by Georg Kell


Social investment the way it should be


Regardless of whether you call it CSR, corporate responsibility, environmental, social and corporate governance (ESG) or sustainability, a common understanding is emerging around the world: a company's long-term financial success goes hand in hand with its record on social responsibility, environmental stewardship and corporate ethics.

As business has gone global in recent decades – spurred by technology and liberal trade and investment – so too has the idea and practice of corporate responsibility.

Several big trends indicate that corporate sustainability is here to stay:

1. Transparency

Reporting and disclosure will undoubtedly continue to grow, driven by ever-lower barriers to information access, higher public interest and regulatory changes. Already over 5,000 corporations disclose their ESG performance on an annual basis, and this number is bound to grow.

2. Trust

The ever-growing impact of business on society means that citizens and consumers expect corporate power to be exerted responsibly. As citizens more often are sceptical, self-organised and prone to challenge authority, the corporate community will have to raise its learning curve on building trust. This means being proactive and thorough in how a company views its responsibilities and impacts on society, and then showing how it manages operations accordingly.

3. Community participation

Business is expected to do more in areas that used to be the exclusive domain of the public sector – ranging from health and education, to community investment and environmental stewardship. Environmental issues are a good example of this blurred line. Natural resources are now recognised to be finite and under stress. 

4. Accessing new markets responsibly

Overcoming barriers to growth, such as civil violence, uneducated workforce and unsustainable sources of energy, water, minerals and soil is now in the interest of business.

5. Initiatives to engage companies

Means for engaging in corporate sustainability are plentiful and growing. Initiatives, standards and consultancies are booming at national and global levels. The UN Global Compact, is engaging 8,000 companies in more than 145 countries on human rights, labour standards, environment and anti-corruption. Many others are producing practical resources in key areas.

For business, environmental, social and governance responsibilities are no longer add-ons. They are integral to success. While the great majority of companies have yet to commit to this trajectory, there is a strong upward growth curve in actively engaged companies, with a vanguard taking serious action in all key markets. The growing feeling is that corporate sustainability has drawn a line in the sand, and it's best for business to get on the right side.


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Issue 23


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