CSR - A growing section on the Web

Wednesday, February 06, 2008

More and more investors and analysts are showing an interest in CSR, Corporate Social Responsibility.  This increases the need for companies to open up for work with CSR. Communication should therefore be seen as an important part of a company’s CSR strategy. An efficient channel for overall corporate communication is the corporate website, and it is also the primary source of corporate information for many financial analysts, investors and business journalists.

Today, more than 70 per cent of European companies communicate CSR through their corporate website. The percentage is even higher among the 150 largest companies in Europe, where almost 97 per cent have a separate CSR section on the web. Finnish companies are best in Europe in communicating their CSR activities, followed by the UK, the Netherlands, France, Spain and Norway. Swedish companies, which like the Finish have a long tradition of working with these issues, have seen themselves outrun during the past years coming in seventh place. Companies in other countries have increasingly seen the advantages of attracting capital through communicating what they do and many companies are investing heavily in CSR. However, if increasing CSR communication Swedish companies can advance and retake the lead.

Hallvarsson & Halvarsson has since 1997 conducted the Webranking, where corporate websites are reviewed based on the expectations of financial analysts, investors and business journalists. Over the years the criteria for the CSR section has increased concurrently with the financial markets’ greater expectations. The total score for the CSR section in the H&H Webranking 2007 has increased with 30 per cent from the previous year and specific, rather than general, information is required. There is especially an increase in the demand for environmental information and information towards SRI investors. It has also become more important for companies to have a CSR/Sustainability Report and to be included in ethical indices, such as the Dow Jones Sustainability Index or FTSE4Good.

Behind this increased interest are profound changes in the industry. CSR, as a strategy and a tool for leadership, is viewed as the new big management idea today, following the thoughts on shareholder value, shareholder value orientation which were launched in USA in the mid 1980s and in Sweden in the mid 1990s.

It arises from the industry’s crisis of confidence  which evolved after corporate scandals, the opposition to globalisation, and the sharp fall in share prices in the beginning of the new millennium. By focusing on CSR, companies create legitimacy, strengthen their reputation and build trust, which gives a corporation a licence to operate and increases their value. Value maximisation is the overall goal of every company, but many are caught up in a short-term focus, where quarterly earnings, cost control and asset deployment are seen as the success factors for their business. Well-founded value maximisation calls for a long-term perspective, where short-term drivers are important, but where environmental, social, governance and ethical factors must be considered as well. Maximising value therefore requires good relationships with key stakeholders, such as customers, employees, suppliers, investors, shareholders, the authorities and the community. Companies cannot maximise value in the long term if they ignore or mistreat any of their important stakeholders. Thus, close relationships with the main stakeholders increases a company’s long-term value – a form of enlightened shareholder value. Today, the business case for CSR is the primary drive for CSR.

The financial markets are increasingly requiring companies to focus on CSR. Even analysts are now becoming more interested in CSR, since it is seen by many as an integral part in a corporate strategy that therefore has to be included when assessing risk. The United Nation’s initiative Principles for Responsible Investment (PRI) is an important driving force behind SRI (Socially Responsible Investments).  Over 200 leading institutions from the financial market have now incorporated ESG (Environment, Social, and Governance) issues into investment analysis, decision-making and ownership policies. This represents over USD 10 trillion in assets under management. The SRI market today represents as much as 10-15 per cent of total assets under management in Europe and the US. In order to compete with the investors companies must communicate CSR through their websites. So far Swedish companies do this to a smaller extent than their competitors. 

You can find more information on CSR communication on corporate websites in the CSR Spotlight Report 2007. The report, which also describes the development and the business case of CSR, focusing on an investor relations perspective where CSR can be seen as a tool for building long-term corporate value, is based on three individual studies of how European companies across different countries and sectors communicate CSR on the web. Useful best practice examples from the CSR section in the H&H Webranking 2007 are also provided to assist in finding shortcuts and inspiration to better communicate CSR on the corporate website.

The report can be ordered by visiting www.webranking.eu or by emailing us at .