Companies urged to take CSR seriously

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The Independent Online

A leading investor group yesterday dismissed companies' lavishly produced corporate and social responsibility (CSR) reports as "a PR exercise".

The Association of British Insurers said key information on CSR should be included in annual reports, and told company directors to take it seriously. The ABI also urged companies to spell out risk factors facing their business in enhanced "narrative reports" that British companies will be required to produce under new EU rules.

ABI investment affairs director Peter Montagnon claimed companies that were already ahead of the curve on these issues tended to have higher share prices than those that did not.

"More companies do regard CSR as being part of the mainstream responsibilities. That is good and produces real results," he said. "But we want to build on that. Investors want to see more forward-looking discussion in the annual report. Understanding companies requires more than just looking at the financial numbers. We would also like to see a greater use of key performance indicators."

Gordon Brown, the Chancellor, scrapped the requirement to include an "operating financial review" in annual reports last November. But a forthcoming EU directive will require companies to include a "business review" along similar lines. It will force them to discuss risks of material interest to their company.

"We don't want to see everything in this," said Mr Montagnon. "We just want to know what matters. What we also don't want is everything lumped into a CSR report as a PR venture. What we want to know is where the risks are and how companies are dealing with them."

Mr Montagnon highlighted examples he would like to see, such as MacDonalds addressing the impact of obesity on its business, or chemical companiesgiving details of the effect a major chemical spill.

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