• Do investors actually care about CSR?

    Corporate Social Responsibility is not a new or revolutionary idea. It has smothered business and economics media over the last two decades to a point where we would expect its institutionalisation in modern business strategy.

    Corporate Affairs has been at the forefront of this conversation around expanding the primary financial bottom line to comprise a holistic understanding of a corporations purpose, both as a revenue-generating vehicle and as a socially- and environmentally-minded citizen.

    However, one of the most pivotal stakeholder groups has often contended the validity of such claims – the investors. However, a new report from Massachusetts Institute of Technology Sloan Management Review (MIT SMR) in collaboration with The Boston Consulting Group has unveiled a divide between the values of the shareholders and those of senior managers, and it is not what you think.

    Investors care more about sustainability than managers think

    A lack of data to support decision-making has meant that sustainability initiatives have been dimly lit in the past, but with access to modern metrics, 75 per cent of investors surveyed viewed sustainable performance as having material importance to their investment decisions. Furthermore, around 60 per cent observed that sustainable business structures increased operational efficiency and revenue performance, as well as reduced their risk assessment and lowered the cost of capital.

    Despite this, a significantly lower portion of managers thought that investors cared about CSR, and thus only 25 per cent of businesses have developed a clear business case.

    Seminal writer on CSR John Paluszek spoke to Forbes magazine in 2014 about the amalgamation of business development and sustainability. An important issue he saw moving forward was how CSR success can be communicated in a financially compelling way.

    When sustainability can speak in the language of measurable benefits, we can shift away from the "because it's the right thing to do" argument and begin to acknowledge that it actually generates returns for shareholders over the short- and long-term. 

    Facilitating a dialogue to realigning values and strategy

    Co-author of the report and Executive Director of MIT SMR David Kiron alluded to how the solution to this issue may lie within the realms of corporate affairs.

    "There's a communications gap," said Mr Kiron.

    "We found that investor relations professionals in companies are not really talking to investors about the value of sustainability to the bottom line, even though investors place real value on sustainability performance."

    Investor priorities of authenticity, ethicality and sustainability need to be matched by managers and other executives. Thus, as communications professionals, we must ensure shareholders, managers and other stakeholders alike see eye-to-eye. Thereby, sustainability can take it's rightful place at the centre of corporate strategy.

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