The business case for CSR rests on the assumption that responsible business is better business and those companies that manage their stakeholder relationships well will outperform those companies that don’t (outperform in the sense of delivering better business results and returns to investors).

However, there is a perceived disregard for the CSR agenda in the mainstream investment community. Without demonstrable impact on shareholder value, the willingness of investors to expend time, energy and expense on building ESG factors into valuation models is limited. These valuation models tend to focus on non-financial performance issues, reflecting stakeholder relationships that are viewed by investors as more obviously material to business performance.

The CSR Laboratory on Corporate Responsibility and Market Valuation of Financial and Non-Financial Performance is seeking to develop a framework for dialogue between business and investors that is based on material issues of interest to both. It aims to promote:

• the idea of a common set of core non-financial performance drivers that are relevant across businesses, sectors and markets;
• an acceptance that these core drivers are influenced, at least in part, by the performance and perception of the business by a wide range of stakeholders, reflected in ESG factors, in a way that is more sector or business specific.

The laboratory is supported by a parallel research programme funded by the European Academy for Business in Society through its corporate founding partners – IBM, Johnson & Johnson, Microsoft, Shell, and Unilever. The Valuing Business research programme is an initiative to review both current practice in Europe on valuing the strategies and actions businesses adopt in maximising the opportunities presented by Environmental, Social and Governance (ESG) factors and to suggest ways of encouraging more companies and more investors to incorporate ESG performance into how businesses are valued.

 

More information on http://www.investorvalue.org [2]