Corporate social responsibility (CSR) has become a buzz-word over the past decade but what does it mean, and why is it important for investors?
John Ditchfield, co-owner of Castlefield Advisory Partners, comments: "CSR is generally used to describe activities undertaken by companies which reflect their responsibilities to the public and not just shareholders.
"So, for example, when an insurance or investment group donates time or technical support to a charity or non-governmental organisation, it is doing this to promote wide social wellbeing and not just to further its own interests or the interests of its shareholders."
But Leon Kamhi, head of responsibility for Hermes Investment Management, believes there has been a change in what CSR has come to mean for investors and practitioners.
He explains: "Historically, a company’s CSR activities have been about charitable giving and helping local communities in schools, homes for the elderly and the like.
"Today, CSR is becoming an integrated part of how a company operates as they need to demonstrate what they are doing as part of their business for customers, employees and society at large."
John David, head of Rathbone Greenbank Investments, also believes the term CSR has "grown beyond its strict dictionary definition".
He comments: "It is now an umbrella term for all the ways in which a company should have regard for its impact on the world beyond its profit and loss.
"Whereas CSR, for the most part, used to be little more than a nice marketing add-on to pad out an annual report, the new generation of consumers demand something far more authentic."
Mr David adds: "Over the last 20 years we have seen CSR become fully integrated into business strategy – covering how business relates to the environment and society more broadly."
Sandra Crowl, member of the investment committee at Carmignac, agrees that CSR goes further than a mere description of a company's activities.
She says: "CSR goes beyond the legal and compliance obligations of good governance, putting social and environmental concerns equally at the heart of their businesses for long-term sustainable gains."
CSR can mean slightly different things to different investors, as there are nuances in terms of how investors view a company's CSR activities, but the essence is the same, as Rose Beale, thematic analyst in the responsible investment team at Columbia Threadneedle Investments, elaborates.
"For us, CSR reflects the programme of activities undertaken by a company to demonstrate awareness of, and improve the situation for those affected by, any of a number of social and environmental issues.
"It does not include activities delivered to meet corporate objectives or legal requirements."
Ms Beale adds: "CSR is typically concerned with relations with external beneficiaries, communities and the wider environment, and generally not directed at internal issues such as employee wellbeing or resource efficiency.