Are These 3 The Most Socially Responsible Companies In The World?

Not only do we want our investments to make us rich, but we are increasingly choosing investments that give us more than just a financial return. Companies provide details of their impact on society and the environment in the guise of the Corporate Social Disclosure Report, and until now this report has been voluntary.

Compulsory reporting is imminent as the European Commission now guarantees a forthcoming European Directive on corporate social responsibility. It will require publicly traded companies to report on a number of non-financial metrics. Information concerning human rights, environmental performance, anti-corruption measures and diversity programmes will be required.

Companies know that socially responsible activities can increase its profits and reduce the cost of capital, but how many of us actually make investment decisions based on a company’s social activities?

appleAs the largest company in the world in terms of capitalisation (US$416bn), you would expect Apple (NASDAQ: AAPL.US) to be the world leader with regard to improving the planet and reducing its environmental impact. It has recently published information detailing how it is “committed to the environment for the future”. The company’s pledge to “make everything better” goes beyond the technology and innovation improvements for just its products.

Apple is taking a comprehensive approach to reducing its environmental infraction by meticulously measuring, verifying and disclosing its carbon emissions. Not only does it report the carbon footprint from its own operations, it also discloses that of its entire supply chain.

sainsbury'sAnother company going above and beyond a few standard phrases on a corporate social report is Sainsbury’s (LSE: SBRY). Following a successful three-year trial of Clean Air Power‘s Genesis-EDGE Dual-Fuel system in its haulage trucks, the retailer converted its fleet to run on bio-methane gas, produced from landfill waste. This technology delivers significant reductions in both carbon emissions and air pollution by 25% lower emissions than diesel equivalents. It will deliver carbon reduction that is equal to taking more than 900 cars off the road every year.

The compass of social conscience has shifted in recent years from environmental issues to tax avoidance. The media, politicians and the public are angry with multinational companies that avoid paying any corporation tax. By using complex company structures and royalty payments, they can legally organise their activities to ensure profits accrue in the most friendly tax regime, which is not always the country of operations. With the spotlight firmly on this area, there is a growing movement for companies to voluntarily disclose taxes paid.

vodafoneVodafone (LSE: VOD) has been the FTSE 100 winner in leading the way for the high standard of its tax disclosure report. Reporting tax strategy circumnavigates any PR disasters and builds public trust. While not being without public scrutiny over its taxes in the past, Vodafone now publishes its tax strategy and provides a comprehensive breakdown of all of its tax revenues generated by type and by country. It paid £11.1 billion tax in 2011/12 and details the 25 countries where this was paid including the by tax type.

It is likely that different stakeholder groups will have conflicting interests with regard to a company’s strategy for paying tax, but an open and transparent reporting policy allows all stakeholders to make decisions that fit their social responsibility preferences.

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Lisa Walls-Hester owns shares in Clean Air Power. The Motley Fool owns shares in Apple.