ALMOST half of the world’s largest companies believe employee motivation is a key driver when it comes to corporate social responsibility – an indication the ‘war for talent’ is increasingly important in such firms, according to a global professional services company
ALMOST half of the world’s largest companies believe employee motivation is a key driver when it comes to corporate social responsibility – an indication the ‘war for talent’ is increasingly important in such firms, according to a global professional services company.
A KPMG survey of 1600 of the world’s largest companies across 16 industrialised countries, including Australia, examined why they are committed to corporate responsibility and what influenced the content of the reports.
The study, which included a detailed analysis of the reports of the global top 250 companies, found business drivers for CSR are economic (75 per cent) and ethical (50 per cent), while other drivers include innovation and learning (53 per cent) as well as improved shareholder value (39 per cent) and reputation or brand (27 per cent).
The study also found there has been a dramatic change in the type of CSR reporting, which has changed from purely environmental reporting up until 1999 to sustainability (social, environmental and economic reporting), which has now become mainstream among the global top 250 companies (70 per cent).
Reports also cover a range of working conditions under social issues, including health and safety (72 per cent), training (72 per cent), working conditions (62 per cent) and employee satisfaction (32 per cent).
The KPMG report follows a recent research project from the World Business Council for Sustainable Development (WBCSD), which found that companies can turn regulatory compliance and heightened corporate governance efforts into opportunities that create value for their businesses.
Companies now invest heavily in time and money to comply with increased levels of regulation and expectations of improved corporate governance. Yet the push to make companies more accountable, either through legislation or voluntary compliance with guidelines, has been slow to inspire confidence among investors and other stakeholders.
“Leading companies build sustainable businesses by embedding strong governance and corporate responsibility into their strategies and culture,” said Samuel DiPiazza, global CEO of PricewaterhouseCoopers and co-chair of the WBCSD project.
“By earning the trust of their employees, communities, trading partners and the capital markets companies with a culture of corporate responsibility are able to generate value where others cannot.”
The WBCSD project, which encompassed 60 global firms, explores how companies can obtain value and restore trust by understanding the relationship between accountability and sustainability and their core business strategy.
It recommended companies articulate their own vision of accountability and sustainability, and embed it within core business strategies, and use accountability codes as tools to change mindsets about the relationship between value creation and sustainable development – not simply in compliance efforts.
The project also recommended firms integrate sustainable development and accountability across corporate functions rather than create specialised centres.
Similarly, a recent Conference Board report calls on corporate directors to redefine their roles with management, strengthen their independence, and improve practices and processes in their companies’ key audit, compensation, and governance committees.
“Recent settlements at WorldCom and Enron, which required directors to dip into their own pockets to satisfy irate investors, have made directors increasingly anxious to define their proper corporate role,” said Carolyn Kay Brancato, research director, global corporate governance research center.
“To ensure maximum board effectiveness, boards need to shift their entire emphasis. They can no longer be just advisors who wait for management to come to them.
“Their new role requires that they provide active oversight of the company’s business to minimise corporate risk and promote creation of shareholder value,”she said.
The Conference Board report includes insights and recommendations from prominent directors and chief executives from a wide array of companies.
It emphasises that by instituting governance best practices, companies can improve their internal effectiveness and better manage corporate risk.
The key to accomplishing this is to make certain that the company’s board is managed as well as the company itself is managed. Each board should operate differently according to the company’s stage of development, ownership structure and size, and the mix of skills and personalities of the individual directors. The ‘one size doesn’t fit all’ rule clearly applies.
