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KLD Hosts Webcast on Sudan Divestment Issues Anatomy of a Corporate Social Responsibility Report KLD Opens Doors to Academic Research KLD Hosts Webcast on Sudan Divestment Issues On May 24th, KLD hosted a conference call and Webcast on Sudan Divestment. The Webcast consisted of a group of panelists widely considered to be the leaders of the Sudan divestment movement and was a very informative session as to both what is going on in Darfur as well as the divestment campaign in the US. Speakers included:
Over 125 participants attended the Webcast, mainly from investment management firms as well as state legislators, academic institutions and the media. Great questions lasting over a half hour were posed to the panel, some of which are posted on the Q&A log pasted below. For a copy of the Webcast transcript and PowerPoint presentation, please contact Karen Agredo. Partial Unscrubbed Q&A Log QUESTION: What is the hope that the conflicts will be resolved, particularly in the light of the recent news that there has been a peace treaty?
PANELIST: The
proposed peace treaty is a very partial agreement. The most representative
faction of the Sudan Liberation Movement Army, led by Abdul Wahid
al-Nur, has not signed and likely will not sign. Implementation
is quite unlikely; the violence is undiminished since the cease
fire went into effect. Beyond that, if we'd look at the history
of the current regime, which came to power by military coup in 1989,
it has been a history of reneging. It has never, never followed
through on any agreement with any Sudanese party. Now, more than
ever, is the time for pressure to continue to be a part of this
regime, to insure that it complies both with the comprehensive North-South
peace agreement and also this very fragile, very tenuous, very weak
Darfur peace agreement. QUESTION: What states are likely to pass Sudan divestment legislation in the near future?
PANELIST: Currently,
most state legislatures are out of session, or they're in a short
session related to exclusively budgetary matters. However, Connecticut's
bill, which was requested by the state treasurer, Denise Napier,
has already passed the House and the Senate. The same goes for California.
We are hoping the bill for Rhode Island will get out of committee
fairly rapidly, as we have the support of the majority of the committee
members there. We're also working in Massachusetts and on the state
of New York. We are working on introducing about five plus states
when the senates go back into session in January. QUESTION: Are investment professionals receptive to the divestment dilemma without overly worrying about performance impact? PANELIST: That's obviously the $64,000 question. I think that given the choice, any investment professional would like to have fewer restrictions rather than more. But to the extent that we are looking to create solutions for our clients, and we're all doing that, no matter what firm we're from, I think that there are ways around, and there are tools that we all have to help us invest where we can, within any restrictions that are placed upon us. QUESTION: Given the increased asset allocations devoted towards hedge funds and alternative investments, what pressure if any can be applied to these non-regulated investment firms and investment structures? PANELIST: I think it's actually a pretty pressing question that's being raised, because the truth of the matter is, more and more investors are shifting their money into unregulated investments. And the bulk of the divestment movement across the country is obviously targeting publicly traded companies. But as the world of investment equity shifts, I think that eventually that question is going to be gaining more and more momentum, because that's where more and more money will go. And it does appear, if you study the home page of the Sudanese government in particular, the various ministries and the various conferences they're pulling together, they do seem to be actively recruiting or seeking out private equity investment, and it might be because they're understanding that they can rely less and less on publicly traded investment. So what, if anything, should be done today or next year, I think is a good question. I'm not in a position, probably to answer it all that well, but I'm thinking it's something that forward people should be looking at. Anatomy of a Corporate Social Responsibility Report By: Claire Moroni, Research Analyst and Assistant Client Services Manager What makes a good report good? In recent years, the socially responsible investment community has benefited from the improved quantity and quality of Corporate Social Responsibility (CSR) reporting. No longer viewed purely as a public relations exercise, the CSR report continues to gain acceptance as a strategic opportunity for meaningful communication with stakeholders. The target audience of a CSR report is varied, including employees, socially responsible investors, Non-Governmental Organizations (NGO), and consumers. The most effective CSR reports overcome the challenge posed by a diverse audience by providing quantitative metrics, specific benchmarks, and measurable goals. The best CSR reports use these tools to tell a company's social responsibility story, to illustrate the company's social and environmental performance over time. A candid discussion of the particular social and environmental challenges a company faces significantly enhances the quality and credibility of a company's CSR report. By publicly acknowledging the social and environmental challenges it faces, a company underlines its commitment to improve. When relevant, a strong report also references specific data points with goals and benchmarks measuring performance over time, such as emissions data, regulatory actions, remediation liabilities, lawsuits, health and safety data, and information released by the Equal Employment Opportunity Commission (EEOC) report. In order to provide context to these data points, CSR reports should discuss internal management and communications systems, as well as the policies and procedures that drive the company's social and environmental performance. Companies should make every effort to provide consistent metrics. When a company changes what and how they report from one year to the next, they impede a reader's ability to monitor and assess progress. Questions to be answered in a CSR report include:
Claire Moroni is a Research Analyst at KLD, covering large cap companies in the retail and communications industries. She has participated in a number of stakeholder teams and report review committees organized by CERES. KLD Opens Doors to Academic Research KLD has a long and active relationship with the academic community, whose professors, researchers and students - both in the U.S. and abroad – have used KLD data in research papers and in the classroom. KLD internships have been influential in drawing new, bright minds into the SRI and CSR fields, while KLD staff have long supported a number of major academic conferences. "KLD is proud to support academic research," says Graham Sinclair, product manager. "By expanding the horizons for knowledge about the pros and cons of CSR, we establish the legitimacy of our field, while breaking down misconceptions about the opportunity for SRI-themed investing." KLD research, as well as KLD indexes like the Domini 400 Social Index, have supported over 100 peer-reviewed articles in respected publications including the Academy of Management Journal, Business and Society Review, Journal of Business Ethics, Journal of Investing and International Journal of Organizational Analysis. KLD Influence on Research The study of socially responsible investing (SRI), business ethics, and corporate social responsibility (CSR) has benefited greatly from KLD data. In the field of SRI, KLD data has supported the majority of Moskowitz Prize-winning papers, including the 2004 winner by Prof. Marc Orlitzky of the Australian Graduate School of Management and co-authored by University of Iowa professors Frank Schmidt and Sara Rynes. As CSR and business ethics have developed as academic fields, KLD has been a key resource for both hard data and teaching resources. Currently, 40% of the Beyond Grey Pinstripes' top MBA programs for social and environmental studies rely on KLD research and index products. The influential paper on the link between corporate social performance and financial performance, a 2001 meta study by Professors Margolis and Walsh (Harvard and Wharton business schools, respectively), reflected the extent to which KLD analysis has helped to pave the way for SRI and CSR research. Their compendium analysis of 95 studies covering over 30 years of research "People and Profits? The Search for a Link Between a Company's Social and Financial Performance", indicates a positive relationship between social performance and financial performance. In the studies evaluating whether corporate social performance contributes to corporate financial performance, over half of them point to a positive relationship.
Not Just In Class KLD is found both in campus centers of excellence devoted to business ethics or corporate social responsibility, as well as in library resources for campus-wide access. Students of environment, engineering, law and liberal arts have all benefited from KLD's research. KLD provides a range of research for academics:
Researchers use the data for performance analysis of screened versus conventional portfolios and to develop and test trading strategies. Recent reports on Villanova University's student-managed SRI portfolio illustrate how students measure against KLD's Domini 400 Social Index as the de facto benchmark for judging SRI performance for their student-managed SRI portfolios. Over 70 academic institutions currently use KLD STATS, a data set of historical ratings applying KLD's SOCRATES framework for environmental, social and governance (ESG) factors for the S&P 500 universe for every year from 1991-2005. The data offers a longitudinal study of CSR factors possible, providing an historical snapshot of the social ratings contained in SOCRATES at each calendar year-end. As ESG ratings have evolved, KLD STATS has expanded the universe of companies covered, today providing historical ratings for the entire Russell 3000 universe. A major strength of KLD’s social research data is its versatility. Academics have used this data to perform research on topics as varied as the link between corporate social performance and corporate profitability, environmental performance studies, corporate strategy, and stakeholder theory. For more on how KLD products and services can improve your academic research, please contact Jay Carberry or visit www.kld.com/Academic. |
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