Report Finds CSR Policies on the Rise in Asia, Europe, and North America

Source: Institutionalshareowner.Com, 21 June 2004

One measure of the development of corporate social responsibility (CSR), or the incorporation of ethical, environmental, and sustainability considerations into business practice, is the prevalence of CSR policies at companies. A report released last month by the University of Hong Kong’s Center of Urban Planning and Environmental Development surveys the incidence of CSR policies globally. Entitled Corporate Social Responsibility in Europe, North America, and Asia: 2004 Survey Results, the report is authored by Richard Welford, deputy director of the Corporate Environmental Governance Programme (CEGP) there.
"In the past it has been argued that as a concept [CSR] has not been well defined," writes Dr. Welford in the report, which seeks better definition of CSR by going straight to the source—the companies themselves.

The report builds on a similar survey conducted in 2002 and published in 2003, which introduced a set of 20 aspects of CSR policy that the current report tracks as well. Both surveys ask companies whether they had written policies on each of the 20 aspects, but did not require respondents to provide documentation. While the 2003 report surveyed 240 of the largest companies in European and Asia (20 companies in each of 12 countries), the 2004 report surveys 450 companies by upping the number of companies per country to 30 and adding three North American countries.

"In surveys of this kind, there is of course a degree of survey bias," Dr. Welford writes. "Questionnaires about the environment, sustainable development and social responsibility and such like are more likely to be completed by companies that have done work in these areas rather than those that have not."

However, because the study was not seeking to yield scientific statistics but rather to "paint a picture of best practice," Dr. Welford suggests that survey bias works in favor of the report’s goals.

"The 49 percent of companies that did respond are more likely to be carrying out the elements identified and, since we are looking for best practice rather than a scientific sample, this is therefore not a problem," he states. "It simply re-enforces the best practice picture."

The study divides the 20 CSR elements into four categories: six internal aspects, nine external aspects, two accountability aspects, and three citizenship aspects.

Interesting survey findings include reductions since the 2003 report in the percentage incidence of policies in the two accountability aspects, CSR or sustainability reporting and two-way stakeholder dialogue.

"Reporting on social and sustainable development issues does seem to be important although we actually saw a reduction in the incidence of policies in this area with the inclusion of more firms in the survey," Dr. Welford writes. "Certainly reporting is less common than one might have imagined in Canada and the USA."

Only 47.7 percent of responding companies have policies on CSR/sustainability reporting in North America, compared with 60.4 percent in Europe and 33.3 percent in Asia. The survey did not specifically address environmental reporting, which may have lowered the results, according to Dr. Welford. Also counterintuitive is the higher incidence of policies promoting two-way stakeholder dialogue in Asia (26.4 percent) as compared to North America (18.2 percent).

Similar dynamics emerged on external aspects as well.

"We could certainly not draw the conclusion that European and North American companies are always more advanced with respect to the external aspects than Asian ones," writes Dr. Welford.

Asia outpaces Europe and North America on supplier-related policies, except on child labor, where it runs neck and neck.

Japan, which has one of the most developed economies in Asia, scored best in the region, suggesting a correlation.

"In general we would have to argue that CSR is, in part, linked to economic development," Dr. Welford states. "Generally the more developed the country the higher the incidence of policies in the area of CSR."

Dr. Welford cautions that the mere existence of a policy does not guarantee that it is implemented, and conversely, the absence of a policy does not mean that the CSR aspect in question is not practiced.

One shortcoming of the study is that it does not list the companies studied, nor does it append company-specific data. This clearly could have been done since the information was collected. A third survey is planned for 2006, so perhaps it will expand its scope to include this information, which would be very helpful.

Download the report (pdf)