Global Compact International Yearbook 2013
191
By unpacking the CSP-CFP link, our framework provides an
important further step for both research and managerial
understanding of the need for setting clear boundaries and
specifying levels of analysis while addressing the business
case for CSR.
Implications for business
Firms are searching for legitimacy. Due to the financial crisis
and the related corporate scandals, society is asking firms to
generate more than money for the benefit of limited groups
of interest such as top managers and main shareholders. How-
ever, several companies “…continue to view value creation
narrowly, optimizing short-term financial performance in a
bubble while missing the most important customer needs and
ignoring the broader influences that determine their long-term
success” (Porter and Kramer).
If many firms overlook these crucial opportunities, it is
because the business case for CSR is still elusive. The lack of
once-and-for-all supportive evidence has often undermined
efforts to fully integrate the CSR perspective into manage-
rial decision making. In parallel, this issue also has a great
impact on the corporations’ relationships with investors. In
fact, if there is no clear linkage between CSR and, for exam-
ple, net income, earnings per share, and market value, why
should CSR be a worthwhile consideration in investment
decisions? Financial markets and the “mainstream” invest-
ment community do not appropriately value the CSR efforts
carried out by innovative firms and this behavior penalizes
business and society.
From a strategic standpoint, rejection of CSR dramatically
limits companies’ understandings of their surrounding en-
vironments. For the investment community, ignoring the
possible consequences – if not benefits – of CSR means los-
ing opportunities for more reliable and robust investments.
Despite some attempts to integrate these points into main-
streammanagement and performance assessments, financial
considerations are still the prevailing criteria for accepting or
rejecting corporate initiatives or investments. Therefore, more
comprehensive and reliable tools and methodologies, such as
integrated reporting, to support the evaluations of corporate
performance and business projects are needed.
Our analysis proposes a framework that could help companies
and the investment community to better understand how CSR
–
and thereforemore inclusive stakeholder-oriented governance
systems –could positively affect corporate performance. Firms
can refer to that to better assess, reframe, and improve their
CSR policies – in terms of their efficiency and effectiveness
–
by considering the mechanisms that could lead to enhanced
performance. The investment community can draw on this
framework to increase its understanding of corporate initia-
tives and efforts in order to better evaluate the real quality
of management and the sustainability of the value-creation
processes developed by the companies they work with.
Furthermore, our framework could also assist a more balanced
interaction between firms and the investment community. At
the moment, this field suffers from a knowledge gap.
To address the sustainability challenge, several firms are devel-
oping more participative governance systems and deploying
broad value-creation processes by targeting, involving, and
engaging stakeholders, but these efforts are not fully appreci-
ated by the financial markets. The perspective provided by the
CSP-CFP multilevel framework outlined in this study offers a
positive contribution to address this crucial issue and direct
the behavioral patterns of firms and investors toward more
aware, consistent, and informed approaches.
The article draws upon Perrini, F., Russo, A., Tencati, A., and Vurro, C.: 2011,
“
Deconstructing the Relationship between Corporate Social and Financial
Performance,” Journal of Business Ethics 102 (Supplement 1), 59- 76.
Agenda
ISO 26000
Integrated Reporting
Francesco Perrini (Università Bocconi), Angeloantonio Russo
(
LUM University), Antonio Tencati (Università degli Studi di
Brescia), and Clodia Vurro (Università Bocconi) work at the
CReSV – Center for Research on Sustainability and Value,
Università Bocconi, Milan, Italy. The authors contributed
equally to the work.