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?”
Climate change is currently the most pressing issue uniting socially responsible investors globally. Responses by different investors have varied from outright divestment of fossil fuel producers, engagement through shareholder resolutions seeking further disclosure, to measuring the direct carbon exposure of investment portfolios.
Each of the approaches used by large institutional investors has advantages and disadvantages in trying to effect corporate change. This blog post attempts to summarise these issues, weighing the arguments and counterarguments from a range of sources. Ultimately, the most appropriate course of action will differ on a case-by case basis.
However, the present debate on divestment has largely ignored individual investors. The existing investment architecture needs a rethink to enable individuals to have a stronger say in how their investments are managed when it comes to environmental, social and governance (ESG) issues.
Innovation is possible and necessary, and I suggest three approaches to aid engagement by individual investors, namely: a “building blocks” approach, look-through proxy voting and standardised ESG exposure metrics. Responsible investing is simultaneously personal and universal. The investment industry has an important role to play in evolving its infrastructure to let the voices of all investors be heard.
Continue reading “Divestment dilemma: Resolution, revolution or evolution?”
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””
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?”