Europeans trump North Americans in responsible business practices: Research

North American companies lag behind their European counterparts across key environmental, social and corporate governance challenges, according to new research.

A report by the Ethical Investment Research Services (EIRIS) finds that responsible corporate governance, environment, equal opportunities, human rights and supply chain practices are increasingly being adopted by companies worldwide, though there are significant differences between regions.

Findings of the report include:

• North American companies significantly lag behind their European counterparts across all the areas researched although a core of larger companies have adopted responsible business practices

• European companies have well developed responsible business practices across a broad range of issues. This is due to a sophisticated responsible investment market, NGO pressure and a strong regulatory environment

“Twenty five years ago very few companies were aware of ESG issues, let alone developing policies and systems to address them. Corporate responsibility continues to evolve from what was a mainly philanthropic activity to a more mainstream approach where it is integrated into core business activities.

Bob Gordon, report author and head of US and Japan Research at EIRIS

• Japanese companies demonstrate strong performance on environmental issues, although need to make progress on other areas to match European levels

• Large companies are more likely to adopt responsible business practices than smaller companies

• Continued growth in responsible investment especially amongst ‘mainstream’ investors - driven by a belief that environmental, social and governance issues affect financial performance - is expected to drive greater corporate take up of and reporting on these issues.

Bob Gordon, report author and head of US and Japan Research at EIRIS, commented: “Twenty five years ago very few companies were aware of ESG issues, let alone developing policies and systems to address them. Corporate responsibility continues to evolve from what was a mainly philanthropic activity to a more mainstream approach where it is integrated into core business activities.”

Peter Webster, EIRIS’ executive director said: “Investors are concerned by the potential costs of investing in irresponsible and unsustainable companies. Increasingly they are favouring those companies that are responding well to the environmental, social and governance challenges they face – each of which has the potential to affect shareholder value if not properly addressed.”