Business Views On New Legislation

New research carried out by MORI, on behalf of Corporate Edge, shows NGOs and CSR experts are highly supportive of proposed Operating and Financial Review (OFR) legislation, while institutional investors, the intended audience for the proposed report, still need convincing.

The proposed legislation, which will require all quoted companies to report on non-financial issues, is supported by 89% of CSR experts and 71% of NGOs, compared to 41% of institutional investors (with 34% opposing).

Whilst institutional investors may not be entirely supportive of the proposed OFR legislation, half (51%) agree that, given legislation, the new OFR will result in more investors taking account of companies' non-financial performance when they make their investment decisions.

Qualitative research shows that while some investors welcome the OFR as 'another piece of the jigsaw,' building investors' knowledge of the companies in which they invest, others feel that investors will greet the OFR with scepticism, and some maintain that any important non-financial factors are already considered by investors.

The research reveals widespread uncertainty, amongst all of the groups consulted, as to what will constitute an ideal OFR under the new legislation. Despite this, however, most audiences feel that OFR legislation could represent an opportunity for companies, if they approach it in the right way.

Technical details

Quantitative research was conducted using the MORI Summer 2004 study of institutional investors, interviewing 100 institutional investors face-to-face between 7 June and 26 July 2004. The MORI Summer 2004 study of NGOs (including a range of campaigning and charitable organisations promoting both social and environmental causes) and experts in the field of corporate responsibility (including membership organisations, think tanks, consultants and other commentators) was also used: 40 people were interviewed by telephone (21 NGOs and 19 CSR experts) between 14 June and 13 July 2004.

Qualitative research was also conducted between 15 July and 27 August, comprising a focus group among those in corporate responsibility and communications roles in large companies, a focus group among Socially Responsible Investors (SRIs) and experts in the field of corporate responsibility, and nine telephone depth interviews among companies, institutional investors (SRI and non-SRI) and NGOs.

Topline Results

Q1 As you may know, the Government has proposed legislation to introduce a new Operating and Financial Review (OFR) within the company reporting framework. This would require quoted UK companies to publicly report on material non-financial risks to their business, for example, governance, employment, social, community, environmental and reputation issues. There will be a requirement for auditors to report on the OFR. Thinking about this proposed OFR legislation, would you say you...?

Q2 Please could you tell me to what extent you agree or disagree with the following statement. The Operating and Financial Review (OFR) will result in more investors taking account of companies' non-financial performance in their investment decisions.