“Finally, I hope that the great thinkers here will dedicate some time to finding ways for businesses, governments, NGOs, and the media to create measures of what companies are doing to use their power and intelligence to serve a wider circle of people.” — Bill Gates at Davos, Switzerland, “Creative Capitalism,” January 24, 2008

Mr. Gates appears now to be joining the social investing movement. What a welcome development! He wants measures because he wants recognition for these activities, because recognition brings rewards to companies: inspired employees and public approbation. And I would add: social investors investing for the long-term. His speech calls on companies to do what social investors have been asking companies to pay attention to and what KLD has been measuring for many years — the social and environmental impact of corporations, especially on low-income groups.

Microsoft Corporation’s efforts to expand its beneficial impacts for low-income citizens beyond philanthropy into its business model are recent, as Mr. Gates acknowledges in his Davos speech. These efforts are recognized by KLD in our company profile of Microsoft. KLD’s evaluation of Microsoft’s efforts is that the company is not yet a leader in this regard, but it is making a start.

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From within the world of SRI, one gets the impression that a key aspect of global supply chain management is how to uphold and improve labor standards for workers producing the things that you and I use every day.

Human rights groups, labor unions, social investors, international organizations, academics and a number of companies have spent years on this question, and there are now annual conferences devoted entirely to labor rights in supply chain production.

So when I came across a brochure recently for the upcoming Tenth Annual European Supply Chain & Logistics Summit 2008, to be held in Germany in May, I was surprised to find almost no mention of labor standards. I was even more taken aback when I saw that scheduled speakers include company representatives from industries, such as technology and electronics, that have been hit by allegations of supply chain labor violations.

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Jonathan Dee’s article, “A Toy Maker’s Conscience“, which appeared in the New York Times Magazine at the end of December is a must read.

First, it’s a generous yet clear-eyed portrait of Baruch College professor Prakash Sethi, a defining force in the movement for corporate accountability for more than 35 years.

His story is one of the great ones in our business, but it has gone, largely, unheralded. And Jonathan Dee has gotten both the story and Prof. Sethi’s voice right.

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An update to Liz Umlas’ July post: Mandatory CSR?

In September 2007, Ethical Corporation noted that Malaysia was also putting laws in place around corporate social responsibility (CSR) (and in September 2006, that country’s stock exchange began requiring public companies to report on CSR-related initiatives). Here is the link to the article in Ethical Corporation.

Time and time again, I see people on my side of the corporate social responsibility debate claim that “originally” corporations only came into existence for a “public purpose”.

Some go on to argue that we should reinstate that qualification. Others think we should assume the requirement still exists and impose higher levels of social responsibility on companies.

While history does not support the claim of a golden age when corporations came into being to serve a “public purpose”, it does not prevent society from imposing one now.

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Copyright © 2007 by KLD Research & Analytics, Inc. All rights reserved.

One of the under-reported heroes of the environmental cause is Patriarch Bartholomew I of the Eastern Orthodox Church. The story below reflects his efforts.

Before turning to the story, I’d like to quote some words of the Patriarch from his visit to the US ten years ago:

To commit a crime against the natural world is a sin. For humans to cause species to become extinct and to destroy the biological diversity of God’s creation, for humans to degrade the integrity of the Earth by causing changes in its climate, stripping the Earth of its natural forests, or destroying its wetlands … for humans to contaminate the Earth’s waters, its land, its air, and its life with poisonous substances — these are sins.¹

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On Tuesday August 7th, I joined members of KLD’s staff and summer interns to pay a visit to the Boston College Center for Corporate Citizenship. There, we enjoyed presentations given about the Center and its affiliate, The Institute for Responsible Investment (IRI).

The Center and IRI are closely aligned with the mission of KLD. Both are doing some wonderful work and research in the areas of socially responsible investing and corporate responsibility. IRI is working on projects ranging from emerging markets to responsible property investment. In addition, IRI is wrapping up a study on non-financial reporting and the findings should be available in the first quarter of 2008. For more information about the Center and the IRI visit http://www.bcccc.net/.

Two recent articles point to some interesting developments - from some unlikely sources - regarding corporate social responsibility (CSR) and regulation.

In the UK, a report commissioned by Tomorrow’s Company concluded that companies should push for CSR laws. Ethical Performance noted in July that the report says that “while voluntary initiatives are the best way forward, ‘they subsequently need to be translated into national regulation that is then rigorously and uniformly enforced’.” Ethical Performance goes on to emphasize that most of the ten people on the panel that undertook the inquiry were from the business community, not from non-governmental organizations (NGOs).

Also this month, Indonesia passed a law making CSR - broadly understood as the implementation of “environmental and social responsibility programs” - mandatory for companies, apparently becoming the first country to do so. Erin Lyon wrote in CSR Asia Weekly that business opposition to an earlier draft had led to a narrowing of the bill to cover only “companies with an impact on natural resources”.

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Why should companies engage KLD? What are KLD’s boundaries in talking with the companies we research about environmental, social and governance (ESG) issues? These questions – more than any others – come up when we talk to companies. They have come increasingly from the media and the public.

KLD’s position on engaging with companies has changed very little since its founding in 1988. We began by being clear about:

• whose interests we represented – social investors and their fiduciaries and agents;

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Coca-Cola CEO E. Neville Isdell has urged ‘more companies to get involved’ in protecting the environment. He spoke to a crowd of his peers at a meeting of the UN’s Global Compact in Geneva on July 7.

The Reuters report on his speech described his fervor with phrases such as ‘rattling the pulpit’ and ‘railing against his fellow executives to stand up and do more to protect the environment — particularly drinkable water’.

Exciting – and significant – as Isdell’s speech is, the Reuters story also captured the dilemma for corporations and their stakeholders in setting expectations – and limits – for what does not directly affect the corporate bottom line. Here is an excerpt from the article:

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