Ethical Performance
inside intelligence for responsible business


stock exchange will act on questionnaire fatigue

May 2004

The London Stock Exchange is preparing to create a centralized database on the social and environmental performance of companies as a way of tackling questionnaire fatigue among UK businesses.

The Exchange has formed a committee to look into the matter, and hopes to have a ‘technical’ solution to the problem by the end of the summer.

Although the Exchange says it has an open mind on how to reduce the ‘alarming burden’ of requests for information on companies from socially responsible investors, rating agencies and researchers, the committee is most likely to favour the creation of a central database, run by the Exchange, that will collate information on the social, environmental and ethical performance of companies.

‘A database has to be at the heart of anything like this,’ said an Exchange spokesman. ‘There is liable to be some sort of portal solution that creates a channel between the providers of the data and the users.’

The Exchange is to take a sectoral approach. There have already been meetings to discuss the collation of data on firms in different industry sectors.

The committee, which will hold its first meeting this month, is expected to have developed a solution by the second half of the year. Led by the UK Social Investment Forum in association with the Exchange, the committee will comprise other industry bodies, companies and ‘financial institutions such as Jupiter Asset Management and Ethical Investment Research Services’, although the actual membership has yet to be announced.

Its brief is to explore a way ‘to reduce the reporting burden whilst improving the real flow of communication’. The Exchange has stressed that any solution will have to be reached by consensus, and added: ‘The technology behind a potential solution is not complex; the complexity comes from getting agreement from a number of different parties.’

However, it appears that while rating agencies and researchers will push hard to retain their right to ask searching questions of companies, they may actually welcome some standardization led by the LSE.

‘It could be a very positive step and we would broadly welcome it,’ said Stephen Hine, head of international relations at Eiris. ‘Even with a centralized system you will still need research groups such as Eiris to find out information that isn’t reported by companies. But if there is a core set of data coming from the companies, through the Stock Exchange and based on Global Reporting Initiative standards, for example, that can’t be a bad thing. That would save us work, and we can spend more time analyzing data.’

The committee has been set up after a survey commissioned by by the LSE and Uksif found that listed companies devoted an average of seven working days of one employee’s time each month to form filling on CSR. At one in five companies a senior official spent more than half of his or her time gathering the information sought. Of the 55 listed companies questioned by research firm Taylor Nelson Sofres, only a third felt able to provide, to their satisfaction, the amount of information required by more than 30 different surveys and reporting mechanisms that seek to measure corporate governance and CSR.

Most believed the time spent gathering data would be better spent on improving company performance. BT recently revealed that it spends £25,000 ($44,000) responding to up to 200 CSR questionnaires a year.

UK CSR minister Stephen Timms told EP in March that his department might consider whether it could help tackle questionnaire fatigue, although he had no specific ideas as to how this might be done (EP5, issue 11, p9). The LSE said the committee planned to have ‘practical discussions with government departments’.

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