Valuing CSR – McKinsey Global Survey Results
Thursday, 5th March 2009 at 1:32 pm
Two-thirds of CFOs and three-quarters of investment professionals agree that environmental, social, and governance activities do create value for their shareholders in normal economic times. But the current economic crisis has caused them to view some of these programs differently according to the latest McKinsey Global Survey.
The survey says investment professionals agree that the global economic turmoil has increased the importance of governance programs—and decreased the importance of environmental programs—in creating shareholder value.
Environmental, social, and governance programs create shareholder value, most executives believe, but neither CFOs nor professional investors fully include that when evaluating business projects or companies.
The perceived importance of corporate environmental, social, and governance programs has soared in recent years, as executives, investors, and regulators have grown increasingly aware that such programs can mitigate corporate crises and build reputations.
But no consensus has emerged to define whether and how such programs create shareholder value, how to measure that value, or how to benchmark financial performance from company to company.
This McKinsey survey asked CFOs, investment professionals, institutional investors, and corporate social responsibility professionals from around the world to identify whether and how environmental, social, and governance programs create value and how much value they create. The survey also examines which metrics are the best indicators of value and how they can be communicated most effectively.
The results indicate agreement that environmental, social, and governance programs do create shareholder value, though the current economic turmoil has increased the importance of governance programs and decreased that of environmental and social programs.
Nonetheless, a significant proportion of respondents don’t fully consider these programs’ financial value when assessing the attractiveness of business projects or companies. Some think the value is too long-term or indirect to measure, and others just aren’t satisfied with the metrics available.