Ethical Performance
inside intelligence for responsible business


measuring social performance by what the general public thinks

September 1999

Two broad themes emerge from this month’s issue. The first is how best to measure the environmental, social and ethical performance of a company. The second is the difficulty of convincing stakeholders and the public that your company is making a genuine effort to become more socially responsible. Clearly, these two themes are related: companies need evidence to present their case.

Most progress to date has been made on quantifying environmental impact. The need for international guidelines on corporate sustainability reporting may at least in part be met by the Global Reporting Initiative, which next Spring is expected to publish the outcome of its pilots being carried out around the world (page 7).

But guidelines for how to quantify social and ethical performance are still a very long way off, if indeed they ever come at all. Many companies are still at the very early stage of trying to decide what the issues are and the field remains dynamic and rapidly changing. Nine out of 10 of the FTSE’s 100 biggest companies have no ethical policy as yet, according to Pensions and Investment Research Consultants (page 5). Without a written policy in place, it is hard to see what a company’s performance on say, human rights or child labour can be measured against.

Fear of adverse public opinion is likely to remain the main stimulant for improved corporate ethical performance for the forseeable future. Yet surprisingly little work has been done on public attitudes to corporate social responsibility. This work is now under way by pollsters MORI and others.

The ongoing dilemma for companies is that the public is unlikely to be convinced by social or ethical claims, if there are no agreed guidelines by which those claims can be assessed. For now, risk-averse companies must continue winning over employees and local communities, further develop social, ethical and environmental policies – and rec0gnise that the public will be the toughest nut to crack.


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