Chief executives of multinationals increasingly believe that the
performance of their businesses on social issues such as community
involvement and labour standards will soon be as critical as financial
performance in determining their company’s standing, a study suggests.
An analysis of responses from the chief executives of 163 of the
world’s 500 largest companies by revenue, found that in general they
‘believe social credibility will be at least as important as financial
credibility in maintaining a positive corporate reputation’.
The research appears in a new book, The sustainability effect, by Arlo
Brady, head of corporate sustainability and CSR services at the
UK-based engineering and management consultancy Mott MacDonald Group.
Brady, who is also a research associate of the Judge Business School at
the University of Cambridge, said his findings ‘should act as a wake-up
call for sustainability disbelievers’, and showed that ‘even chief
executives, who are considered by many to parody and embody the worst
aspects of capitalism, are aware that the time has come for business to
acknowledge its environmental and social responsibilities’.
The 33 chief executives who responded from outside Europe and North
America generally felt that social and environmental performance was
already more important than financial credibility in developing a
company’s reputation. The 55 North American chief executives attached
less importance to this aspect of business activity, while the 75 from
Europe occupied the middle ground. Brady stressed that respondents were
not saying financial issues would diminish in importance. ‘They don’t
predict that environmental and social issues will eclipse financial or
other associated issues, but that they will complement them,’ he said.
The respondents led companies with combined revenues of $5trillion
(£2.85tn).
Mark Goyder, director of the Tomorrow’s Company think-tank, commented:
‘If you had a control group of CEOs five years ago and CEOs today, the
former group would have regarded CSR as more peripheral, something for
someone else to worry about. Issues have to earn their interest.’
