Michael Blanding recently posted an article on the Harvard Business School – Working Knowledge website about new research by George Serafeim of Harvard Business School and Ioannis Ioannou of London Business School that demonstrates that mandatory CSR reporting works on several different levels and offers a model in which to measure it. Here is the link to the article: http://hbswk.hbs.edu/item/6701.html
The article itself has a link to the working paper.
Some key points from the executive summary:
- “In the past 10 years, corporate investors have shown an increasing interest in the social responsibility of the companies whose stocks they pick.”
- “The researchers compared 16 countries that required sustainability reporting with a sample of 42 countries that didn’t. Using several measures, they found that the social responsibility of business leaders and managerial credibility increased in those countries with reporting mandates.”
- “The data provide the first concrete evidence that mandating social responsibility reporting actually makes a positive difference.”
A quote from George Serafeim of HBS: “”The number of investors who care about this kind of performance has increased dramatically in the last 10 years,” Serafeim says. “Right now those investors have about $5 trillion in assets under management, so you can say this is a pretty significant amount of money.”
As we can see, mandatory CSR is having an overall positive impact in a variety of ways. Unfortunately, at this point in time mandatory CSR reporting by companies is not prevalent, the opposite being the case for annual financial reporting. Consumers and customers of products and services need to be able to evaluate the offerings of companies and whether they are socially responsible in order to make more informed choices. One can only hope that regulations and legislation will be introduced to legally mandate CSR reporting on a global scale. This effort will obviously take time and resources, but will have a long lasting impact on socio-economic and environmental conditions.
Companies such as Fabrisource in the textile industry have adopted social responsibility into its mission and primary objectives and it benefits society as a whole when investors and consumers alike can make informed decisions based on the ideals and priorities that they hold dear. One can only hope that mandatory CSR reporting is implemented sooner rather than later on a global scale and this seminal research shows that CSR reporting is working and is worth doing so.