LONDON, KYIV, 12 SEPTEMBER 2008 – Social, ethical and environmental issues attract as much interest and passion in stakeholders as the traditional flashpoints of financial performance or director remuneration and have the same ability to influence corporate reputation and corporate value, according to the Ernst & Young Corporate Responsibility Governance survey based on interviews with 31 FTSE 100 companies across 20 sectors. 

The survey was conducted to understand what companies are doing, to establish what best practice might look like and to develop insight for leaders and managers on how to derive value from improved CR governance.

The results of the survey of FTSE companies’ response to the CR challenge demonstrate a plethora of committees, advisors and key performance indicators, all of which indicate a significant degree of engagement with CR. Seventy-one percent of the interviewed companies established a CR committee within the last five years. An overwhelming 94% of companies had set up a structured process to identify and update the board on the most relevant CR issues. Every surveyed company had defined key performance indicators and 71% had a board member with responsibility for championing CR and environmental performance.

But while commitment like this is an essential first step towards improved governance, the real question is whether this new CR infrastructure supports the organization in mitigating the risks presented by the CR agenda and capitalizing on the opportunities. To a large extent this depends on the competence of the individuals involved. Nearly a third (30%) of the companies interviewed had sought the advice of external experts on critical environmental, ethical or social issues. Two companies (6% of our sample) had established an independent stakeholder panel to provide challenge and guidance. An increasing number of organizations are establishing clear criteria for the selection of CR committee members and commissioning formal reviews of the effectiveness of their committee.

But while the higher level infrastructure appears to be well organized, the survey found that in the majority of companies, CR managers were not being used to best effect. Indeed, most were focusing their efforts on a narrow range of somewhat generic issues and in particular on maintaining relationships with communities. While good community relations are frequently an essential part of doing business in developing countries, they are perhaps the least material area in terms of business risk and business performance in developed countries.

The results of the survey suggest that the CR function no longer belongs within Corporate Affairs or Corporate Communications, as is still most frequently the case, but should instead have a more operational role that would enable CR managers to embrace the full range of issues which now fall under their remit, for example health and safety, HR and environment.

Doug Johnston, Ernst & Young Director, Corporate Responsibility Services, UK, emphasizes the objectives of the survey: “In this report we assess current practice and indicate where we believe companies could improve performance and harness CR governance structures to drive improved shareholder value.”

Said Tatiana Grinberg, Head of Ernst & Young’s Sustainability Assurance and Advisory Services in the CIS: “We believe that Ukrainian companies should pay attention to the results of this survey, as it revealed several CR governance trends and issues which national businesses may face in the near future.”

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Natalia Partach 
Ernst & Young PR Specialist 
(044) 490 3000 
Natalia.Partach@ua.ey.com