Environmental Credibility a Core Value for Global CEOs

CAMBRIDGE, England, April 11, 2003 (ENS) - The chief executive officers of Global Fortune 500 companies polled by a doctoral candidate at Cambridge University predict that environmental and social credibility will have a significant impact on the future reputation and value of multinational corporations.

The survey released Thursday by the Judge Institute of Management at Cambridge University was conducted between May and October 2002 by Arlo Brady. He asked the CEOs to rate the significance of seven elements of reputation to the preservation of a positive corporate reputation.

Arlo Brady (Photo courtesy Cambridge University)

Thirty-four of the CEOs from the Global Fortune 500 completed the survey. If combined the revenues of their respective companies' amount to almost US$5 trillion, according to Brady. "Taken holistically this small group of people controls the direction of massive capital flows, their daily decisions affecting the current and future lives of billions worldwide," he said.

Despite recent financial scandals such as those at Enron and WorldCom, the CEOs surveyed predict that in the near future social credibility will be as important as financial credibility, and environmental credibility will only be marginally less important.

In his foreword to the report Sir Mark Moody-Stuart, the chairman of Anglo American plc, says that with the possible exception of quality all the elements ranked by the CEOs who answered the survey are all elements which are difficult to measure.

(Photo courtesy Business Action for Sustainable Development)

The position of the seven elements displays a regional variation, Brady found. European companies consistently assign the future importance of environmental, financial and social credibility a higher level of significance to the preservation of a positive corporate reputation than their North American counterparts.

Sir Mark said, "This is the first time that I have seen a survey indication of differences in this area across the Atlantic." In addition to heading Anglo American, a mining and natural resources company, he is one of 11 people on the UN Global Compact Advisory Council, a body that assists the UN Secretary-General to find cooperative solutions to the challenges of globalization.

The largest group of respondents to Brady's survey were European CEOs. "We found that when compared with the majority of European CEOs, North American CEOs were relatively inaccessible, in many cases it was not even possible to speak to their office," Brady wrote.

The environmental survey section was worded as two questions. "In a society framed by growing environmental problems is the company perceived as adding to the negative legacy that we leave for future generations? Or is it perceived to be creating environmental value, and offsetting the actions of less responsible organizations?

"We have all heard the rhetoric about the Internet shrinking the world; the big news is that it’s theoretically true," Brady says in the introduction to his report. "The global goldfish bowl has enforced a degree of transparency upon institutions."

Through dialogue with global leaders, Brady says his research aims to establish the extent to which corporate reputation could, in the near future, "represent the fabled return on responsibility."

The project was financially supported by the British Safety Council.