate ESG criteria were identified with $3.5 billion in assets at the end of 2011, an increase from the 8 ETFs with $2.25 billion in net assets identified in its 2007 report—the first Trends report to track ETFs [11]. Unlike the Employee Retirement Income Security Act of 1974 (ERISA), which severely limits the extent to which socially responsible goals can be considered in managing corporate and Taft-Hartley pension assets (due to ERISA's overriding goal of protecting employees' pensions), registered investment companies can take these factors into account so long as the disclosure and other requirements of the Investment Company Act of 1940 are met. US SIF maintains charts describing the socially responsible mutual funds offered by its member firms.


Key: X = No investment; P = Positive investment; R = Restricted investment; NS = No screens.

Fund	Alcohol	Tobacco	Gambling	Defense/ Weapons	Animal Testing	Products/ Services	Environment	Human Rights	Labor Relations	Employment/ Equality	Community Investment	Proxy Voting
Access Capital Strategies Community Investment Fund[24]	NS	NS	NS	NS	NS	NS	NS	NS	NS	NS	P	X
AHA Balanced Fund - Instiutional Class	NS	X	NS	NS	NS	NS	NS	NS	NS	NS	NS	V
AHA Diversified Equity Fund - Institutional Class	NS	X	NS	NS	NS	NS	NS	NS	NS	NS	NS	V
AHA Diversified Equity Fund - N Class	NS	X	NS	NS	NS	NS	NS	NS	NS	NS	NS	V
AHA Full Maturity Fixed Income Fund - Institutional Class	NS	X	NS	NS	NS	NS	NS	NS	NS	NS	NS	V
AHA Full Maturity Fixed Income Fund - N Class	NS	X	NS	NS	NS	NS	NS	NS	NS	NS	NS	V
AHA Limited Maturity Fixed Income Fund - Institutional Class	NS	X	NS	NS	NS	NS	NS	NS	NS	NS	NS	V
AHA Limited Maturity Fixed Income Fund - N Class	NS	X	NS	NS	NS	NS	NS	NS	NS	NS	NS	V
AHA Socially Responsible Equity I	X	X	X	X	NS	P	P	P	P	P	NS	V
AHA Socially Responsible Equity N	X	X	X	X	NS	P	P	P	P	P	NS	V
Appleseed Fund[1]	R	R	R	R	NS	NS	P	P	P	NS	P	V
Ariel Appreciation Fund [2]	NS	X	NS	X	NS	NS	NS	NS	NS	NS	NS	V
Ariel Focus Fund	NS	X	NS	X	NS	NS	NS	NS	NS	NS	NS	V
Ariel Fund	NS	X	NS	X	NS	NS	NS	NS	NS	NS	NS	V
Azzad Ethical Income Fund [3]	X	X	X	X	NS	NS	NS	NS	NS	NS	NS	V
Azzad Ethical Mid Cap Fund	X	X	X	X	NS	NS	NS	NS	NS	NS	NS	V
Brighter Student Fund [4]	X	X	X	X	X	X	X	X	X	P	X	X
'Fund'	Alcohol	Tobacco	Gambling	Defense/ Weapons	Animal Testing	Products/ Services	Environment	Human Rights	Labor Relations	Employment/ Equality	Community Investment	Proxy Voting
Calvert Aggressive Allocation Fund [5]	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Capital Accumulation A [6]	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Capital Accumulation B [7]	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Capital Accumulation C [8]	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Conservative Allocation Fund [9]	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Global Alternative Energy Fund A [10]	NS	NS	NS	NS	NS	P	P	P	P	P	NS	V
Calvert Global Water Fund [11]	X	NS	NS	X	NS	X	NS	P	NS	NS	NS	V
Calvert International Opportunities Fund [12]	R	R	NS	NS	NS	P	P	P	P	P	NS	V
Calvert Large Cap Growth A	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Large Cap Growth B	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Large Cap Growth C	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Large Cap Growth I	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Mid Cap Value Fund	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Moderate Allocation Fund	X	X	X	R	R	P	P	P	P	P	P	V
Calvert New Vision Small Cap A	X	X	X	R	R	P	P	P	P	P	P	V
Calvert New Vision Small Cap B	X	X	X	R	R	P	P	P	P	P	P	V
Calvert New Vision Small Cap C	X	X	X	R	R	P	P	P	P	P	P	V
'Fund'	Alcohol	Tobacco	Gambling	Defense/ Weapons	Animal Testing	Products/ Services	Environment	Human Rights	Labor Relations	Employment/ Equality	Community Investment	Proxy Voting
Calvert Small Cap Value Fund	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Index A	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Index B	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Index C	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Index I	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Investment Balanced A	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Investment Balanced C	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Investment Bond A	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Investment Enhanced Equity A	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Investment Enhanced Equity B	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Investment Enhanced Equity C	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Investment Equity A	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Investment Equity C	X	X	X	R	R	P	P	P	P	P	P	V
Calvert Social Investment Equity I	X	X	X	R	R	P	P	P	P	P	P	V
Calvert World Values International A	X	X	NS	R	NS	P	P	P	P	P	P	V
Calvert World Values International C	X	X	NS	R	NS	P	P	P	P	P	P	V
CRA Qualified Investment [13]	NS	NS	NS	NS	NS	NS	NS	NS	NS	NS	P	X
'Fund'	Alcohol	Tobacco	Gambling	Defense/ Weapons	Animal Testing	Products/ Services	Environment	Human Rights	Labor Relations	Employment/ Equality	Community Investment	Proxy Voting
Domini European PacAsia Social Equity A [14]	X	X	X	X	NS	P	P	P	P	P	NS	V
Domini European PacAsia Social Equity I [15]	X	X	X	X	P	P	P	P	P	P	NS	V
Domini European Social Equity A	X	X	X	X	NS	P	P	P	P	P	NS	V
Domini European Social Equity I	X	X	X	X	NS	P	P	P	P	P	NS	V
Domini Institutional Social Equity	X	X	X	X	NS	P	P	P	P	P	NS	V
Domini PacAsia Social Equity A	X	X	X	X	NS	P	P	P	P	P	NS	V
Domini PacAsia Social Equity I	X	X	X	X	NS	P	P	P	P	P	NS	V
Domini Social Bond [16]	X	X	X	X	NS	P	P	P	P	P	P	V
Domini Social Equity A	X	X	X	X	NS	P	P	P	P	P	NS	V
Domini Social Equity I	X	X	X	X	NS	P	P	P	P	P	NS	V
Epiphany Faith and Family Values 100 Fund - A Class [17][18]	R	R	R	R	NS	NS	P	P	P	P	NS	V
Epiphany Faith and Family Values 100 Fund - C Class	R	R	R	R	NS	NS	P	P	P	P	NS	V
Epiphany Faith and Family Values 100 Fund - N Class	R	R	R	R	NS	NS	P	P	P	P	NS	V
Gabelli SRI Green Fund Inc A[25]	R	R	R	X	NS	P	P	NS	NS	NS	NS	V
Gabelli SRI Green Fund Inc AAA [25]	R	R	R	X	NS	P	P	NS	NS	NS	NS	V
Gabelli SRI Green Fund Inc C	R	R	R	X	NS	P	P	NS	NS	NS	NS	V
Gabelli SRI Green Fund Inc I	R	R	R	X	NS	P	P	NS	NS	NS	NS	V
Green Century Balanced [19]	NS	X	NS	R	R	P	P	NS	NS	NS	NS	V
Green Century Equity	X	X	X	R	NS	P	P	P	P	P	NS	V
Integrity Growth and Income Fund [20]	X	X	X	NS	R	NS	P	R	R	R	NS	V
'Fund'	Alcohol	Tobacco	Gambling	Defense/ Weapons	Animal Testing	Products/ Services	Environment	Human Rights	Labor Relations	Employment/ Equality	Community Investment	Proxy Voting
Legg Mason Prt Social Awareness Fund A	NS	R	NS	R	NS	NS	P	P	P	P	NS	V
Legg Mason Prt Social Awareness Fund B	NS	R	NS	R	NS	NS	P	P	P	P	NS	V
Legg Mason Prt Social Awareness Fund C	NS	R	NS	R	NS	NS	P	P	P	P	NS	V
Praxis Growth Index Fund A [21]	X	X	X	X	NS	P	P	P	P	P	P	V
Praxis Growth Index Fund I	X	X	X	X	NS	P	P	P	P	P	P	V
Praxis Impact Bond Fund A	X	X	X	X	NS	P	P	P	P	P	P	V
Praxis Impact Bond Fund I	X	X	X	X	NS	P	P	P	P	P	P	V
Praxis International Index Fund A	X	X	X	X	NS	P	P	P	P	P	P	V
Praxis International Index Fund I	X	X	X	X	NS	P	P	P	P	P	P	V
Praxis Small Cap Index Fund A	X	X	X	X	NS	P	P	P	P	P	P	V
Praxis Small Cap Index Fund I	X	X	X	X	NS	P	P	P	P	P	P	V
Praxis Value Index Fund A	X	X	X	X	NS	P	P	P	P	P	P	V
Praxis Value Index Fund I	X	X	X	X	NS	P	P	P	P	P	P	V
Neuberger Berman Socially Resp Inv [22]	X	X	X	X	R	P	P	P	P	P	NS	V
New Alternatives Fund [23]	X	X	X	X	X	P	P	P	P	P	P	X
'Fund'	Alcohol	Tobacco	Gambling	Defense/ Weapons	Animal Testing	Products/ Services	Environment	Human Rights	Labor Relations	Employment/ Equality	Community Investment	Proxy Voting
Parnassus Core Equity Fund [24]	X	X	X	X	R	P	P	P	P	P	NS	V
Parnassus Fund [25]	X	X	X	X	R	P	X	P	P	P	P	V
Parnassus Income Fixed Income [26]	X	X	X	X	R	P	X	P	P	P	NS	V
Parnassus Mid Cap Fund [27]	X	X	X	X	R	P	P	P	P	P	P	V
Parnassus Small Cap Fund	X	X	X	X	R	P	X	P	P	P	P	V
Parnassus Endeavor Fund	X	X	X	X	R	P	X	P	P	P	P	V
Pax World Balanced	R	X	R	R	R	P	P	P	P	P	P	V
Pax World Growth	R	X	R	R	R	P	P	P	P	P	NS	V
Pax World High Yield	R	X	R	R	R	P	P	P	P	P	P	V
Pax World Value Fund - Individual Investor	NS	X	R	X	R	P	P	P	P	P	NS	V
Pax World Value Fund - Institutional Class	NS	X	R	X	R	P	P	P	P	P	NS	V
Pax World Women's Equity Fund - Individual Investor	NS	X	R	X	R	R	R	NS	R	R	NS	V
Pax World Women's Equity Fund - Institutional Class	NS	X	R	X	R	R	R	R	R	R	NS	V
Portfolio 21 [28]	NS	X	R	R	R	P	P	R	R	R	P	V
Portfolio 21 Institutional [29]	NS	X	R	R	R	P	P	R	R	R	NS	V
Sentinel Sustainable Core Opportunities Fund [30]	X	X	X	R	R	P	P	P	P	P	NS	V
Sentinel Sustainable Emerging Companies Fund	X	X	X	R	R	P	P	P	P	P	NS	V
SPDR Gender Diversity Index ETF (SHE)	X	X	X	X	X	X	X	P	P	P	NS	V
TIAA-CREF	R	R	R	R	NS	P	P	P	P	P	NS	V
Flex Total Return Utilities Fund [31]	X	X	X	X	X	P	P	NS	P	P	NS	V
Vanguard FTSE Social Index Fund
Walden Social Balanced Fund	X	X	R	X	R	P	P	P	P	P	P	V
Walden Social Equity Fund	X	X	R	X	R	P	P	P	R	P	X	V
Winslow Green Growth Fund [32]	R	R	R	R	R	P	P	NS	NS	NS	NS	V
xRussell 3000[26]	NS	NS	NS	NS	NS	NS	NS	NS	NS	NS	NS	X

Separately managed accounts

According to the 2014 Report on US Sustainable, Responsible and Impact Investing Trends, among separate account managers, 214 distinctive separate account vehicles or strategies, with $433 billion in assets, incorporated ESG factors into investment analysis. Where a separate account is subject to ERISA, there are legal limitations on the extent to which investment decisions can be based on factors other than maximizing plan participants' economic returns.

Shareholder advocacy

Shareholder resolutions are filed by a wide variety of institutional investors, including public pension funds, faith-based investors, socially responsible mutual funds, and labor unions. In 2004, faith-based organizations filed 129 resolutions, while socially responsible funds filed 56 resolutions.

Regulations governing shareholder resolutions vary from country to country. In the United States, they are determined primarily by the Securities and Exchange Commission, which regulates mutual funds and applies the 1940 Act and by the Department of Labor, which regulates certain plans and applies ERISA.

These regulatory regimes require pension plans and mutual funds to disclose how they voted on behalf of their investors. U.S. shareholders have organized various groups to facilitate jointly filing resolutions. These include the Council of Institutional Investors, the Interfaith Center on Corporate Responsibility, and the US SIF.

From 2012 to 2014, more than 200 US institutions and investment management firms filed or co-filed proposals. These institutions and money managers collectively controlled $1.72 trillion in assets at the end of 2013. The top categories of environmental and social issues from 2012 to 2014 were political contributions and climate change and environmental issues.

Community investing

Community investing, a subset of socially responsible investing, allows for investment directly into community-based organizations. Community investing institutions use investor capital to finance or guarantee loans to individuals and organizations that have historically been denied access to capital by traditional financial institutions. These loans are used for housing, small business creation, and education or personal development in the US and UK, or are made available to local financial institutions abroad to finance international community development. The community investing institution typically provides training and other types of support and expertise to ensure the success of the loan and its returns for investors.

Community investing grew almost 5% from 2012 to 2014. Assets held and invested locally by community development financial institutions (CDFIs) based in the US totaled $64.3 billion at the start of 2014, up from $61.4 billion in 2012.

Investing strategies

Investing in capital markets

Social investors use several strategies to maximize financial return and attempt to maximize social good. These strategies seek to create change by shifting the cost of capital down for sustainable firm and up for the non-sustainable ones. The proponents argue that access to capital is what drives the future direction of development.

ESG integration

ESG integration is one of the most common responsible investment strategies and entails the incorporation of environmental, social and governance ("ESG") criteria into the fundamental analysis of equity investments. According to the non-profit Investor Responsibility Research Center institute (IRRCi), approaches to ESG integration vary greatly among asset managers depending on:

• Management: Who is responsible for ESG integration within the organization?
• Research: What ESG criteria and factors are being considered in the analysis?
• Application: How are the ESG criteria being applied in practice?

Negative screening

Negative screening excludes certain securities from investment consideration based on social or environmental criteria. For example, many socially responsible investors screen out tobacco company investments.

The longest-running SRI index, the Domini 400—now the MSCI KLD 400—was started in May 1990. It has continued to perform competitively —with average annualized total returns of 9.51% through December 2009 compared with 8.66% for the S&P 500.

Despite this impressive growth, it has long been commonly perceived that SRI brings smaller returns than unrestricted investing. So-called "sin stocks", including purveyors of tobacco, alcohol, gambling and defense contractors, were banned from portfolios on moral or ethical grounds. And shutting out entire industries hurts performance, the critics said. However, in a comprehensive study, financial economists Lobe, Roithmeier, and Walkshäusl taking the position of the advocatus diaboli, answer the question whether to invest in a socially responsible way – or not? They create a set of global and domestic sin indexes consisting of 755 publicly traded socially irresponsible stocks around the world belonging to the Sextet of Sin: adult entertainment, alcohol, gambling, nuclear power, tobacco, and weapons. They compare their stock market performance directly with a set of virtue comparables consisting of the most important international socially responsible investment indexes. They find no compelling evidence that ethical and unethical screens lead to a significant difference in their financial performance, which is in contrast with the results of prior studies on sinful investing.

Divestment

Divesting is the act of removing stocks from a portfolio based on mainly ethical, non-financial objections to certain business activities of a corporation. Recently, CalSTRS (California State Teachers' Retirement System) announced the removal of more than $237 million in tobacco holdings from its investment portfolio after 6 months of financial analysis and deliberations.

Shareholder activism

Shareholder activism efforts attempt to positively influence corporate behavior. These efforts include initiating conversations with corporate management on issues of concern, and submitting and voting proxy resolutions. These activities are undertaken with the belief that social investors, working cooperatively, can steer management on a course that will improve financial performance over time and enhance the well being of the stockholders, customers, employees, vendors, and communities.  Recent movements have also been reported of "investor relations activism", in which investor relations firms assist groups of shareholder activists in an organized push for change within a corporation; this is done typically by leveraging their enhanced knowledge of the corporation, its management (often via direct relationships), and the securities laws as a whole. Hedge funds are also major activist investors; while some pursue socially responsible investing goals, many simply are seeking to maximize fund returns. Pension plans subject to ERISA are somewhat more constrained in their ability to engage in shareholder activism or the use of plan assets to promote public policy positions; any expenditure of plan assets must be aimed at enhancing participants' retirement income.

Shareholder engagement

A less vocal subtype of shareholder activism, shareholder engagement requires extensive monitoring of the non-financial performance of all portfolio companies. In shareholder engagement dialogues, investees receive constructive feedback on how to improve ESG issues within their sphere of influence.

Positive investing

Positive investing is the new generation of socially responsible investing. It involves making investments in activities and companies believed to have a positive social impact. Positive investing suggested a broad revamping of the industry's methodology for driving change through investments. This investment approach allows investors to positively express their values on corporate behavior issues such as social justice and the environment through stock selection – without sacrificing portfolio diversification or long-term performance. Positive screening pushes the idea of sustainability, not just in the narrow environmental or humanitarian sense, but also in the sense of a company's long-term potential to compete and succeed. In 2015, Morgan Stanley conducted a review of 10,000 funds and concluded "strong sustainability" investments outperformed weak sustainability investments, tackling the idea of a trade-off between positive impact and financial return. while the Global Impact Investing Network's 2015 report on benchmarks and returns in impact investing in private equity and venture capital found market-rate or market-beating returns were common in impact investments.

Impact investing

Impact Investing is the alternative investment (ie private equity) approach to Positive investing. In 2014, the UK's presidency of the G8 created a Social Impact Investment Task Force which produced a series of reports that defined impact investing as "those that intentionally target specific social objectives along with a financial return and measure the achievement of both." Impact investing, capitalizes businesses that potentially provide social or environmental impact at a scale that purely philanthropic interventions usually cannot reach. This capital may be in a range of forms including private equity, debt, working capital lines of credit, and loan guarantees. Examples in recent decades include many investments in microfinance, community development finance, and clean technology. Impacting investing has its roots in the venture capital community, and an investor will often take active role mentoring or leading the growth of the company or start-up.

Community investment

By investing directly in an institution, rather than purchasing stock, an investor is able to create a greater social impact: money spent purchasing stock in the secondary market accrues to the stock's previous owner and may not generate social good, while money invested in a community institution is put to work. For example, money invested in a Community Development Financial Institution may be used by that institution to alleviate poverty or inequality, spread access to capital to under-served communities, support economic development or green business, or create other social good. In 1984, Trillium Asset Management's founder, Joan Bavaria, invited Chuck Matthei of the Institute for Community Economics (ICE), an organization that helps communities create and sustain land trusts, to a meeting of US SIF. It is likely that this was the first time a nonprofit organization with a loan fund would meet directly with SRI managers. Trillium clients began investing in ICE later that year.

Global context

Socially responsible investing is a global phenomenon. With the international scope of business itself, social investors frequently invest in companies with international operations. As international investment products and opportunities have expanded, so have international SRI products. The ranks of social investors are growing throughout developed and developing countries. In 2006, the United Nations Environment Programme launched its Principles for Responsible Investment which provide a framework for investors to incorporate environmental, social, and governance (ESG) factors into the investment process. PRI has more than 1,500 signatories managing more than US$60 trillion of assets.

Ethical investment in the UK

In 1985, Friends Provident launched the first ethically screened investment fund with criteria which excluded tobacco, arms, alcohol and oppressive regimes. Since 1985, over 90 investment funds have launched offering a wide range of investment criteria; both negatively screened and with positive investment criteria i.e. investing into companies involved in promoting sustainability.

Since 1985, most of the major investment organizations have launched ethical and socially responsible funds, although this has led to a great deal of discussion and debate over the use of the term "ethical" investment. This is because each of the fund management organizations tend to apply a slightly different approach to running their funds.

In recent years there has been growth in the market for high social impact investments; this is a style of investing where the businesses receiving investment have social or environmental goals as a primary purpose.

UK institutions are also getting more involved in social investing through impact investing funds, with those such as Deutsche Bank and NESTA, alongside other institutions such as Big Issue Invest, which is part of The Big Issue group.

As of June 2014, EIRIS estimated that there was over £13.5 billion invested in Britain’s green and ethical retail funds. This estimate is based on around 85 UK domiciled green or ethical retail funds and it seeks to not include UK money invested in ethical funds domiciled outside of the UK.

In higher education

In 2007, the Dwight Hall organization at Yale University launched the first undergraduate-run socially responsible investment fund in the United States, known as the Dwight Hall Socially Responsible Investment Fund.

Social responsibility

From Wikipedia, the free encyclopedia

Social responsibility is an ethical framework and suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large. Social responsibility is a duty every individual has to perform so as to maintain a balance between the economy and the ecosystems. A trade-off may exist between economic development, in the material sense, and the welfare of the society and environment, though this has been challenged by many reports over the past decade. Social responsibility means sustaining the equilibrium between the two. It pertains not only to business organizations but also to everyone whose any action impacts the environment. This responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by performing activities that directly advance social goals. Social responsibility must be intergenerational since the actions of one generation have consequences on those following.

Businesses can use ethical decision making to secure their businesses by making decisions that allow for government agencies to minimize their involvement with the corporation. For instance if a company follows the United States Environmental Protection Agency (EPA) guidelines for emissions on dangerous pollutants and even goes an extra step to get involved in the community and address those concerns that the public might have; they would be less likely to have the EPA investigate them for environmental concerns. "A significant element of current thinking about privacy, however, stresses "self-regulation" rather than market or government mechanisms for protecting personal information". According to some experts, most rules and regulations are formed due to public outcry, which threatens profit maximization and therefore the well-being of the shareholder, and that if there is not an outcry there often will be limited regulation.

Some critics argue that corporate social responsibility (CSR) distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing, or "greenwashing"; others argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful corporations though there is no systematic evidence to support these criticisms. A significant number of studies have shown no negative influence on shareholder results from CSR but rather a slightly negative correlation with improved shareholder returns.

Corporate social responsibility

Corporate social responsibility or CSR has been defined by Lord Holme and Richard Watts in the World Business Council for Sustainable Development's publication "Making Good Business Sense" as "…the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large." CSR is one of the newest management strategies where companies try to create a positive impact on society while doing business. Evidence suggests that CSR taken on voluntarily by companies will be much more effective than CSR mandated by governments. There is no clear-cut definition of what CSR comprises. Every company has different CSR objectives though the main motive is the same. All companies have a two-point agenda—to improve qualitatively (the management of people and processes) and quantitatively (the impact on society). The second is as important as the first and stake holders of every company are increasingly taking an interest in "the outer circle"-the activities of the company and how these are impacting the environment and society. The other motive behind this is that the companies should not be focused only on maximization of profits.

While many corporations include social responsibility in their operations, it is still important for those procuring the goods and services to ensure the products are socially sustainable. Verification tools are available from a multitude of entities internationally, such as the Underwriters Laboratories environmental standards, BIFMA, BioPreferred, and Green Seal. These resources help corporations and their consumers identify potential risks associated with a product's lifecycle and enable end users to confirm the corporation's practices adhere to social responsibility ideals.

Scientists and engineers

One common view is that scientists and engineers are morally responsible for the negative consequences which result from the various applications of their knowledge and inventions. After all, if scientists and engineers take personal pride in the many positive achievements of science and technology, why should they be allowed to escape responsibility for the negative consequences related to the use or abuse of scientific knowledge and technological innovations? Furthermore, scientists and engineers have a collective responsibility for the choice and conduct of their work. Committees of scientists and engineers are often involved in the planning of governmental and corporate research programs, including those devoted to the development of military technologies and weaponry. Many professional societies and national organizations, such as the National Academy of Science and the National Academy of Engineering in the United States, have ethical guidelines. Clearly, there is recognition that scientists and engineers, both individually and collectively, have a special and much greater responsibility than average citizens with respect to the generation and use of scientific knowledge.

Unfortunately, it has been pointed out that the situation is not that simple and scientists and engineers should not be blamed for all the evils created by new scientific knowledge and technological innovations. First, there is the common problem of fragmentation and diffusion of responsibility. Because of the intellectual and physical division of labor, the resulting fragmentation of knowledge, the high degree of specialization, and the complex and hierarchical decision-making process within corporations and government research laboratories, it is exceedingly difficult for individual scientists and engineers to control the applications of their innovations. This fragmentation of both work and decision-making results in fragmented moral accountability, often to the point where "everybody involved was responsible but none could be held responsible."

Another problem is ignorance. The scientists and engineers cannot predict how their newly generated knowledge and technological innovations may be abused or misused for destructive purposes in the near or distant future. While the excuse of ignorance is somewhat acceptable for those scientists involved in very basic and fundamental research where potential applications cannot be even envisioned, the excuse of ignorance is much weaker for scientists and engineers involved in applied scientific research and technological innovation since the work objectives are well known. For example, most corporations conduct research on specific products or services that promise to yield the greatest possible profit for share-holders. Similarly, most of the research funded by governments is mission-oriented, such as protecting the environment, developing new drugs, or designing more lethal weapons. In all cases where the application of scientific knowledge and technological innovation is well known a priori, it is impossible for a scientist or engineer to escape responsibility for research and technological innovation that is morally dubious. As John Forge writes in Moral Responsibility and the Ignorant Scientist: "Ignorance is not an excuse precisely because scientists can be blamed for being ignorant."

Another point of view is that responsibility falls on those who provide the funding for the research and technological developments, which in most cases are corporations and government agencies. Furthermore, because taxpayers provide indirectly the funds for government-sponsored research, they and the politicians that represent them, i.e., society at large, should be held accountable for the uses and abuses of science. Compared to earlier times when scientists could often conduct their own research independently, today's experimental research requires expensive laboratories and instrumentation, making scientists dependent on those who pay for their studies.

Quasi-legal instruments, or soft law principle has received some normative status in relation to private and public corporations in the United Nations Educational, Scientific and Cultural Organization (UNESCO) Universal Declaration on Bioethics and Human Rights developed by the UNESCO International Bioethics Committee particularly in relation to child and maternal welfare.(Faunce and Nasu 2009) The International Organization for Standardization will "encourage voluntary commitment to social responsibility and will lead to common guidance on concepts, definitions and methods of evaluation."

Corporate social responsibility

From Wikipedia, the free encyclopedia

Corporate social responsibility (CSR, also called corporate sustainability, sustainable business, corporate conscience, corporate citizenship or responsible business) is a type of international private business self-regulation. While once it was possible to describe CSR as an internal organisational policy or a corporate ethic strategy, that time has passed as various international laws have been developed and various organisations have used their authority to push it beyond individual or even industry-wide initiatives. While it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organisations, to mandatory schemes at regional, national and even transnational levels.

Considered at the organisational level, CSR is an organisational policy. As such, it must align with and be integrated into a business model to be successful. With some models, a firm's implementation of CSR goes beyond compliance with regulatory requirements, and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law". The choices of 'complying' with the law, failing to comply, and 'going beyond' are three distinct strategic organisational choices. While in many areas such as environmental or labor regulations, employers may choose to comply with the law, or go beyond the law, other organisations may choose to flout the law. These organisations are taking on clear legal risks. The nature of the legal risk, however, changes when attention is paid to soft law. Soft law may incur legal liability particularly when businesses make misleading claims about their sustainability or other ethical credentials and practices. Overall, businesses may engage in CSR for strategic or ethical purposes. From a strategic perspective, the aim is to increase long-term profits and shareholder trust through positive public relations and high ethical standards to reduce business and legal risk by taking responsibility for corporate actions. CSR strategies encourage the company to make a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others. From an ethical perspective, some businesses will adopt CSR policies and practices because of ethical beliefs of senior management. For example, a CEO may believe that harming the environment is ethically objectionable.

Proponents argue that corporations increase long-term profits by operating with a CSR perspective, while critics argue that CSR distracts from businesses' economic role. A 2000 study compared existing econometric studies of the relationship between social and financial performance, concluding that the contradictory results of previous studies reporting positive, negative, and neutral financial impact, were due to flawed empirical analysis and claimed when the study is properly specified, CSR has a neutral impact on financial outcomes. Critics questioned the "lofty" and sometimes "unrealistic expectations" in CSR. or that CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. In line with this critical perspective, political and sociological institutionalists became interested in CSR in the context of theories of globalization, neoliberalism and late capitalism. Some institutionalists viewed CSR as a form of capitalist legitimacy and in particular point out that what began as a social movement against uninhibited corporate power was transformed by corporations into a 'business model' and a 'risk management' device, often with questionable results.

CSR is titled to aid an organization's mission as well as serve as a guide to what the company represents for its consumers. Business ethics is the part of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. ISO 26000 is the recognized international standard for CSR. Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles, but with no formal act of legislation.

Definition

Since the 1960s, corporate social responsibility has attracted attention from a range of businesses and stakeholders. A wide variety of definitions have been developed but with little consensus. Part of the problem with definitions has arisen because of the different interests represented. A business person may define CSR as a business strategy, an NGO activist may see it as 'greenwash' while a government official may see it as voluntary regulation." In addition, disagreement about the definition will arise from the disciplinary approach." For example, while an economist might consider the director's discretion necessary for CSR to be implemented a risk of agency costs, a law academic may consider that discretion to be an appropriate expression of what the law demands from directors.

Corporate social responsibility has recently been defined by Sheehy as "international private business self-regulation." Sheehy examined a range of different disciplinary approaches to defining CSR. The definitions reviewed included the economic definition of "sacrificing profits," a management definition of "beyond compliance", institutionalist views of CSR as a "socio-political movement" and law's own focus on directors' duties. Further, Sheehy considered Carroll's widely used description of CSR as a pyramid of responsibilities, namely, economic, legal, ethical and philanthropic responsibilities. Importantly, while Carroll was not defining CSR but simply arguing for classification of activities, Sheehy developed a definition differently following the philosophy of science—the branch of philosophy used for defining phenomena.

Carroll 1991 extended corporate social responsibility from the traditional economic and legal responsibility to ethical and philanthropic responsibility in response to the rising concerns on ethical issues in businesses, . This view is reflected in the Business Dictionary which defines CSR as "A company's sense of responsibility towards the community and environment (both ecological and social) in which it operates. Companies express this citizenship (1) through their waste and pollution reduction processes, (2) by contributing educational and social programs and (3) by earning adequate returns on the employed resources."

Consumer perspectives

“	Businesses have changed when the public came to expect and require different behavior [...] I predict that in the future, just as in the past, changes in public attitudes will be essential for changes in businesses' environmental practices.	”
— Jared Diamond, "Big businesses and the environment"

Most consumers agree that while achieving business targets, companies should engage in CSR efforts at the same time. Most consumers believe companies doing charity work will receive a positive response. Somerville also found that consumers are loyal and willing to spend more on retailers that support charity. Consumers also believe that retailers selling local products will gain loyalty. Smith (2013) shares the belief that marketing local products will gain consumer trust. However, environmental efforts are receiving negative views given the belief that this would affect customer service. Oppewal et al. (2006) found that not all CSR activities are attractive to consumers. They recommended that retailers focus on one activity. Becker-Olsen (2006) found that if the social initiative done by the company is not aligned with other company goals it will have a negative impact. Mohr et al. (2001) and Groza et al. (2011) also emphasize the importance of reaching the consumer.

 

 

 

 

Approaches

CSR Approaches

Some commentators have identified a difference between the Canadian (Montreal school of CSR), the Continental European and the Anglo-Saxon approaches to CSR. It is said that for Chinese consumers, a socially responsible company makes safe, high-quality products; for Germans it provides secure employment; in South Africa it makes a positive contribution to social needs such as health care and education. And even within Europe the discussion about CSR is very heterogeneous.

A more common approach to CSR is corporate philanthropy. This includes monetary donations and aid given to nonprofit organizations and communities. Donations are made in areas such as the arts, education, housing, health, social welfare and the environment, among others, but excluding political contributions and commercial event sponsorship.

Another approach to CSR is to incorporate the CSR strategy directly into operations, such as procurement of Fair Trade tea and coffee.

Creating shared value or CSV is based on the idea that corporate success and social welfare are interdependent. A business needs a healthy, educated workforce, sustainable resources and adept government to compete effectively. For society to thrive, profitable and competitive businesses must be developed and supported to create income, wealth, tax revenues and philanthropy. The Harvard Business Review article Strategy & Society: The Link between Competitive Advantage and Corporate Social Responsibility provided examples of companies that have developed deep linkages between their business strategies and CSR. CSV acknowledges trade-offs between short-term profitability and social or environmental goals, but emphasizes the opportunities for competitive advantage from building a social value proposition into corporate strategy. CSV gives the impression that only two stakeholders are important - shareholders and consumers.

Many companies employ benchmarking to assess their CSR policy, implementation and effectiveness. Benchmarking involves reviewing competitor initiatives, as well as measuring and evaluating the impact that those policies have on society and the environment, and how others perceive competitor CSR strategy.

Cost-benefit analysis

In competitive markets cost-benefit analysis of CSR initiatives can be examined using a resource-based view (RBV). According to Barney (1990), "formulation of the RBV, sustainable competitive advantage requires that resources be valuable (V), rare (R), inimitable (I) and non-substitutable (S)." A firm introducing a CSR-based strategy might only sustain high returns on their investment if their CSR-based strategy could not be copied (I). However, should competitors imitate such a strategy, that might increase overall social benefits. Firms that choose CSR for strategic financial gain are also acting responsibly.

RBV presumes that firms are bundles of heterogeneous resources and capabilities that are imperfectly mobile across firms. This imperfect mobility can produce competitive advantages for firms that acquire immobile resources. McWilliams and Siegel (2001) examined CSR activities and attributes as a differentiation strategy. They concluded that managers can determine the appropriate level of investment in CSR by conducting cost benefit analysis in the same way that they analyze other investments.

Reinhardt (1998) found that a firm engaging in a CSR-based strategy could only sustain an abnormal return if it could prevent competitors from imitating its strategy.

Scope

Initially, CSR emphasized the official behaviour of individual firms. Later, it expanded to include supplier behaviour and the uses to which products were put and how they were disposed of after they lost value.

Supply chain

In the 21st century, corporate social responsibility in the supply chain has attracted attention from businesses and stakeholders. Corporations' supply chain is the process by which several organizations including suppliers, customers and logistics providers work together to provide a value package of products and services to the end user, who is the customer.

Corporate social irresponsibility in the supply chain has greatly affected the reputation of companies, leading to a lot of cost to solve the problems. For instance, incidents like the 2013 Savar building collapse, which killed over 1000 people, pushed companies to consider the impacts of their operations on society and environment. On the other side, the horse meat scandal of 2013 in the United Kingdom affected many food retailers, including Tesco, the largest retailer in the United Kingdom, leading to the dismissal of the supplier. Corporate social irresponsibility from both the suppliers and the retailers has greatly affected the stakeholders who lost trust for the affected business entities, and despite the fact that sometimes it's not directly undertaken by the companies, they become accountable to the stakeholders. These surrounding issues have prompted supply chain management to consider the corporate social responsibility context. Wieland and Handfield (2013) suggested that companies need to include social responsibility in their reviews of component quality. They highlighted the use of technology in improving visibility across the supply chain.

Corporate social initiatives

Corporate social responsibility includes six types of corporate social initiatives:

• Corporate philanthropy: company donations to charity, including cash, goods, and services, sometimes via a corporate foundation
• Community volunteering: company-organized volunteer activities, sometimes while an employee receives pay for pro-bono work on behalf of a non-profit organization
• Socially-responsible business practices: ethically produced products which appeal to a customer segment
• Cause promotions: company-funded advocacy campaigns
• Cause-related marketing: donations to charity based on product sales
• Corporate social marketing: company-funded behavior-change campaigns

All six of the corporate initiatives are forms of corporate citizenship. However, only some of these CSR activities rise to the level of cause marketing, defined as "a type of corporate social responsibility (CSR) in which a company's promotional campaign has the dual purpose of increasing profitability while bettering society."

Companies generally do not have a profit motive when participating in corporate philanthropy and community volunteering. On the other hand, the remaining corporate social initiatives can be examples of cause marketing, in which there is both a societal interest and profit motive.

Implementation

CSR may be based within the human resources, business development or public relations departments of an organisation, or may be a separate unit reporting to the CEO or the board of directors.

Engagement plan

An engagement plan can assist in reaching a desired audience. A corporate social responsibility individual or team plans the goals and objectives of the organization. As with any corporate activity, a defined budget demonstrates commitment and scales the program's relative importance.

Accounting, auditing and reporting

Social accounting is the communication of social and environmental effects of a company's economic actions to particular interest groups within society and to society at large.

Social accounting emphasizes the notion of corporate accountability. Crowther defines social accounting as "an approach to reporting a firm's activities which stresses the need for the identification of socially relevant behavior, the determination of those to whom the company is accountable for its social performance and the development of appropriate measures and reporting techniques." Reporting guidelines and standards serve as frameworks for social accounting, auditing and reporting:

• AccountAbility's AA1000 standard, based on John Elkington's triple bottom line (3BL) reporting
• The Prince's Accounting for Sustainability Project's Connected Reporting Framework
• The Fair Labor Association conducts audits based on its Workplace Code of Conduct and posts audit results on the FLA website.
• The Fair Wear Foundation verifies labour conditions in companies' supply chains, using interdisciplinary auditing teams.
• Global Reporting Initiative's Sustainability Reporting Guidelines
• Economy for the Common Good's Common Good Balance Sheet
• GoodCorporation's standard developed in association with the Institute of Business Ethics
• Synergy Codethic 26000 Social Responsibility and Sustainability Commitment Management System (SRSCMS) Requirements—Ethical Business Best Practices of Organizations—the necessary management system elements to obtain a certifiable ethical commitment management system. The standard scheme has been build around ISO 26000 and UNCTAD Guidance on Good Practices in Corporate Governance. The standard is applicable by any type of organization.;
• Earthcheck Certification / Standard
• Social Accountability International's SA8000 standard
• Standard Ethics Aei guidelines
• The ISO 14000 environmental management standard
• The United Nations Global Compact requires companies to communicate on their progress (or to produce a Communication on Progress, COP), and to describe the company's implementation of the Compact's ten universal principles.
• The United Nations Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) provides voluntary technical guidance on eco-efficiency indicators, corporate responsibility reporting, and corporate governance disclosure.
• The FTSE Group publishes the FTSE4Good Index, an evaluation of CSR performance of companies.
• EthicalQuote (CEQ) tracks reputation of the world's largest companies on Environmental, Social, Governance (ESG), Corporate Social Responsibility, ethics and sustainability.
• The Islamic Reporting Initiative (IRI) is a not-for-profit organization which leads the creation of the IRI framework; the guiding integrated CSR reporting framework based on Islamic principles and values.

In nations such as France, legal requirements for social accounting, auditing and reporting exist, though international or national agreement on meaningful measurements of social and environmental performance has not been achieved. Many companies produce externally audited annual reports that cover Sustainable Development and CSR issues ("Triple Bottom Line Reports"), but the reports vary widely in format, style, and evaluation methodology (even within the same industry). Critics dismiss these reports as lip service, citing examples such as Enron's yearly "Corporate Responsibility Annual Report" and tobacco companies' social reports.

In South Africa, as of June 2010, all companies listed on the Johannesburg Stock Exchange (JSE) were required to produce an integrated report in place of an annual financial report and sustainability report. An integrated report reviews environmental, social and economic performance alongside financial performance. This requirement was implemented in the absence of formal or legal standards. An Integrated Reporting Committee (IRC) was established to issue guidelines for good practice.

One of the reputable institutions that capital markets turn to for credible sustainability reports is the Carbon Disclosure Project, or CDP.

Verification

Corporate social responsibility and its resulting reports and efforts should be verified by the consumer of the goods and services. The accounting, auditing and reporting resources provide a foundation for consumers to verify that their products are socially sustainable. Due to an increased awareness of the need for CSR, many industries have their own verification resources. The include organizations like the Forest Stewardship Council (paper and forest products), International Cocoa Initiative, and Kimberly Process (diamonds). The United Nations also provides frameworks not only for verification, but for reporting of human rights violations in corporate supply chains.

Ethics training

The rise of ethics training inside corporations, some of it required by government regulation, has helped CSR to spread. The aim of such training is to help employees make ethical decisions when the answers are unclear. The most direct benefit is reducing the likelihood of "dirty hands", fines and damaged reputations for breaching laws or moral norms. Organizations see increased employee loyalty and pride in the organization.

Common actions

Common CSR actions include:

• Environmental sustainability: recycling, waste management, water management, renewable energy, reusable materials, 'greener' supply chains, reducing paper use and adopting Leadership in Energy and Environmental Design (LEED) building standards.
• Community involvement: This can include raising money for local charities, providing volunteers, sponsoring local events, employing local workers, supporting local economic growth, engaging in fair trade practices, etc.
• Ethical marketing: Companies that ethically market to consumers are placing a higher value on their customers and respecting them as people who are ends in themselves. They do not try to manipulate or falsely advertise to potential consumers. This is important for companies that want to be viewed as ethical.

Social license to operate

Social License to Operate can be determined as a contractual grounds for the legitimacy of activities and projects company is involved in. It refers to the level of support and approval of a company’s activities by its stakeholders. Displaying commitment to CSR is one way to achieve social license, by enhancing a company's reputation.

As stated in Enduring value: the Australian minerals industry framework for sustainable development the concept of the 'social license to operate', then defined simply as obtaining and maintaining broad community support and acceptance. Unless a company earns and maintains that license social license holders may intend to block project developments; employees may leave the company for a company that is a better corporate citizen: and companies may be under ongoing legal challenge.

In research of Requisite Organization Dr Elliott Jaques defines Social License to Operate for the company as the social contract the company has with the social license holders (employees, trade unions, communities, government)  for them to manifest positive intention to support the business short- and long-term objectives by “providing managerial leadership that nurtures the social good and also gives the foundation for sustainable growth in organizational results.”

The primary objective for the companies is to obtain and maintain the Social License to Operate. Based on the Requisite Organization research of Dr. Elliott Jaques to achieve this goal a company needs to:

• Identify the business strategy and business objectives
• Identify the social license holders (employees of a company, labour unions, local and national governments, communities, activist groups, etc.) for every business objectives
• Identify the support that the company desires to achieve from the social license holders by specifying for every business objective social license elements (target of support, context of support, time of support, action of support)
• Quantitatively measure the intention (positive or negative) of the social license holders to support the business objectives
• Identify the factors that negatively impact the intention of the social license holders to support the business objectives (strength of their belief in support, their evaluation of support outcomes, pressure to provide support, enablers / disablers of support, etc.)
• Develop the Social License Development Strategy to remove the negative factors and ensure positive intention of all the social license holders to support all the business objectives of the company.
• Perform ongoing monitoring and quantitative measurement of changes in the Social License to Operate of the company   

Potential business benefits

A large body of literature exhorts business to adopt non-financial measures of success (e.g., Deming's Fourteen Points, balanced scorecards). While CSR benefits are hard to quantify, Orlitzky, Schmidt and Rynes found a correlation between social/environmental performance and financial performance.
The business case for CSR within a company employs one or more of these arguments:

Triple bottom line

"People, planet and profit", also known as the triple bottom line, form one way to evaluate CSR. "People" refers to fair labour practices, the community and region where the business operates. "Planet" refers to sustainable environmental practices. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital (unlike accounting definitions of profit).

This measure was claimed to help some companies be more conscious of their social and moral responsibilities. However, critics claim that it is selective and substitutes a company's perspective for that of the community. Another criticism is about the absence of a standard auditing procedure.
The term was coined by John Elkington in 1994.

Human resources

A CSR program can be an aid to recruitment and retention, particularly within the competitive graduate student market. Potential recruits often consider a firm's CSR policy. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fundraising activities or community volunteering. CSR has been credited with encouraging customer orientation among customer-facing employees.

CSR is known for impacting employee turnover. Several executives suggest that employees are their most valuable asset and that the ability to retain them leads to organization success. Socially responsible activities promote fairness, which in turn generate lower employee turnover. On the other hand, if an irresponsible behavior is demonstrated by a firm, employees may view this behavior as negative. Proponents argue that treating employees well with competitive pay and good benefits is seen as a socially responsible behavior and therefore reduces employee turnover. Executives have a strong desire for building a positive work context that benefits CSR and the company as a whole. This interest is driven particularly by the realization that a positive work environment can result in desirable outcomes such as more favorable job attitudes and increased work performance.

The IBM Institute for Business Value conducted a survey of 250 business leaders worldwide in 2008. The survey found out that businesses have assimilated a much more strategic view, and that 68% companies reported are utilizing CSR as an opportunity and part of a sustainable growth strategy. The authors noted that while developing and implementing a CSR strategy represents a unique opportunity to benefit the company. However, only 31% of businesses surveyed engaged their employees on the company's CSR objectives and initiatives. The survey's authors also stated that employee engagement on CSR initiatives can be a powerful recruitment and retention tool. As a result, employees tend to discard employers with a bad reputation.

Risk management

Managing risk is an important executive responsibility. Reputations that take decades to build up can be ruined in hours through corruption scandals or environmental accidents. These draw unwanted attention from regulators, courts, governments and media. CSR can limit these risks.

Brand differentiation

CSR can help build customer loyalty based on distinctive ethical values. Some companies use their commitment to CSR as their primary positioning tool, e.g., The Co-operative Group, The Body Shop and American Apparel.

Some companies use CSR methodologies as a strategic tactic to gain public support for their presence in global markets, helping them sustain a competitive advantage by using their social contributions as another form of advertising.

Companies that operate strong CSR activities tend to drive customer's attention to buy products or services regardless of the price. As a result, this increases competition among firms since customers are aware of the company's CSR practices. These initiatives serve as a potential differentiator because they not only add value to the company, but also to the products or services. Furthermore, firms under intense competition are able to leverage CSR to increase the impact of their distribution on the firm's performance. Lowering the carbon footprint of a firm's distribution network or engaging in fair trade are potential differentiators to lower costs and increase profits. In this scenario, customers can observe the company's commitment to CSR while increasing company sales.

Whole Foods' marketing and promotion of organic foods have had a positive effect on the supermarket industry. Proponents assert that Whole Foods has been able to work with its suppliers to improve animal treatment and quality of meat offered in their stores. They also promote local agricultures in over 2,400 independent farms to maintain their line of sustainable organic produce. As a result, Whole Foods' high prices do not turn customers away from shopping. In fact, they are pleased buying organic products that come from sustainable practices.

According to a Harvard Business Review article, there are three theaters of practice in which CSR can be divided. Theater one focuses on philanthropy, which includes donations of money or equipment to non-profit organizations, engagement with communities' initiatives and employee volunteering. This is characterized as the "soul" of a company, expressing the social and environmental priorities of the founders. The authors assert that companies engage in CSR because they are an integral part of the society. The Coca-Cola Company contributes with $88.1 million annually to a variety of environmental educational and humanitarian organization. Another example is PNC Financial Services' "Grow Up Great" childhood education program. This program provides critical school readiness resources to underserved communities where PNC operates.

On the other hand, theater two focuses on improving operational effectiveness in the workplace. The researchers assert that programs in this theater strive to deliver social or environmental benefits to support a company's operation across the value chain by improving efficiency. Some of the examples mentioned include sustainability initiatives to reduce resource use, waste, and emission that could potentially reduce costs. It also calls for investing in employee work conditions such as health care and education which may enhance productivity and retention. Unlike philanthropic giving, which is evaluated by its social and environmental return, initiatives in the second theater are predicted to improve the corporate bottom line with social value. Bimbo, the largest bakery in Mexico, is an excellent example of this theater. The company strives to meet social welfare needs. It offers free educational service to help employees complete high school. Bimbo also provides supplementary medical care and financial assistance to close gaps in the government health coverage.

Moreover, the third theater program aims to transform the business model. Basically, companies create new forms of business to address social or environmental challenges that will lead to financial returns in the long run. One example can be seen in Unilever's Project Shakti in India. The authors describe that the company hires women in villages and provides them with micro-finance loans to sell soaps, oils, detergents, and other products door-to-door. This research indicates that more than 65,000 women entrepreneurs are doubling their incomes while increasing rural access and hygiene in Indian villages. Another example is IKEA's People and Planet initiative to be 100% sustainable by 2020. As a consequence, the company wants to introduce a new model to collect and recycle old furniture.

Reduced scrutiny

Corporations are keen to avoid interference in their business through taxation or regulations. A CSR program can persuade governments and the public that a company takes health and safety, diversity and the environment seriously, reducing the likelihood that company practices will be closely monitored.

Supplier relations

Appropriate CSR programs can increase the attractiveness of supplier firms to potential customer corporations. E.g., a fashion merchandiser may find value in an overseas manufacturer that uses CSR to establish a positive image—and to reduce the risks of bad publicity from uncovered misbehavior.

Criticisms and concerns

CSR concerns include its relationship to the purpose of business and the motives for engaging in it.

Nature of business

Milton Friedman and others argued that a corporation's purpose is to maximize returns to its shareholders and that obeying the laws of the jurisdictions within which it operates constitutes socially responsible behavior.

While some CSR supporters claim that companies practicing CSR, especially in developing countries, are less likely to exploit workers and communities, critics claim that CSR itself imposes outside values on local communities with unpredictable outcomes.

Better governmental regulation and enforcement, rather than voluntary measures, are an alternative to CSR that moves decision-making and resource allocation from public to private bodies. However, critics claim that effective CSR must be voluntary as mandatory social responsibility programs regulated by the government interferes with people's own plans and preferences, distorts the allocation of resources, and increases the likelihood of irresponsible decisions.

Motives

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A story of CSR promoted by Azim Premji Foundation in India

Some critics believe that CSR programs are undertaken by companies to distract the public from ethical questions posed by their core operations. They argue that the reputational benefits that CSR companies receive (cited above as a benefit to the corporation) demonstrate the hypocrisy of the approach. Moreover, some studies find that CSR programs are motivated by corporate managers' personal interests at the cost of the shareholders so they are a type of an agency problem in corporations.

Others have argued that the primary purpose of CSR is to provide legitimacy to the power of businesses. As wealth inequality is perceived to be increasing it has become increasingly necessary for businesses to justify their position of power. Bakan is one of the most prominent critics of the conflict of interest between private profit and public good, and his argument is summarised by Haynes that "a corporate calculus exists in which costs are pushed onto both workers, consumers and the environment". CSR spending may be seen in these financial terms, whereby the higher costs of socially undesirable behaviour are offset by a CSR spending of a lower amount. Indeed, it has been argued that there is a "halo effect" in terms of CSR spending. Research has found that firms which had been convicted of bribery in the USA under the Foreign Corrupt Practices Act (FCPA) received more lenient fines if they had been seen to be actively engaging in comprehensive CSR practices. It was found that typically either a 20% increase in corporate giving or a commitment to eradicating a significant labour issue, such as child labour, was equated to a 40% lower fine in the case of bribing foreign officials.

Aguinis and Glavas conducted a comprehensive review of CSR literature, covering 700 academic sources from numerous fields including organizational behaviour, corporate strategy, marketing and HRM. It was found that the primary reason for firms to engage in CSR were the expected financial benefits associated with CSR, rather than being motivated a desire to be responsible to society.

Ethical ideologies

CEOs' political ideologies are evident manifestations of their different personal views. Each CEO may exercise different powers according to their organizational outcomes. In fact, their political ideologies are expected to influence their preferences for the CSR outcomes. Proponents argue that politically liberal CEOs will envision the practice of CSR as beneficial and desirable to increase a firm's reputation. They tend to focus more on how the firm can meet the needs of the society. As a consequence, they will advance with the practice of CSR while adding value to the firm. On the other hand, property rights may be more relevant to conservative CEOs. Since conservatives tend to value free markets, individualism and call for a respect of authority, they will not likely envision this practice as often as those identifying as liberals might.

The financials of the company and the practice of CSR also have a positive relationship. Moreover, the performance of a company tends to influence conservatives more likely than liberals. While not seeing it from the financial performance point of view, liberals tend to hold a view that CSR adds to the business triple bottom line. For instance, when the company is performing well, they will most likely promote CSR. If the company is not performing as expected, they will rather tend to emphasize this practice because they will potentially envision it as a way to add value to the business. In contrast, politically conservative CEOs will tend to support the practice of CSR if they hold a view that it will provide a good return to the financials of the company. In other words, this type of executives tend to not see the outcome of CSR as a value to the company if it does not provide anything in exchange.

Misdirection

There have been unsubstantiated social efforts, ethical claims, and outright greenwashing by some companies that has resulted in increasing consumer cynicism and mistrust. Sometimes companies use CSR to direct public attention away from other, harmful business practices. For example, McDonald's Corporation positioned its association with Ronald McDonald House and other children's charities as CSR while its meals have been accused of promoting poor eating habits.

Acts which may initially appear to be altruistic CSR may have ulterior motives. The funding of scientific research projects has been used as a source of misdirection by firms. Prusiner, who discovered the protein responsible of CJD and won of the 1997 Nobel prize in Medicine, thanks the tobacco company RJ Reynolds for their crucial support. RJ Reynolds funded the research into CJD. Proctor states that "the tobacco industry was the leading funder of research into genetics, viruses, immunology, air pollution" anything which formed a distraction from the well-established research linking smoking and cancer.

Research has also found that corporate social marketing, a form of CSR promoting societal good, is being used to direct criticism away from the damaging practices of the alcohol industry. It has been shown that adverts which supposedly encourage responsible drinking simultaneously aim to promote drinking as a social norm. Companies may engage in CSR and social marketing in this case to prevent more stringent government legislation on alcohol marketing.

Controversial industries

Industries such as tobacco, alcohol or munitions firms make products that damage their consumers or the environment. Such firms may engage in the same philanthropic activities as those in other industries. This duality complicates assessments of such firms with respect to CSR.

The Kizhakkambalam takeover

Textile company Kitex has taken over the administration of an entire Indian village called Kizhakkambalam near Cochin by winning the local body elections. Environmentalists and mainstream politicians of India point out that this can lead to a dangerous precedent because the company got actively involved in CSR only after they were caught red-handed in polluting the village.

Stakeholder influence

One motivation for corporations to adopt CSR is to satisfy stakeholders.

Branco and Rodrigues (2007) describe the stakeholder perspective of CSR as the set of views of corporate responsibility held by all groups or constituents with a relationship to the firm. In their normative model the company accepts these views as long as they do not hinder the organization. The stakeholder perspective fails to acknowledge the complexity of network interactions that can occur in cross-sector partnerships. It relegates communication to a maintenance function, similar to the exchange perspective.

Ethical consumerism

The rise in popularity of ethical consumerism over the last two decades can be linked to the rise of CSR. Consumers are becoming more aware of the environmental and social implications of their day-to-day consumption decisions and in some cases make purchasing decisions related to their environmental and ethical concerns.

One issue with the consumer's relationship with CSR is that it is much more complex than it first appears. In their paper on the consumer and CSR, Janssen and Vanhamme looked into a phenomenon that they termed the "CSR-Consumer Paradox". This describes the mismatch that occurs where consumers report that they would only buy from companies with good social responsibility. A survey by Cohn & Wolfe found that globally over 60% of consumers want to buy from responsible companies. However, Janssen and Vanhamme reported that less than 4% of average household expenditure in the UK in 2010 was ethical. This indicates that there is a clear discrepancy between consumer beliefs and intentions, and actual consumer behaviour, so that when it comes down to their actual purchase behaviour, CSR has a much lesser impact than consumers initially say it does.
One theory put forward for explaining the "CSR-Consumer Paradox" is that of "bystander apathy" or the bystander effect. This theory stems from the social psychology works of Darley and Latané and states that the likelihood of an individual acting in a given situation is greatly reduced if other bystanders do nothing even if that individual strongly believes in a certain course of action. In terms of explaining the CSR-Consumer Paradox, this theory would suggest an "If they do not care then why should I?" mentality. So even if a consumer is against the use of sweatshops or wants to support green causes, they may continue to make purchases from companies that are socially irresponsible just because other consumers seem apathetic towards the issue.

A second explanation issued by Janssen and Vanhamme is that of reciprocal altruism. This is a key concept in evolutionary psychology that is argued to fuel all human behaviour: people only do something if they can get something back in return. In the case of CSR and ethical consumerism, however, consumers get very little in return for their investment. Ethically sourced or manufactured products are typically higher in price due to greater costs. However, the reward for consumers is not much different from that of a non-ethical counterpart. Therefore, evolutionary speaking making an ethical purchase is not worth the higher cost to the individual even if they believe in supporting ethically, environmentally and socially beneficial causes.

Socially responsible investing

Shareholders and investors, through socially responsible investing, are using their capital to encourage behavior they consider responsible. However, definitions of what constitutes ethical behavior vary. For example, some religious investors in the US have withdrawn investment from companies that violate their religious views, while secular investors divest from companies that they see as imposing religious views on workers or customers.

Public policies

Some national governments promote socially and environmentally responsible corporate practices. The heightened role of government in CSR has facilitated the development of numerous CSR programs and policies. Various European governments have pushed companies to develop sustainable corporate practices. CSR critics such as Robert Reich argued that governments should set the agenda for social responsibility with laws and regulation that describe how to conduct business responsibly.

Regulation

Fifteen European Union countries are actively engaged in CSR regulation and public policy development. CSR efforts and policies are different among countries, responding to the complexity and diversity of governmental, corporate and societal roles. Some studies have claimed that the role and effectiveness of these actors were case-specific. This variety among company approaches to CSR can complicate regulatory processes.

Canada adopted CSR in 2007. Prime Minister Harper encouraged Canadian mining companies to meet Canada's newly developed CSR standards.

The 'Heilbronn Declaration' is a voluntary agreement of enterprises and institutions in Germany especially of the Heilbronn-Franconia region signed the 15th of September 2012. The approach of the 'Heilbronn Declaration' targets the decisive factors of success or failure, the achievements of the implementation and best practices regarding CSR. A form of responsible entrepreneurship shall be initiated to meet the requirements of stakeholders' trust in economy. It is an approach to make voluntary commitments more binding.

In opposition to mandated CSR regulation, Researchers Armstrong & Green suggest that all regulation is "harmful", citing regulation as the cause for North Korea's low economic freedom and per capita GDP. They further claim without source that "There is no form of market failure, however egregious, which is not eventually made worse by the political interventions intended to fix it," and conclude "there is no need for further research on regulation in the name of social responsibility."

Laws

In the 1800s, the US government could take away a firm's license if it acted irresponsibly. Corporations were viewed as "creatures of the state" under the law. In 1819, the United States Supreme Court in Dartmouth College vs. Woodward established a corporation as a legal person in specific contexts. This ruling allowed corporations to be protected under the Constitution and prevented states from regulating firms. Recently countries included CSR policies in government agendas.

On 16 December 2008, the Danish parliament adopted a bill making it mandatory for the 1100 largest Danish companies, investors and state-owned companies to include CSR information in their financial reports. The reporting requirements became effective on 1 January 2009. The required information included:

• CSR/SRI policies
• How such policies are implemented in practice
• Results and management expectations

CSR/SRI is voluntary in Denmark, but if a company has no policy on this it must state its positioning on CSR in financial reports.

In 1995, item S50K of the Income Tax Act of Mauritius mandated that companies registered in Mauritius paid 2% of their annual book profit to contribute to the social and environmental development of the country. In 2014, India also enacted a mandatory minimum CSR spending law. Under Companies Act, 2013, any company having a net worth of 500 crore or more or a turnover of 1,000 crore or a net profit of 5 crore must spend 2% of their net profits on CSR activities. The rules came into effect from 1 April 2014.

The only mandatory CSR law in the world thus far was passed by the Indian parliament in 2013 as Article 135 of the Companies Law. According to that bill, all firms with net worth above $75 million, turnover over $150 million, or net profit over $750,000 are required to spend at least 2% of their annual profits (averaged over three years). The law requires that all businesses affected establish a CSR committee to oversee the spending. Prior to this law’s passage, CSR laws applied to public sector companies only.

Crises and their consequences

Crises have encouraged the adoption of CSR. The CERES principles were adopted following the 1989 Exxon Valdez incident. Other examples include the lead paint used by toy maker Mattel, which required the recall of millions of toys and caused the company to initiate new risk management and quality control processes. Magellan Metals was found responsible for lead contamination killing thousands of birds in Australia. The company ceased business immediately and had to work with independent regulatory bodies to execute a cleanup. Odwalla experienced a crisis with sales dropping 90% and its stock price dropping 34% due to cases of E. coli. The company recalled all apple or carrot juice products and introduced a new process called "flash pasteurization" as well as maintaining lines of communication constantly open with customers.

Geography

Corporations that employ CSR behaviors do not always behave consistently in all parts of the world. Conversely, a single behavior may not be considered ethical in all jurisdictions. E.g., some jurisdictions forbid women from driving, while others require women to be treated equally in employment decisions.

UK retail sector

A 2006 study found that the UK retail sector showed the greatest rate of CSR involvement. Many of the big retail companies in the UK joined the Ethical Trading Initiative, an association established to improve working conditions and worker health.

Tesco (2013) reported that their 'essentials' are 'Trading responsibility', 'Reducing our Impact on the Environment', 'Being a Great Employer' and 'Supporting Local Communities'. J Sainsbury employs the headings 'Best for food and health', 'Sourcing with integrity', 'Respect for our environment', 'Making a difference to our community', and 'A great place to work', etc. The four main issues to which UK retail these companies committed are environment, social welfare, ethical trading and becoming an attractive workplace.

Top ten UK retail brands in 2013 based on Retail Week reports:

Retailer	Annual sales £bn
Tesco	42.8
Sainsbury's	22.29
Asda	21.66
Morrisons	17.66
Mark and Spencer	8.87
Co-operative Group	8.18
John Lewis Partnership	7.76
Boots	6.71
Home Retail Group	5.49
King Fisher	4.34

Anselmsson and Johansson (2007) assessed three areas of CSR performance: human responsibility, product responsibility and environmental responsibility. Martinuzzi et al. described the terms, writing that human responsibility is "the company deals with suppliers who adhere to principles of natural and good breeding and farming of animals, and also maintains fair and positive working conditions and work-place environments for their own employees. Product responsibility means that all products come with a full and complete list of content, that country of origin is stated, that the company will uphold its declarations of intent and assume liability for its products. Environmental responsibility means that a company is perceived to produce environmental-friendly, ecological, and non-harmful products". Jones et al. (2005) found that environmental issues are the most commonly reported CSR programs among top retailers.

CSR and US corporations updates

An article published in Forbes.com last September 2017 mentioned the yearly study of Boston-based reputation management consulting company Reputation Institute (RI) which rates the top 10 US corporations in terms of corporate social responsibility. RI monitors social responsibility reputations by focusing on perception of consumers regarding company governance, positive impact on the community and society, and treatment of the workforce. It rates each criterion with the firm’s proprietary RepTrak Pulse platform. Forbes identified the companies as Lego, Microsoft, Google, Walt Disney Company, BMW Group, Intel, Robert Bosch, Cisco Systems, Rolls-Royce Aerospace, and Colgate-Palmolive.

According to the CSR Journal, the millennial generation worldwide helps propel brands toward social responsibility. Many millennials want to conduct business with companies and trademarks that employ pro-social themes, sustainable manufacturing processes, and ethical business practices. Nielsen Holdings published its Annual Global Corporate Sustainability Report in 2017 concentrating on global responsibility as well as sustainability. Nielsen’s 2015 report showed that 66 percent of consumers will spend more on products that come from sustainable brands. Another 81 percent expect their preferred corporate institutions to reveal in public their statements about corporate citizenship.

The National Association on the Advancement of Colored People (NAACP) through its chief executive officer Derrick Johnson shared the organization’s insights on how American corporations can help in the realization of social justice. According to the article from Yahoo News, the NAACP has been engaged in a crusade for racial justice and economic opportunities during the last 109 years. This organization believes all citizens in the United States must be held liable in ensuring democracy works for all people.

Texts

• United Nations Guiding Principles on Business and Human Rights (2011)
• OECD Guidelines for Multinational Enterprises (2011)