New research confirms link between corporate responsibility and improved financial performance

New research released today by Business in the Community (BITC) reveals a statistically significant link between effective management and governance of environmental and social issues and financial performance.

Now more than ever, businesses need to demonstrate that corporate responsibility isn’t an over-head but a value creator. This research clearly shows that sustained environmental and social performance does pay dividends – literally.

Sponsored by Legal & General and undertaken by Ipsos MORI, the research revealed that FTSE companies that actively managed and measured corporate responsibility issues outperformed the FTSE 350 on total shareholder return by between 3.3% and 7.7% throughout the period 2002-2007.

The research examined the relationship between total shareholder return and the management of environmental and social impacts in 33 FTSE companies that have measured and managed their corporate responsibility through Business in the Community’s Corporate Responsibility Index (CR Index) in each of its six years.

In addition, the research found the more a company measures its environmental and social impacts, the less volatile its stock price.

Business in the Community has for many years stated that responsible business is just good business. The objective of the analysis was to look for a correlation between the extent to which these companies' corporate responsibility performance (as measured by their CR Index scores) and their financial performance (looking at three measures: total shareholder return, dividend yield and stock price returns volatility) may be linked.

More information

For more information please see the full report: The value of Corporate Governance: The positive return of responsible businessor contact Charlotte Turner Research Director, Business in the Community