UK - Most business leaders only pay "lip service" to corporate social responsibility despite the high performance it generates, a new report claims.
The study by the Work Foundation and the Virtuous Circle – Achieving High Performance: CSR at the Heart of Business – found “a sufficient weight of empirical evidence” for the financial rewards of CSR.
A Work Foundation league table showed that firms which met high corporate governance standards were 42% more productive than those failing to comply with best practice.
But the report highlighted a “lack of leadership from the top” in putting CSR at the heart of business. It called for “sensible forms of legislation” to bolster investor and company relationships and urged policy-makers to offer incentives for firms to conduct CSR audits.
Report co-author Virtuous Circle member Tony Hoskins said: “Our analysis shows that CSR is no longer merely ‘fashionable’ but an essential component in delivering improved performance, requiring committed leaders to put it at the heart of business.”
A report by the department for work and pensions at the end of last year found that shareholder activism and CSR was “not a high priority” for the majority of scheme trustees.
Insight Investment investor responsibility director Rory Sullivan said:
“Corporate governance and SRI can no longer be seen as separate disciplines – a proper assessment of these issues requires investors to have a detailed understanding of the company, of governance issues in the round – not just the combined code – and a refusal to simply ‘tick the boxes’.”
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.