We bring the findings of IR Magazine’s new report on Corporate Social Activities to the cautious IROs of the ‘woke’ world.
As part of the recent rise in ESG, companies are required to address social issues. This does not just mean that companies are responsible for their own internal performance on these issues. It’s also about how actively we work to bring about change in broader society.
In March, IR Magazine published its Corporate Social Engagement Report, which examines the extent and impact of how companies engage in social and political issues. This report considers how important a company’s involvement in issues of social concern is to both her IRO and investors, and whether it impacts a company’s investment potential.
A key finding from this report is that it supports corporate involvement in social action. When presented with the statement: “It is important for companies to not only demonstrate corporate social responsibility, but also actively engage in activities that make a difference,” three-quarters of IROs agreed and disagreed. was only 5%. Investors share this view, with 68% agreeing and 12% disagreeing.
Graham Stanley, vice president of investor relations at US healthcare company Henry Schein, is encouraged that only a small portion of IROs and investors disagree with this approach. “Social responsibility is fundamental to our business philosophy, as we balance the priorities of our five core constituents: investors, employees, suppliers, customers and communities,” he said. say. “We believe it is important to balance each of these to be successful as a company.”
Friederike Edelman, vice president of investor relations at Central Garden & Pet, agrees. “It is important that a company’s social and environmental activities are aligned with its business purpose and values, so it can reduce risk, enhance its reputation and contribute to its business performance,” she says. Masu. “In doing so, the company is actively working to drive change. As a result of its CSR efforts, employee engagement has increased and the company has left a green footprint, setting a good example for other companies to emulate.” It shows.”
core mission
While there is clear support for corporate social engagement, there is also, to a lesser extent, support for companies that limit their messaging to their core mission. Another finding in the report found that 45% of IROs and 49% of investors agreed that “companies should focus on their core mission and only comment on issues that directly impact that mission.” while 22% of IROs and 21% of investors disagree.
At first glance, it seems contradictory that there is widespread agreement both that companies should speak out on social issues and that they should only speak out on issues that directly impact their core mission. Masu. However, it does indicate the extent to which IROs and investors believe social engagement is essential to a company’s fundamental purpose.
Hector Wilson Tovar García, chief economist at Colombian brokerage Acciones & Valores, said: “Companies should approach social and environmental issues strategically, focusing on those most directly related to their core mission and business.” I agree that we should focus on doing that.”
“But it is also important to recognize that there is a growing interrelationship between social, environmental and economic issues, and that businesses can have a significant impact on these issues.” You may believe that a focus on CSR is essential to long-term business and financial success, while also contributing to social and environmental well-being. ”
Julia Vater Fernández, VTEX’s Investor Relations Director, believes there needs to be a balance. “Companies need to focus on their core business, but they also need to remain mindful of the environmental and social impact of their operations,” she points out. “While the prevailing macroeconomic conditions have forced companies to redirect some of their efforts to their core businesses, I am confident that the focus on ESG responsibility will gain significant momentum once we get through this difficult period. doing.”
Mike Wang, IR manager at Taiwanese technology company Bizlink, favors a targeted and organic approach to social engagement. “When setting corporate sustainability goals, it is important not to set too many goals, but to be clear about what needs to be done to achieve these select few goals. It’s important to do that,” he explains. “These goals should be about the core mission only and centered around what makes the most sense for the company.
“If the costs and effort required exceed the benefits, it will be an uphill battle. They should come naturally and be built into the company’s values and goals. True corporate sustainability is about It’s not about ‘waking up’ or demonstrating virtue or checking things off a list.”
“Awakened” distraction
The term “woke” has become popular among young progressives over the past decade to describe a worldview that includes the intersectionality of social justice, identity, and privilege. To its critics, it is a fashionable doctrine that creates an orthodoxy that excludes any skepticism or dissent.
The problem with discussing arousal is that it is a vague concept and can mean different things to different people depending on whether they agree or disagree. Being for or against wokeness is above all a statement of cultural identity.
Still, woke and anti-woke sentiments clearly influence attitudes toward corporate social activities. The most notable recent example is Disney’s criticism of Florida’s policies regarding the education of LGBTQ+ issues in schools. It became a test case for corporate statements on social issues, with Gov. Ron DeSantis describing Florida as “a place where woke people die.”
This has led to a conflation of awakening and corporate social action. One investor who participated in our report’s research commented: “Companies are not instruments of whims/trends/social pressures.” Giving in to short-term pressures may mean that company management is not truly focused on the underlying long-term mission of the business. It shows that there is. The focus should be solely on providing better products/services to create more value for the company’s direct stakeholders (employees, customers, shareholders). If a company wants to make a difference in society, it needs to register as a charity. ”
It’s a legitimate concern for investors to think that a company is engaging in social activism just to jump on the bandwagon, but being able to adapt to current trends is something that investors typically reward companies for. But while wokeness may be seen as just a fashion whim, its underlying social issues are anything but.
various battles
IR Magazine’s Corporate Social Activities Report covers not only the extent to which companies engage in social activities in general, but also their level of commitment to specific social issues. Some areas of social concern may be more central to a company’s core mission than others.
The report examines the level of engagement by both IROs and investors in employment rights, environmental attitudes, general democratic rights, invasion/war/displacement, LGBTQ+ rights, public health, and human rights. It identifies eight separate areas: speciesism, women’s rights.
The IRO believes that the most important issues on which companies should take a clear stand are employment rights, environmental attitudes, racial discrimination and women’s rights. More than four out of five IROs think these four areas are important, and a majority think their positions on the first three areas are very important.
However, there are differences in the extent to which these issues influence investment, with attitudes towards employment rights and the environment being more likely to influence investors’ decisions than racism and women’s rights. expensive.
Overall, 7 in 10 investors say attitudes towards employment rights and the environment influence their decisions, while 45 per cent say the same about racial discrimination, and women’s rights influence their decisions. Only 42 percent of
Mr. Garcia regrets this. “While it is encouraging that the majority of investors value employment rights and environmental stances, it is worrying that fewer investors are valuing the importance of racial discrimination and women’s rights. ” he says.
“This may indicate a gap in our understanding of the interconnectedness of social issues, or a lack of recognition of the importance of these issues to long-term business and financial success. there is.”
“By proactively addressing these issues, companies can not only contribute to social and environmental well-being, but also to their ability to attract and retain investors and customers over the long term.”
It’s understandable that investors tend to see employment rights and environmental initiatives as central to a company’s core mission. Employment rights are the basis of any organization’s daily operations, and environmental commitment is an inevitable E of her ESG. Furthermore, the assessment of employment rights is expected to include consideration of non-discrimination and diversity.
Stanley describes his company’s experience: “We typically discuss diversity, equity and inclusion (DE&I) and environmental issues with investors on an equal footing basis.Given the evolving landscape regarding environmental reporting standards, it is important to provide clear metrics on this. However, DE&I is clearly an area that shareholders are considering, and governance functions within investment companies in particular can evaluate.”
Beyond has awakened
The majority of investors and IR professionals are not only positive about corporate social activities in general. They are also positive about the importance of corporate involvement in specific social issues. More than two-thirds of IROs believe it is important for companies to take a clear position on each of the eight issues we have identified, but LGBTQ+ issues This is the only area where we disagreed on the importance of the position.
Mr. Fernández is witnessing a new landscape of social and economic interactions. “In my opinion, there has been a huge shift in the world in terms of ESG considerations in the last five years,” she says. “It is no longer enough to simply buy green bonds to offset the negative impacts of your own operations. Investors are embracing a trend that is not unique to them.
“Looking beyond this, it is clear that consumers are becoming increasingly aware of brands that make a positive contribution to society. , I think this trend will continue to grow in importance.”
Edelman agrees. “CSR is here to stay. Strengthening a company’s CSR will impact sales, employee motivation and carbon footprint, sometimes directly and sometimes indirectly,” she says. . “But it’s important to explain the relevance and impact to the company’s mission.”
“No two companies are the same; their stakeholders, strategies, goals, and operating environments are all different,” Wang says. “Companies approach sustainability differently, and the scope and degree of change will not be the same for any two companies.
“The important thing is that businesses need to bring about change in their own way and on their own schedule. This will lead to more meaningful and lasting change.”
This article is the result of discussions with IR Magazine’s research panel of IR experts. If you would like to join the panel, please email research@irmagazine.com with your name and company name.
