Corporate social responsibility in firms and

Communities are stakeholders that determine brand image through their significant lobbying activities and responses to the business.

Corporate social responsibility in firms and

History[ edit ] Historical decisions of where financial assets would be placed were based on various criteria, financial return being predominant. It was in the s and 60s that the vast pension funds managed by the Trades Unions recognised the opportunity to affect the wider social environment using their capital assets [4] - in the United States the International Brotherhood of Electrical Workers invested their considerable capital in developing affordable housing projects, whilst the United Mine Workers invested in health facilities.

As a response to a growing call for sanctions against the regime, the Reverend Leon Sullivana board member of General Motors in the United States, drew up a Code of Conduct in for practising business with South Africa.

The conclusions of the reports led to a mass disinvestment by the US from many South African companies.

The resulting pressure applied to the South African regime by its business community added great weight to the growing impetus for the system of apartheid to be abandoned. Towards the end of the century however a contrary theory began to gain ground. In James S. The Ceres coalition today represents one of the world's strongest investment groups with over 60 institutional investors from the U.

The investment market began to pick up on the growing need for products geared towards what was becoming known as the Responsible Investor. He coined the phrase the " triple bottom line ", referring to the financial, environmental and social factors included in the new calculation.

At the same time the strict division between the environmental sector and the financial sector began to break down.

Corporate social responsibility in firms and

In the City of London inChris Yates-Smith a member of the international panel chosen to oversee the technical construction, accreditation and distribution of the Organic Production Standard and founder of one if the City of London's leading Branding Consultancies, established one of the first environmental finance research groups.

The informal group of financial leaders, city lawyers and environmental stewardship NGOs became known as The Virtuous Circle, its brief was to examine the nature of the correlation between environmental and social standards and financial performance.

Corporate social responsibility in firms and

Several of the world's big banks and investment houses began to respond to the growing interest in the ESG investment market with the provision of sell-side services, among the first were the Brazilian bank Unibancoand Mike Tyrell's Jupiter Fund in London which used ESG based research to provide both HSBC and Citicorp with selective investment services in In the early years of the new millennium, the major part of the investment market still accepted the historical assumption that ethically directed investments were by their nature likely to reduce financial return.

Philanthropy was not known to be a highly profitable business and Friedman had provided a widely accepted academic basis for the argument that the costs of behaving in an ethically responsible manner would outweigh the benefits.

However the assumptions were beginning to be fundamentally challenged. In two journalists Robert Levering and Milton Moskowitz had brought out the Fortune Best Companies to Work For, initially a listing in the magazine Fortunethen a book compiling a list of the best practicing companies in the United States with regard to corporate social responsibility and how their financial performance fared as a result.

Of the three areas of concern that ESG represented, the environmental and social had received most of the public and media attention, not least because of the growing fears concerning climate change. Moskowitz brought the spotlight onto the corporate governance aspect of responsible investment.

His analysis concerned how the companies were managed, what the stockholder relationships were and how the employees were treated. He argued that improving corporate governance procedures did not damage financial performance, on the contrary it maximised productivity, ensured corporate efficiency and led to the sourcing and utilising of superior management talents.

In the early s, the success of Moskowitz's list and its impact on company's ease of recruitment and brand reputation began to challenge the historical assumptions regarding the financial effect of ESG factors. The Freshfields report concluded that not only was it permissible for investment companies to integrate ESG issues into investment analysis but it was arguably part of their fiduciary duty to do so.

Many in the investment industry believe the development of ESG factors as considerations in investment analysis to be inevitable. There has been uncertainty and debate as to what to call the inclusion of intangible factors relating to the sustainability and ethical impact of investments.

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Names have ranged from the early use of buzz words such as "green" and "eco", to the wide array of possible descriptions for the types of investment analysis - "responsible investment", "socially responsible investment" SRI"ethical", "extra-financial", "long horizon investment" LHI"enhanced business", "corporate health", "non-traditional", and others.

But the predominance of the term ESG has now become fairly widely accepted. In fact, more than six in ten participants agreed they would be more likely to contribute or increase their contributions to their retirement plan if they knew their investments were doing social good.

It also acknowledged that despite significant progress, many investors have yet to fully integrate ESG issues into their investment decision-making processes. Environmental governance Threat of climate change and the depletion of resources has grown, so investors have to factor sustainability issues into their investment choices.

The issues often represent externalities, such as influences on the functioning and revenues of the company that are not exclusively affected by market mechanisms.

Climate change[ edit ] The body of research providing evidence of global trends in climate change has led investors — pension funds, holders of insurance reserves — to begin to screen investments in terms of their impact on the perceived factors of climate change.

Fossil fuel reliant industries are less attractive.International Journal of Business and Social Science Vol. 4 No. 4; April Corporate Social Responsibility and Sustainability: The New Bottom Line? There is growing research in all areas of ethics and CSR that govern the activities of a firm and the value systems that underlie their business activities.

Corporate Social Responsibility An Implementation Guide for Business Paul Hohnen, Author Jason Potts, Editor. Business Ethics. This page provides a guide to the best sites on business ethics, ethics management, ethical business, corporate governance and corporate social responsibility.

AE Research on Corporate Social Responsibility Reporting Amfiteatru Economic important stock exchanges have placed extra pressure on them and on standard setters for the increase in the quality of corporate reporting (Beretta and Bozzolan, ).

Abstract. Companies have believed for years that their only responsibility was a financial one—maximizing value for shareholders. Corporate Social Responsibility (CSR) is a new idea—where the corporate sector incorporates social and environmental concerns in its strategies and plays a more responsible role in the world.

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