The Weighting of CSR Dimensions: One Size Does Not Fit All

25 Pages Posted: 7 Mar 2014 Last revised: 25 Jun 2014

See all articles by Gunther Capelle-Blancard

Gunther Capelle-Blancard

Université Paris I Panthéon-Sorbonne - Centre d'Economie de la Sorbonne (CES)

Aurélien Petit

Université Paris I Panthéon-Sorbonne - Centre d'Economie de la Sorbonne (CES)

Date Written: June 2014

Abstract

The concept of Corporate Social Responsibility (CSR) is fundamentally multidimensional. However, this multidimensionality is often overlooked, especially when it comes to the measure of Corporate Social Performance (CSP). Most of the work here uses equally-weighted composite scores, provided by extra-financial rating agencies (mainly KLD), which simply sum up the scores of different CSR facets to yield an overall assessment. How relevant are such composite CSP scores? Does it make sense to give the same weight to all of the criteria? Should the weighting scheme be the same for the assessment of Banks and Oil companies? This paper proposes an original weighting scheme of CSR strengths and concerns, at the sector level, which is proportional to media and NGO scrutiny, and based on a comprehensive database of environmental, social and corporate governance news. We show that previous CSP assessments under-weight environmental and corporate governance concerns. We moreover find that firms which are exposed to the closest scrutiny are usually criticized on one single dimension: e.g. banks for bad corporate governance, and basic-resource firms for environmental damage. Composite scores based on equal-weights hence misrepresent CSP and the difference in CSR between sectors.

Keywords: ESG News, Corporate Social Performance, Corporate Social Strategy, Multiple- Criteria Decision Analysis, Fungibility, Commensurability, Weighting scheme, Composite index, KLD ratings.

JEL Classification: Q27, Q51

Suggested Citation

Capelle-Blancard, Gunther and Petit, Aurélien, The Weighting of CSR Dimensions: One Size Does Not Fit All (June 2014). Available at SSRN: https://ssrn.com/abstract=2405801 or http://dx.doi.org/10.2139/ssrn.2405801

Gunther Capelle-Blancard (Contact Author)

Université Paris I Panthéon-Sorbonne - Centre d'Economie de la Sorbonne (CES) ( email )

106-112 Boulevard de l'hopital
106-112 Boulevard de l'Hôpital
Paris Cedex 13, 75647
France

Aurélien Petit

Université Paris I Panthéon-Sorbonne - Centre d'Economie de la Sorbonne (CES) ( email )

106-112 Boulevard de l'hopital
106-112 Boulevard de l'Hôpital
Paris Cedex 13, 75647
France

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