Global Compact International Yearbook 2013
185
Agenda
By Prof. Dr. Timo Busch
ISO 26000
Integrated Reporting
Starting from very fundamental investigations, John Spicer
was one of the first authors to conduct an econometric study
that investigates the economic consequences of ecological and
social efforts. Ever since then, a substantial body of more recent
management research has sought to address this question and
investigate the relationship between corporate sustainability
performance (CSP) and corporate financial performance (CFP)
from different angles. However, there continues to be much
confusion within this debate. At the 2010 Academy of Manage-
ment conference in Montreal, papers presented in a session
entitled “Examining the corporate social performance–corpo-
rate financial performance relationship” offered various results:
no relationship, a positive relationship, or even a curvilinear
relationship. These results are reflected by scholars’ attempts
to detect an outperformance of mutual funds or specialized
indexes that invest in firms with enhanced CSP: Empirical
studies suggest that sustainable investments may either out-
perform the market, underperform the market, or make no
difference in terms of their risk-adjusted financial returns.
As a result of these mixed findings, some scholars suggest
that the situation has remained the same: There is no clear
relationship between CSP and CFP. Other scholars conducted
meta-analyses and indicate – albeit highlighting epistemo-
logical and methodological concerns – that CSP practices are
likely to pay off. At least there seems to be no clear indication
of a negative relationship between CSP and CFP.
One common notion that has recently emerged in the literature
emphasizes that there is no unequivocal, final answer to the
CSP–CFP debate. As a consequence, focusing further on the
“
Does it pay?” question defeats its purpose, as it “reinforces,
rather than relieves, the tension surrounding corporate re-
sponses to social misery.” As a call for extending this debate,
scholars have suggested that instead of seeking to answer the
“
Does it pay?” question, future research should address the more
important one of “When does it pay?” This line of thought is
consistent with Rivoli and Waddock’s argument that there is
a clear business case for sustainability, but it shifts over time.
What is – and what is not – responsible corporate practice
is time- and context dependent; the same holds for the profit-
ability of CSP practices. In sum, Berchicci and King conclude
that CSP practices “may pay only for some firms, or in certain
cases, or in certain time frames.”