With investors increasingly looking beyond strictly fiscal issues when looking at companies, more intangible issues like corporate social responsibility (CSR) are often having profound affect on firms' day-to-day operations. In this article, INSEAD Adjunct Professor Kai Hockerts and Lance Moir of the Cranfield School of Management examine three issues concerning investor relations and CSR: the perception investor relations (IR) professionals have of CSR; the role of investor relations officers (IROs) in communicating CSR issues, and the perceptions IROs may have of future developments in this area.
The authors explored the role of investor relations professionals in communicating CSR issues by conducting semi-structured interviews with senior investor relations (IR) executives and managers in 20 leading European and American multinationals. The results of these interviews were then discussed to examine the future potential role for IR officers in relation to CSR.
The traditional approach to investor relations has involved focussing on the valuation of firms. However, CSR issues are increasingly emerging within mainstream investment funds, although to date almost entirely as niche products.
Hockerts and Moir discuss the high awareness among IR staff of the issues involved in their study, particularly the core concepts of "corporate responsibility" and "corporate sustainability". (Corporate social performance, however, was considered harder to manage.) Another point of learning emerging from the interviews is that companies were often teaching investors how to approach various types of social or environmental issues.
The paper concludes with a discussion regarding how firms can best communicate CSR issues, and the potential roles for investor relations in this field. The authors conclude that, while there may be a general lack of consistency on any precise definitions of CSR, the companies surveyed are definitely addressing a broad range of issues of primary importance to a good number of their stakeholders. Moreover, companies are increasingly appreciating the need for better disclosure on social and environmental performance.
Journal of Business Ethics, January 2004