CFO perspectives on CSR
As I mentioned in my last post, I have CSR on my mind because of a conference I am speaking at in Berlin in a few weeks. In recent years, when people ask me if companies in the U.S. were CSR-mindful, I would often say absolutely yes. It seemed to me that American corporations had fully embraced the need for CSR initiatives and reporting in the same way that European companies had years earlier. As proof, I would cite research such as this: In 2013, 72% of S&P companies published sustainability reports compared to 53% in 2012 and 20% in 2011 (Governance & Accountability Institute). However, I do have to add that I had started to notice that the topic of corporate sustainability seemed to be plateauing — still important but essentially table stakes at this point for most companies. I was not sure if I was right or if I was just noticing the tail end effect of the great recession here in the U.S. With this in mind, I came across an article in The Wall Street Journal that provided some missing clues to what I was sensing.
The WSJ article notes that if you ask European CFOs about investors’ interest in sustainability issues, they would most likely say that they absolutely shape their company’s communications around ESG (environmental, social and governance) strategies. They would add that European investors believe that if a company has solid ESG goals and actions in place, its financial results will also outperform over the long-term. And to underscore the seriousness of CSR in the European Union, 500+ employee companies in Europe will be required to publish annual non-financial reports by 2017 that disclose company progress on sustainability, human rights, diversity in management and suppliers. “The planet typically trumps short-term profits.”
The article also makes its point by highlighting a study done by Duke University’s Fuqua School of Business that found that American CFOs were indeed less interested in CSR than their European counterparts. “Nearly half of U.S. chief financial officers rate CSR and sustainability as moderately important or very important items in their business strategies. By contrast, the rating in Europe is 63 percent, 67 percent in Asia, 76 percent in Latin America and 83 percent in Africa.” Clearly, investors in the U.S. are not demanding that U.S. CFOs articulate their sustainability targets for the next 10 years or more American CFOs would be digging deep into their CSR storytelling. Instead, we can presume that U.S. investors are merely asking about quarterly results and not much else.