As consumers and activists have increased their focus on the impact of corporate behaviours on society, companies have responded by upping their emphasis on their corporate social responsibility (CSR) initiatives. This is an undoubtedly positive trend and should be applauded.
However, at the same time headlines relating to corporate tax avoidance have become increasingly frequent. Household names including Google, Starbucks and Vodafone have sparked concern over their “tax planning” practices, despite some of their commitments to improve their environmental and social impacts.
Are CSR initiatives effectively being funded by tax avoidance? Does this actually matter to firms’ stakeholders? In this blog post, I will take a closer look at this relationship, consistent with the findings from research published by academics at the University of Oregon’s Lundquist College of Business. A holistic triple bottom line approach to corporate strategy has become embedded in the minds of many mangers. The concern is that tax avoidance is an equally ingrained logic.
Continue reading “CSR and tax avoidance: Two sides of the same coin?”
Socially responsible investment (SRI) and corporate social responsibility (CSR) go hand-in-hand. Both practices have rightfully gained in prominence as investors have delved deeper into the environmental, social and governance (ESG) aspects of corporate behaviour.
However when considering an investor’s responsibilities, ownership goes beyond simply the direct exposure to the company itself. Investors are also ultimately responsible for the corporate’s supply chain practices, both directly and indirectly.
The aim of this blog post is to take a closer look at the characteristics of large investors, with a particular focus on how they interact with a company’s supply chain. This is done by introducing the concept of an “investor responsibility map” which summarises an investor’s direct and indirect exposures to a corporate’s supply chain.
To illustrate the concept, Apple’s investor base and their supply chain is used as an example, due to the company’s position as the world’s largest by market capitalisation. Interestingly, large investors such as fund managers and pension funds not only own significant stakes in Apple, they also own large portions of Apple’s suppliers. This puts these large investors in the prime position to engage and influence on ESG issues as part of their overall responsibilities.
Continue reading “Anatomy of an “investor responsibility map””
Getting access to finance is difficult for small entrepreneurs in developing countries. Without reliable access to the financial system, many developing country producers are struggling to participate in global trade.
In this blog post*, I will take a closer look at attempts to provide easier access to finance for fair trade producers. Organisations such as Shared Interest and Triodos Bank offer schemes which aim to provide direct loans to smaller producers. Separately, other potential innovations involving fair trade intermediated bonds or fair trade certification for futures contracts is also discussed.
Innovation in trade finance shouldn’t only be about providing easier access to capital for producers. Rather it is important to consider how financial markets can be adapted to be more inclusive of smaller entrepreneurs in developing countries.
Continue reading “Financing fairer trade”
Power relationships and influence matter a lot when it comes to corporate behaviour. However one of the less well covered power relationships is between investors and the companies they own. A recent paper by Fabrizio Ferraro (IESE) and Daniel Beunza (LSE) offers some interesting insights on how the Interfaith Center on Corporate Responsibility (ICCR) has used its position as an investor in major multinationals to catalyse changes in corporate behaviour through dialogue. The findings are revealing and also relevant for non-investors, such as activists and certification bodies, for engaging with corporates on environmental, social and governance (ESG) issues. The constructive and collaborative nature of dialogue enables corporates to be more willing to engage.
In Part 1 of this blog post, the key findings of this paper are discussed together with implications for the pensions and investment industry, particularly the way in which fund managers can play a stronger role. Part 2 will analyse broader implications for other stakeholders, including activists, and the way in which non-investors can influence corporates by collaborating with the investment channel.
Continue reading “Talk isn’t cheap: Engaging corporates on ESG issues (Part 1)”
BBC Panorama raises some salient questions regarding Apple’s production practices in developing countries. There are significant implications for consumers and investors in developed countries. What is the role of the Fairtrade Foundation and Fairphone? Are you indirectly investing in Apple via the UK’s National Employment Savings Trust, the BBC’s pension fund or a myriad of other pension funds?
Continue reading “Another Nike moment for Apple?”