Socially Responsible Finance and Investing: Financial Institutions, Corporations, Investors, and Activists

CHAPTER 17

Measuring Responsibility to the Different Stakeholders

AMIR RUBIN

Associate Professor, Simon Fraser University and Interdisciplinary Center (IDC)

ERAN RUBIN

Lecturer, Holon Institute of Technology (HIT)

INTRODUCTION

Corporations are motivated to become more socially responsible because their stakeholders expect them to understand and address the social and community issues that are relevant to them. Unlike traditional financial performance measures, the definition of social performance is hard to conceptualize. This is due to its aspiring, all-encompassing approach to corporate activity. Social performance typically covers an organization's relationship with the natural environment, its employees, and ethical issues concentrating on consumers and products, as well as the relationship with suppliers. Other issues include corporate actions on questions of ethnicity and gender. This leads to much debate over the possibility of developing a reliable and unbiased measure that effectively represents the overall social performance of the firm. This chapter asserts that while an all-encompassing measure for corporate social performance (CSP) is infeasible, measuring the different aspects of corporate social responsibility (CSR) separately can be effective for increasing transparency and aligning the goals of corporations with those of society.

To illustrate the skeptical view that economists typically associate with the ability to measure CSR, referring to an exchange of ideas ...