The ABI (Association of British Insurers) today issued new investment guidelines to improve disclosure by Britains companies of their approach to corporate social responsibility. The guidelines respond to the widespread and growing interest in corporate social responsibility amongst the public and investors.
The guidelines will encourage companies to adopt best practice when responding to external social, ethical and environmental risks. By setting out what institutional investors will expect to see disclosed in the annual reports of companies in which they hold stakes, the guidelines will increase transparency without imposing unnecessary new burdens.
The ABI also publishes today "Investing in Social Responsibility: Risks and Opportunities" by Roger Cowe. This is major new research which shows clearly the business case for Corporate Social Responsibility. Companies which take their social responsibilities seriously are successful companies.
A company can put its business at risk if it fails to respond appropriately to social, ethical and environmental matters. The ABI guidelines call on companies to confirm in their annual report that they have assessed these risks and are managing them in such a way as to preserve or even enhance the value of the business. Shareholders will then be better placed to engage with companies where they consider significant risks are being ignored.
Peter Montagnon, ABI Head of Investment Affairs, will say at the launch of the guidelines:
"These guidelines bring concerns about social responsibility into the mainstream of investment thinking and practice. We are anxious to avoid unnecessary prescription or the imposition of costly burdens. Our focus is on enhancing value in companies through effective response to risks. Companies and shareholders will of course be able to go further if they wish.
Mary Francis, Director General of the ABI, will say:
"I am pleased that the ABI has been able to respond to members wishes in this constructive role. We have talked to a wide range of fund managers, corporate executives and NGOs in preparing our guildelines. They represent an important opportunity for investors and companies to work together both to protect shareholder value and improve understanding of corporate social responsibility. Successful, responsible companies are good for society and for their shareholders.
Chris Mellor, Chief Executive of AWG, will say:
"SRI forces companies to address some key business issues. I believe that understanding environmental and social costs will be a major factor in building business success over the coming years through increased operational efficiency, better services and, ultimately, shareholder value.
SRI disclosure will provide investors with confidence that a company understands the risks it faces and is positioning itself to deal with them. The ABI’s guidelines are a crucial and valuable step in helping companies prove to themselves and others that they are up to the mark"