Why Should They Care? The Role of Institutional Investors in the Market for Corporate Global Responsibility

2005 ◽  
Vol 37 (11) ◽  
pp. 2015-2031 ◽  
Author(s):  
Gordon L Clark ◽  
Tessa Hebb
Keyword(s):  
Institutional Investors ◽  
Corporate Responsibility ◽  
Climate Change Impacts ◽  
Reputation Management ◽  
Environmental Standards ◽  
Market Risks ◽  
Global Responsibility ◽  
The Uk ◽  
Corporate Social

Institutional investors, primarily pension funds, drive global financial markets. The result is investors vulnerable to the risks companies face in global consumer and capital markets. Though some market risks are inevitable, others, such as reputation risk, can be mitigated through increased corporate social and environmental standards and the increased transparency that such higher standards demand. The transparency necessitated by reputation management has a dual role in monitoring corporate behaviour and providing all stakeholders (internal and external) with the information to evaluate corporate behaviour. Driving this process is the belief that higher standards of corporate responsibility pay off for investors over the long term both through potential equity premia and through risk reduction. This paper presents a model for understanding how and why institutional investors may encourage firms to adopt higher standards. To illustrate our argument, we refer to the experience of the UK Universities Superannuation Scheme (USS) strategy of corporate engagement and the attempts of the USS to encourage firms to raise their environmental standards by focusing on the climate change impacts of pension-fund investments. Investor engagement in corporate responsibility offers an insight into the role of investors in global-standard setting and global citizenship.

6. Company Management and Governance

2020 ◽  
pp. 100-120
Author(s):  
Imogen Moore
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Executive Directors ◽  
Corporate Governance Code ◽  
Executive Remuneration ◽  
Questions And Answers ◽  
The Uk ◽  
And Control ◽  
The Relationship

The Concentrate Questions and Answers series offers the best preparation for tackling exam questions and coursework. Each book includes typical questions, suggested answers with commentary, illustrative diagrams, guidance on how to develop your answer, suggestions for further reading, and advice on exams and coursework. This chapter explores important issues in company management and corporate governance, starting by examining the role of directors and shareholders (and the relationship between them) and the separation of ‘ownership and control’. Since the early 1990s, the governance of listed companies has been dominated by self-regulatory codes (currently the UK Corporate Governance Code). This chapter examines how these codes operate and considers key themes in corporate governance, including the role of non-executive directors and auditors; the position of institutional investors; and executive remuneration.

Corporate social responsibility and institutional investors: the intervening effect of financial performance

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shafat Maqbool ◽  
Nasir Zamir
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Institutional Investors ◽  
Decision Process ◽  
Content Type ◽  
Corporate Social ◽  
The Impact ◽  
The Relationship

PurposeThe research on the role of corporate social responsibility in investors' decision process has proliferated over the past few decades. This paper aims to explore the mediating role of financial performance in the relationship between corporate social responsibility and institutional investors.Design/methodology/approachPanel regression was performed on a sample of 29 commercial banks nine years from 2009 to 2017.FindingsThe initial findings of the study show that that corporate social responsibility has a positive and significant impact on institutional investors. However, when the interaction term (financial performance) was incorporated, the relationship between CSR and institutional turns out to be neutral. The study concludes that financial performance plays a pivotal role in the selection of investment avenues.Originality/valueIn Indian context, there is a dearth of research work which studies the impact of sustainable practices on investors' decision process. This topic has received wider attention but lacks insights from developing countries, like India. This article presents a new approach to verify the relationship through the mediating variable (financial performance).

Attributes of corporate boards and assurance of corporate social responsibility reporting: evidence from the UK

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Laila Aladwey ◽  
Adel Elgharbawy ◽  
Mona Atef Ganna
Keyword(s):  
Social Responsibility ◽  
Corporate Boards ◽  
Board Diversity ◽  
Content Type ◽  
Csr Reporting ◽  
Audit Firms ◽  
The Uk ◽  
Corporate Social ◽  
The Impact

Purpose This study aims to investigate the relationship between the attributes of corporate boards in UK companies and their tendency to assure their corporate social responsibility (CSR) reports. Design/methodology/approach From the agency theory perspective, the authors examine the impact of board attributes on the assurance of CSR reports for the Financial Times Stock Exchange (FTSE) 350 during 2016–2019. The authors used annual integrated reports, companies’ websites and Thomson Reuters Eikon database for data collection and the logistic regression for data analysis. Findings The results confirm that some board attributes significantly influence a company’s decision to assure its CSR reports. While board size, board tenure, the presence of female board members and female executive directors and Chief Executive Officers (CEOs)’ global working experience positively contribute to CSR assurance (CSRA) decisions, the chairman’s independence negatively contributes to it. However, board independence, board meetings and board financial expertise demonstrate no effect on the CSRA decision. Research limitations/implications The authors focus on some attributes of board members, but the authors did not consider board diversity in its broader meaning. Moreover, the effect of board committees and their attributes on CSRA was not addressed. The authors also did not consider the impact of scope, the quality level of assurance service and the differences between assurance providers on companies’ decisions to neither undertake CSRA nor choose between assurance providers. Practical implications The study provides insights into the increasing demand on voluntary assurance to boost the credibility of CSR reports and the role of the board of directors (BOD) in taking this initiative. The findings highlight the importance of board diversity (e.g. gender) in improving transparency and sustainability reporting, which can help policymakers and regulators in shaping future governance policies. Additionally, the findings refer to a drawback in the UK Corporate Governance Code regarding the chairman’s independence, which requires corrective actions from the Financial Reporting Council. The findings raise concern over the small share of audit firms in the assurance service market, despite the growing demand for these services in the UK, which may require more attention to these services from the audit firms. Social implications Companies are increasingly pressurized, especially after the COVID-19 pandemic, to discharge their accountability to stakeholders and to act in a socially responsible manner in their business activities. CSR reporting is one of the main tools that companies use to communicate their social activities. Understanding the determinants of voluntary CSRA helps to increase the credibility of CSR reports and the favorable response to social pressure. Originality/value The authors add empirical evidence to the limited literature on CSRA about the role of the BOD in undertaking companies’ social responsibility, improving CSR reporting and reducing information asymmetry. It also highlights the significance of maintaining a balanced BOD in terms of gender, experience and tenure, in minimizing the risk of perpetuating non-transparent integrated reporting.

scholarly journals BUSINESS STRATEGY AND CORPORATE RESPONSIBILITY: PERCEPTION AND PRACTICE IN THE OIL INDUSTRY AND THE ROLE OF NON-GOVERNMENTAL ORGANISATIONS

2014 ◽  
Vol 15 (5) ◽  
pp. 951-963 ◽  
Author(s):  
Asad K. Ghalib ◽  
Patricia Agupusi
Keyword(s):  
Multinational Corporations ◽  
Business Strategy ◽  
Corporate Responsibility ◽  
Oil Industry ◽  
Ethical Standards ◽  
Short Term ◽  
External Stakeholders ◽  
Responsible Behaviour ◽  
Corporate Social

This paper examines the strategies for the implementation of corporate social responsibility of various multinationals, with a particular focus on the oil industry. The role of non-governmental organisations towards inducing a more responsible behaviour is explored. By drawing on literature and reflecting on documented actions of various multinational corporations, particularly from the extractive sector, we find a commonalty that cuts across the board: a considerable disparity exists between policies, strategies and actions that these organisations display in the interest of their inherent, short-term economic gains. Such gains jeopardize interests of both internal and external stakeholders as well as the environment especially in the developing world. We argue that the disparity in implementation can be linked to weak structural institutions and lack of ethical standards in most developing countries.

scholarly journals Sustainable Corporate Responsibility

2021 ◽  
pp. 9-36
Author(s):  
Caroline D. Ditlev-Simonsen
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Corporate Responsibility ◽  
Corporate Citizenship ◽  
Historical Context ◽  
Philosophical Perspective ◽  
Member States ◽  
Corporate Social

AbstractIn this chapter, I begin by reflecting on the origins and historical context of terms related to sustainability and business, including but not limited to Corporate Social Responsibility (CSR), Corporate Citizenship, and so on. I discuss what they mean, their purpose and limitations. I explore different, multilateral initiatives and frameworks pertaining to sustainability, in particular ones adopted by UN member states and how these apply to businesses. The role of corporate involvement and contribution, moving from a reactive to proactive sustainability engagement, is addressed. The responsibility of corporations from a philosophical perspective including key ethical schools of thoughts is also addressed.

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