On Monday, September 23, over 500 companies including the FTSE 350 have been invited to participate in the new Corporate Responsibility Index. The Index will define what corporate responsibility means in practice, setting the management and reporting boundaries against which businesses will be judged.
The Index has been developed by Business in the Community, working with over 80 companies led by a Steering Group consisting of representatives from Aviva, Diageo, HBOS, Powergen, Severn Trent and Unilever. The deadline for completing the survey is November 15 and results will be published on March 11, 2003.
The Index seeks to consolidate information demands on business, through collaboration and by providing data to others. It has the support of the Accounting Standards Board, the Association of British Insurers, the Confederation of British Industry and the Department of Trade and Industry. The National Association of Pension Funds also will encourage companies to participate, and plans to use the Corporate Responsibility Index as part of its Voting Issues Service.
The Corporate Responsibility Index is the only business-led tool for benchmarking corporate responsibility that covers all sectors of industry. It is global in scope, as participating companies complete the survey on the basis of their global operations, including all subsidiaries and joint ventures under the company’s management control.
The new Index incorporates the 7th Business in the Environment (BiE) Index of Corporate Environmental Engagement. It will build on the latter’s success in engaging board members, by raising awareness of the full range of corporate responsibility issues that are relevant to a company’s business. Companies will have the option of completing the BiE Index only, or completing the new overall Index and being reported in both indices.
The Corporate Responsibility Index will be issued as an on-line survey. It will:
Provide companies with a systematic process through which they can compare their management processes and performance with those of others in their sector;
Measure the extent to which a company integrates corporate responsibility within its core business practices, and its management across the key areas of environment, workplace, community and marketplace, and human rights where relevant;
Ask participants to complete questions on a set of issues relevant to all companies. In addition, participants will be asked to answer questions relating to impact areas materially significant to their own overall organisation;
Help identify gaps in performance, and establish where improvements can be made. Feedback will also allow participants to ensure they are focusing effort in the right areas to achieve maximum benefit for both their company and society.
The Corporate Responsibility Index is one of two initiatives developed by Business in the Community to answer the needs of business and City stakeholders. The complementary Corporate Impact Reporting Initiative reports statistics relating to companies’ actual performance on a website.
Derek Higgs, Senior Adviser in the UK, UBS Warburg and Chairman, Business in the Environment, which pioneered the Index of Corporate Environmental Engagement on which the new Index is based, says:
‘Senior business leaders realise more than ever that corporate responsibility is part and parcel of running a successful business. The Corporate Responsibility Index is a management tool, to raise awareness of corporate responsibility at board level and across the organisation, and drive performance improvement. It will also provide companies with objective information of interest to investors and other stakeholders.’