Better returns for business.pdf - Oxfam New Zealand

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TWENTY EIGHTConsensus around performance expectationsA recurring message across the workshops andinterviews was that investors are more likelyto take specific social issues into account intheir investment decisions and engagementwhen there is a clear consensus around whatthe expectations of companies are. From aninvestment perspective, the argument is thatthe risks to companies (in terms of damage totheir reputation and consequent impacts oncash flows and profits) are greatest where theyviolate or risk violating: (a) existing legislation(particularly when there is risk of lack ofenforcement and implementation); (b) agreedsocietal norms, that is, where their behaviourcan be characterized as ‘unacceptable’ or‘immoral’. In practice, this means that investorswill look out for those areas where companiesbreach agreed norms of good practice (orinternational standards) and are more likelyto avoid those companies whose behaviour isor could be seen as unacceptable and so atgreatest risk. From an engagement perspective,the most effective engagement that has beencarried out by investors has been in thosesituations where the expectations of companiesare clearly defined (i.e., it is possible to assesscompliance/non-compliance in objective terms)and where there is a consensus around thestandards of behaviour or performance that areexpected.In the Better Returns workshops and meetings,investors stressed that internationally agreedframeworks on issues such as labour standards,bribery and corruption, cluster bombs andcontroversial weapons have helped them toovercome some of the barriers discussed.They help investors to simplify the processof integrating development issues into theirinvestment analysis by providing clarity andcertainty about the societal expectations ofcompanies, and by establishing benchmarksagainst which to compare companies.Internationally agreed frameworks also helpprovide a basis for engagement, wherecompany performance can be assessed ina structured and objective manner, therebyenabling investors to compare companies’against each other and allowing them toencourage laggards to improve while alsorewarding leaders.INVESTORS ARE MORE LIKELY TO TAKESPECIFIC SOCIAL ISSUES INTO ACCOUNTIN THEIR INVESTMENT DECISIONSAND ENGAGEMENT WHEN THERE IS ACLEAR CONSENSUS AROUND WHAT THEEXPECTATIONS OF COMPANIES ARE.The question of whether such norms andframeworks should be codified in legallybinding instruments was also discussed. Whilethis represents an ideal situation, the realityis that such instruments take a long time tonegotiate and even longer to implement. Therewas a general consensus that, in the absenceof regulation, credible multi-stakeholderprocesses 49 (e.g., the Roundtable onSustainable Palm Oil) have the potential to playan important bridging role in developing the softlaw and normative frameworks from which – asrequired – stronger implementation mechanismscould emerge.
TWENTY NINEOf course, multi-stakeholder initiatives arenot a panacea. They can take a long time tonegotiate, there is a risk that they may settleon lowest common denominator approaches,and they do not necessarily reach the correctanswers. In relation to this latter point, a goodexample is the use of donation programmesas a positive indicator of pharmaceuticalcompanies’ corporate responsibilityperformance in frameworks such as the Accessto Medicine Index. While donation programmeshave a valid and necessary role to play insome circumstances – such as in the context ofspecific disease-eradication programmes – mostevidence on donation programmes suggeststhat they tend to be counter-productive 50 . Thus,by rewarding donation programmes, investors’might encourage companies to pursue policiesthat have a negative impact on poor people’saccess to medicines.Box 7: Investors and the arms trade, calling for a UN ATTTo date, relatively little attention has been paid by mainstream investors to the humanrights and corporate responsibility issues associated with the defence sector. Thisis because of the perceived closed relationship of major defence contractors withgovernments and the lack of a clear international normative framework to enablecompany performance to be assessed on corporate responsibility issues. Investorswith concerns about the sector have tended to exclude companies from their portfolio.However, as the sector has become increasingly more integrated with civilian sectors(e.g. IT), and as investors face increasing pressure from civil society organizations toaddress human rights and corruption issues in the sector, investors have realized thatthey need to develop a more nuanced approach than simply excluding companies fromtheir portfolios.The negotiations around an internationally binding Arms Trade Treaty (ATT) are seen bymany as enabling the normative expectations of the sector to be defined. At the BRBWworkshop in Stockholm, participants agreed that mainstream investors have a stronginterest in supporting the Treaty as this would provide a broad framework to enablethem to build corporate responsibility issues into their research on the sector, and alsoprovide a basis for engagement with companies in the sector.
Page 4: 1. Introduction“We can’t afford
Page 7 and 8: SEVENThe fact that the project was
Page 9 and 10: NINEOxfam is a rights-based organiz
Page 11: ELEVENWhile the debates around acce
Page 15 and 16: FIFTEENRole 2: Stock selectionInves
Page 17: SEVENTEENRole 4: Influencing public
Page 21 and 22: TWENTY ONE4.1 Introduction4.2 Struc
Page 24 and 25: TWENTY FOURThe lack of transparency
Page 26 and 27: TWENTY SIXBox 5. Integrating living
Page 30 and 31: 5. Conclusions and recommendations
Page 32 and 33: THIRTY TWOTO CREATE DEMAND AND IMPR
Page 34 and 35: THIRTY FOURInstituting proper incen
Page 36 and 37: THIRTY SIXGovernment leadership of
Page 38 and 39: THIRTY EIGHTThe other issue that wa
Page 40 and 41: FORTYAs a final reflection on the q
Page 42 and 43: FORTY TWOCivil society organisation
Page 44 and 45: FORTY FOUREndnotes1 See www.busines
Page 46: FORTY SIXOxfam acknowledges the con

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