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Study Reveals Corporate Social Responsibility a Major Factor in Overseas Investment and Purchasing

Study Reveals Corporate Social Responsibility a Major Factor in Overseas Investment and Purchasing

Published 01-20-04

Submitted by Reuters Events Sustainable Business

NEW YORK, NY/LONDON, UK - Corporate social responsibility is increasingly influencing where and with whom major multinational corporations do business. That is the conclusion of Race to the Top, a new study prepared for the World Bank and the International Finance Corporation.

The project was commissioned by the World Bank Group to shed light on whether corporate social responsibility affects the international investment and purchase decisions of the largest companies in the world. The project also explored the practices and preferences of companies working with host governments on sustainability issues. More than 100 multinational enterprises participated.

The study was jointly conducted by PELC, a New York-based firm that advises corporations on social strategies for operating in the developing world, and by Ethical Corporation Magazine, the London-based monthly publication of corporate social responsibility. The full text of the study with more than 40 graphs and charts, is available on the PELC website, www.pelc.net as well as the Ethical Corporation website, www.ethicalcorporation.com, and the World Bank website www.worldbank.org/privatesector/csr.

"Many global companies have made a commitment to creating lasting social and economic value in their host communities," said Jonathan Berman, PELC's president and the study's director. "This study clearly indicates that their investment and purchase decisions are now being influenced by where they can meet those commitments."

"This report is a landmark in corporate social responsibility, both for its form and contents," said Toby Webb, Ethical Corporation's Editor in Chief. "In an arena filled with anecdotal and speculative evidence, Race to the Top delivers quantitative information never before gathered."

The participating companies have over US$1.66 trillion in combined annual revenues. The annual revenue of the average participating company is US$15.5 billion. Among the critical findings are:

  • An overwhelming majority (88%) of participating companies report that CSR factors are of greater influence in determining where they source and invest than such factors were five years ago. Of these, more than half report that CSR factors are "much more influential" than they were five years ago.

  • A majority of participating companies (52%) have chosen one developing-country partner over another on the basis of their CSR policies.

  • Over the last five years, participants report increasing their investment in CSR, in terms of staff (74%), budget (72%) and most importantly, top executive time (68%)

  • A large majority of respondents (81%) report they are involved in social issues "beyond the factory gates," in which they seek partnership from local government and civil society.

    The report concludes with policy guidance to governments and the development institutions that support them. The recommendations include:

  • Communicating a "CSR-friendly" environment as part of the overall investment-attraction effort.

  • Addressing CSR concerns of potential investors early in their assessment of new ventures.

  • Identifying or building a base of local companies that are "CSR-ready" partners for international firms.

  • Evenly enforcing strong laws on CSR-related issues, such as environment, health, safety and corruption.

  • Reaching out to large multinational corporations as public-private partners, focusing on the company's stated CSR goals and programs.

  • Engaging local religious institutions and civil society in creating an environment that enables CSR.

    PELC is a consulting firm that assists companies in creating and implementing social strategies for operations in the developing world, and assists governments and development institutions to promote socially sustainable investment. The company draws its consultants from the ranks of senior corporate sustainability executives, as well as from civil society and academia. More information on PELC can be found at www.pelc.net .

    Ethical Corporation Magazine is an independent business information provider and events producer on the issues in and around corporate social, financial and environmental responsibility. The company has 12,000 registered business users on the web and in print. Over 1,500 Senior Corporate Executives, NGO representatives and the media have attended Ethical Corporations conferences and workshops worldwide. More information on Ethical Corporation can be found at www.ethicalcorporation.com.

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