New Internationalist

Corporate responsibility – the facts

Issue 407

There are not many solid ‘facts’ about Corporate Responsibility, because it is voluntary, interpreted differently by different companies, has no common standards with which to measure performance, and is selectively reported on.

the industry...

Reporting

The number of companies reporting on their Corporate Responsibility activities has shot up in recent years, which at least demonstrates its growth in popularity as a PR tool.

  • 20% of companies with global supply chains have a supply chain labour standards policy.1
  • 94% of company executives believe the development of a Corporate Responsibility strategy can deliver real business benefits.2

  • Over 90% of companies in Europe and Japan with high environmental impacts have created policies for managing them, compared with 75% in Australia and New Zealand/Aotearoa and 15% in the rest of Asia.1
  • 80% of Japanese companies publish Corporate Responsibility reports, compared with 71% of British, 32% US, 23% Australian and 18% of South African companies.4
  • Around 15% of funds invested in Europe have some kind of ‘Socially Responsible Investment’ (SRI) criteria. It’s around 10% in the United States, where resolutions on social and environmental issues brought by shareholders at AGMs have increased 49% over the last 10 years. In Australia, ‘responsible investment’ grew 56% in 2006.1



the reality...

Tax avoidance

Corporations may be boasting about their social responsibility like never before, but their financial contribution to society in the form of taxes has plummeted.

  • 1/3 of businesses in the UK do not pay any corporation tax, making the ‘tax gap’ between what they should pay and what they do around $93bn per year.5
  • Half of all world trade passes through tax havens so that corporations can avoid paying tax. At least $11 trillion of assets are held offshore, over a third of the world’s annual GDP.7
  • Revenue losses to developing countries from corporation tax avoidance are at least $50bn, around the same as they receive in annual aid flows.8

Profits and pay

Corporate profits in 2006 and 2007 were the highest on record. Pay for top executives in May 2007 was around double what they earned 10 years ago.9


  • CEOs of large US companies make as much money in a day as an average US worker makes in a year.9
  • The top 20 private equity and hedge fund managers pocketed an average $657.5 million each in 2006.9
  • Average pay for directors of Britain’s top companies rose **37% in 2006. Salaries of workers rose 3.3%.10
  1. Ethical Investment Research Association, ‘The state of responsible business: global corporate response to environmental, social and governance challenges’, September 2007, www.eiris.org
  2. Ernst & Young, ‘Corporate Social Responsibility: a survey of global companies’, 2002, www.ey.com
  3. Econtext, ‘Reporting in Context: Global Corporate Responsibility Reporting Trends 2006’, www.econtext.co.uk
  4. KPMG, ‘KPMG International Survey of Corporate Responsibility Reporting 2005’, www.kpmg.com
  5. Andrew Murray-Watson, ‘Give us all the super-wealthy’s tax breaks’, The Independent, 2 September 2007; Richard Murphy, ‘Mind the Gap’, 2006, www.taxjustice.net
  6. International Confederation of Free Trade Unions, ‘Having their cake and eating it too: the Big Corporate Tax Break’, July 2006, www.icftu.org
  7. War on Want, ‘Tax havens and tax companies: one rule for the poor, no rules for the rich’, 2003, www.waronwant.org/taxdodge; Oxfam Great Britain, ‘Tax havens: releasing the hidden billions for poverty eradication’, 2000, www.oxfam.org.uk
  8. Institute for Policy Studies/United for a Fair Economy, ‘Executive Excess 2007: The staggering social cost of US business leadership’, August 2007, www.ips-dc.org
  9. Economic Research Institute and careerjournal.com, ‘May 2007 Executive Compensation Study’, www.erieri.com
  10. Julia French and Simon Bowers, ‘Directors’ earnings break through the £1bn barrier’, The Guardian, 29 August 2007.

Additional research by Silje Vold.

MUSHARRAF’S MESS

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