Business Finance
BU 620 UVA Vigeo and CSR The Daughter of Globalization Questions

BU 620

University of Virginia


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Briefly discuss the following questions about the Case "Vigeo and CSR - The Daughter of Globalization". Use complete sentences and proper grammar. Write at least two sentences to answer each letter a. - f.

a. What is your definition of Corporate Social Responsibility (CSR)?

b. Which stakeholders of a company would be interested in a company's CSR initiatives and why?

c. How can good CSR performance lead to financial success? Provide 2 examples.

d. Do you believe that it is the right approach to measure CSR performance using a quantitative metrics (Vigeo's approach)? Why or why not?

e. Why is it difficult for Vigeo to expand globally?

f. Exhibit 4 - Analyze Vigeo's CSR Evaluation Criteria. Are there any measures that you would add or delete from this list?

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For the exclusive use of Y. Yan, 2020. UV6548 Rev. Jul. 3, 2018 Vigeo and CSR—The Daughter of Globalization Nicole Notat, CEO of Paris-headquartered Vigeo, was set to present to the board of directors her intentions for growing the company in 2015. The company offered products and services for investors and asset managers and for companies and local authorities in assessing companies’ and organizations’ environmental, social, and governance (ESG) practices. As the European leader among ESG rating agencies, Vigeo provided convincing verification that socially responsible investment (SRI) no longer meant giving up some return. From its beginnings in 2001, the amount of capital invested in SRI funds in France had risen from EUR80 million to more than EUR115 billion (see Exhibit 1 for regional data).1 Whether driven by regulation, interest, or other means, social considerations and doing the responsible thing seemed to be catching on. Yet like the companies her agency covered, Notat had to continue to build the business and grow globally. She had to take a strategic view of where the SRI market was going and be prepared. Up until 2012, growth had been through mergers and partnerships. By 2015, Vigeo had offices in Paris, Brussels, Tokyo, London, Milan, Santiago, and Casablanca, and the board had asked Notat to think more about scaling up. The market signaled a demand for emerging-market coverage. Vigeo had embarked upon a program with an in-house analyst team and was on track to fully cover all emerging-market countries by mid-2015. And on the opposite end of the spectrum, there was interest in expanding in developed markets such as the United States. Indeed, Vigeo had introduced its first second-party opinion in the United States on the issue of a USD350 million green bond to finance the Clean Rivers Project in Washington, DC, in the summer of 2014. Notat and her team faced several challenges around expansion. Should they stick to the firm’s methodology—its 38 sustainability drivers, which was highly credible in Europe—everywhere else in the world? Perhaps Vigeo should adapt existing services and products to investors and markets in both developing and developed countries. Or would entering these markets mean rethinking the business model from the ground up? What about ramping up beyond consulting and ratings through new-product growth such as the green bond second-party opinion? How would any of these strategies fit with the company’s overall mission? CSR: What Does It Mean? Although the idea of corporate social responsibility (CSR) had been around for some time, the meaning and practice of CSR varied dramatically from country to country. From donating to charitable causes and being something separate from a firm’s business practices, to conducting business affairs in a way that caused no harm, definitions of CSR were assorted. But more generally, in 2001, the idea of CSR was unrelated to an organization’s bottom line and meant allocating some resources to the topic if business was going well. 1 EUR = euros; USD = US dollars; AUD = Australian dollars; CAD = Canadian dollars; JPY = Japanese yen. This field-based case was prepared by Gerry Yemen, Senior Researcher; Ronald G. Kamin, Professor, ISC Paris; and Andrew C. Wicks, Ruffin Professor of Business Administration. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright  2012 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an email to No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. Our goal is to publish materials of the highest quality, so please submit any errata to This document is authorized for use only by Yunting Yan in BU 620 Fall 2020 taught by Jordan Rippy, Johns Hopkins University from Aug 2020 to Oct 2020. For the exclusive use of Y. Yan, 2020. Page 2 UV6548 Eventually some countries started to incorporate formal laws around CSR practices, while others did not. In 2001, France became one of those countries whose government adopted such laws. It was called NRE (les nouvelles régulations économiques) and forced all public firms traded on any of its three stock markets to report its CSR (in French, RSE, for responsabilité sociale d’entreprise) activities along with its corporate annual reports. In practice, the law affected small and private businesses too. “Large firms often use private or smaller firms as suppliers and they then had to comply with the law,” Notat said. “The responsible purchasing criteria, for example, had an impact on the behavior of smaller companies.” Vigeo: The Meaning of CSR At the beginning of the 21st century, multinational companies were questioned and regularly criticized concerning their contributions to sustainable development. More and more, they were requested to report on their engagements and their social and environmental practices. This appealed to Notat, the former leader of the CFDT:2 “The press was getting involved in these topics—international institutions and stakeholders were starting to question companies on their activities globally,” she said. “Moreover, controversies challenged companies’ reputations.”3 As a respected public figure in France, Notat held an important stock of credibility with employers, investors, and unions: I believed it was becoming increasingly necessary to have someone neutral, from the outside, with the capacity to evaluate performance and measure businesses’ commitment on social and environmental issues. This is how I came up with the idea to create Vigeo, an extra-financial agency. Prior to the creation of Vigeo,4 Notat had presented the idea to several of her contacts running large firms in France. She described an encounter: At one such meeting, I asked the CEO what he thought about the direction I was about to take. And he told me that a deep belief in CSR had nothing to do with his company, and it was not part of a duty a firm had to shareholders or employees. But he said he was a realist and told me that companies were being forced and if it had to be done, he was glad it was me leading it. He also decided to provide 1% of the needed capital to get Vigeo going. As it turned out, several business leaders supported the concept of an independent European agency becoming a reference for rating and evaluating companies on CSR efforts (see Exhibit 2 for investors). One of the investors came with the capital of Arèse, the first ESG rating agency in France. Vigeo took over Arèse’s activities. “It was a great surprise,” Notat said, “that many executives have changed their minds about asset management.” Some were skeptical regarding their capacity to attract investors because of their good CSR practices. Others—perhaps in the more traditional financial community—were feeling the pressure that CSR issues were starting to influence their markets. Notat’s reputation was key. “If I had not been known by politicians and company executives, it would have been much more difficult to develop areas of the company,” she said. 2 CFDT is a trade union confederation highly regarded as being one of the most open-minded reformist unions in Europe. Notat was the first female to be elected to lead it in 1992. 3 All quotations, unless otherwise noted, derive from author interviews with Vigeo employees, August 2011, Paris. 4 Drawn from Latin, Vigeo meant being watchful, alert, and one who kept his or her eyes open. This document is authorized for use only by Yunting Yan in BU 620 Fall 2020 taught by Jordan Rippy, Johns Hopkins University from Aug 2020 to Oct 2020. For the exclusive use of Y. Yan, 2020. Page 3 UV6548 The new organization’s business model would be slightly different from financial rating agencies. Research from Vigeo Rating would be remunerated by investors and asset managers, not by the companies it rated. That would prevent conflicts of interest and would possibly provide more accurate information. Socially Responsible Investors The idea of investing in socially responsible endeavors was an older concept than CSR. Indeed, its meaning could be traced back to the early 1700s, when the Quakers refused to accept slavery as a form of human capital. They were among the first groups to launch anti-slavery campaigns, thereby insisting upon social responsibility. The application of CSR factors in investment decisions progressed from there. As with CSR principles, the SRI market eventually evolved country by country. With time, agencies like Vigeo were created to provide investors with data surrounding firms’ CSR behaviors, and nearly every country had a traditional national champion: Vigeo in France, Oekom in Germany, Sustainalytics in the Netherlands, EIRIS in the United Kingdom, and MSCI in the United States (see Exhibit 3 for competitors). Each country’s culture also marked its approach to SRI. For example, in France, there was less emphasis on exclusion criteria, such as gambling and tobacco, compared with the United States, where those criteria were more important. Former Vigeo SRI Department Director Estelle Mironesco, who had previously been an asset manager, explained: When I first encountered CSR research in 1997, the concept was only just starting in France. I thought that it was very interesting but did not quite see how I could take that into account as well in my job as credit analyst. A few years later, the concept had developed and was gaining increased interest from institutional investors. I could see the added value for equity and credit research. The company I was with decided to dedicate more internal resources to this type of research, and I was appointed to lead that effort. There have been different phases of SRI. The origins were the more ethical/religious/moral approach that started in the United States and the United Kingdom. From there, a development SRI approach was established in France, driven by a best-in-class approach. With this second stage, the idea being not to exclude factors like tobacco (as in ethical), but take a more holistic approach to SRI investment with the practice and behavior of companies on a different range of subjects linked to labor, the environment, and governance—data mining for the best behaved companies. The idea was that companies with good practices would be better prepared to mitigate risk, and this was the second phase. Yet SRI still was restricted to specialist funds outside traditional assets. The amount of investment was probably very small in the beginning. The third stage of development is still at the beginning, which is the mainstreaming of the concept. There are really interesting signs this is starting—for example, the UNPRI [United Nations-backed Principles for Responsible Investment, an initiative that was launched in 2006], which started with 50 signatories and now has over 1,000 signatories that are asset managers or institutional investors representing USD30 trillion. Over a reasonably short period of time, they have been successful. Investors say that they are committed to integrating ESG practices into their investment decisionmaking and ownership practices because it is part of their fiduciary duty and in the best interest of clients. That is an interesting sign to me that the overall investment community is waking up to the importance of these factors. Still, it is a minority side of the management market. This document is authorized for use only by Yunting Yan in BU 620 Fall 2020 taught by Jordan Rippy, Johns Hopkins University from Aug 2020 to Oct 2020. For the exclusive use of Y. Yan, 2020. Page 4 UV6548 Creating Metrics One of the first people Notat recruited was Inspector General of Social Security for Morocco Fouad Benseddik. Notat knew Benseddik, who had a Ph.D. in political science, from her work at CFDT. Benseddik didn’t become familiar with the ideas of sustainable development by thinking about the environment and about saving it for future generations, as many generally do. Instead, he became acquainted with it because of the retirement system in Morocco and the big problem of an aging population. “My double combination of academia and experience in unionism,” Benseddik said, “led me to believe that CSR was the answer, from a management point of view and from an economics point of view, to the challenges companies have operating in an international context.” Still, Benseddik hesitated when Notat first approached him to join her work—it was a new area that still required definition. Yet the uniqueness of joining an enterprise whose shares would be owned by companies, asset managers, investors, financial institutions, unions, and nongovernmental organizations (NGOs) was intriguing, and he eventually decided to move to France and join Notat. By 2002, Notat had established the Vigeo office in a Paris suburb and Arèse employees were relocated to it. Vigeo put out an advertisement seeking more employees and within six weeks had over 500 candidates. As Notat and Benseddik began to examine spreadsheets about firms Arèse had assessed, it was unclear why the topics that formed the basis of its CSR analysis had been chosen. “I asked an analyst which was the best company in Europe’s telecommunications sector and then why,” Benseddik said. “When I was told who and asked the analyst to explain why, the reply was ‘because it is my opinion.’” Those kinds of exchanges had Notat and her leadership team raising the question of whether it would be possible to build a universal definition of CSR. Benseddik recalled: During one of our conversations, I said, “Okay, say I have a company, and I like to avoid tobacco [and] alcohol, I avoid weapons, I avoid gambling, pornography, and so on. But is that enough to be socially responsible?” Further, what does it mean to have diversity in companies? And what does diversity mean? Diversity in the United States cannot be the same as the diversity in South Africa. It’s not the same. At the time the indicators we had around diversity wouldn’t work as a global measure. How is it possible to bring Hispanics to the board of a company in South Africa? And this is how we started to build a methodology to assess the CSR performance of companies. Stage one methodology As Notat’s team members saw it, they had three challenges ahead of them: (1) developing an international CSR definition; (2) creating a reliable assessment methodology; and (3) gaining widespread acceptability of their definition of CSR. As they worked in teams trying to define CSR, Benseddik continually found himself asking why. So, for example, when considering that gambling was not a responsible method of making money, he asked why a firm involved in gambling would not be a responsible one. Was it possible for a company to be involved in gambling and, at the same time, be responsible to all its workers, clients, and so on? And once he heard justifications, Benseddik would ask, “In the name of what should I consider that gambling is bad? In the name of what should one consider that CO2 reduction is a responsible action?” He explained further: By example, take greenhouse emissions. If you say to the Japanese that you have to act ethically if you want to win in the marketplace, they would say no. They consider that doing good should be an end in itself and it should not be something you use for commercial business ends—that we should respect This document is authorized for use only by Yunting Yan in BU 620 Fall 2020 taught by Jordan Rippy, Johns Hopkins University from Aug 2020 to Oct 2020. For the exclusive use of Y. Yan, 2020. Page 5 UV6548 nature, the environment, because that is what life is about and we shouldn’t be doing it because of economic interests to make money. In most of the older conceptions of CSR, the cultural factor was very important. CSR was defined as stakeholder identification and management having a formalized relationship with stakeholders. And this may work in some cultures where there are strong points of relationships between companies and the local communities, for example, with the Quakers in the United Kingdom. But imagine a manager that arrived at work in the morning and said, “Today I am going to meet with our NGO stakeholders and tomorrow with our investor stakeholders, and the next day with our supplier stakeholders”—it’s impossible. There are many countries where stakeholders are not free to organize themselves or they are represented by people who are not representative. So if you take the Protestant model of dialogue, with local communities and stakeholders, and apply it to certain Asian or Latin cultures, where the state is the body that controls these kinds of things, not their local communities, it’s not really going to work. CSR is the daughter of globalization! Thinking about the world stage and exploring the idea of worldwide principles or universally accepted norms, the Vigeo team looked to the United Nations Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights. Both documents were instruments adopted by the United Nations as the base definition of social responsibility for humans, states, and groups and were recognized by the majority of the world’s governments. Working in groups that included Vigeo employees and advisers from the scientific community (a diverse group of academics from around the world), the framework for an international definition of CSR was extracted from the UN documents. “After realizing that CSR is about respecting human rights, we realized it was also related to human resources,” Benseddik said. “And it was also related to business behavior.” Eventually six domains were defined: human rights, human resources, business behavior, corporate governance, environment, and community involvement. The work groups were then divided into six task forces, each one dedicated to a single demand. Within each group, members had to think of the different criteria representing the interests of a category of stakeholders for each demand. Again, the test for each proposition was, “in the name of what?” So, for example, when one participant in the human rights group said that selling weapons was not socially responsible, Benseddik asked, “In the name of what?” He said: Weapons can preserve democracy, can preserve peace, so it depends to whom you sell weapons and what the context is. If we look to international laws about selling weapons, we find that some weapons are forbidden—such as cluster munitions. Each criterion was tied to whether or not there was an international law or norm that suggested a company should react in each way. That methodology was used over and over again for each of the six demands (later referred to as domains), and, within a year, 38 criteria (later called sustainability drivers) were finalized (see Exhibit 4 for evaluation criteria). “It became a collaborative project that created a methodology and a corporate identity for Vigeo at the same time,” Benseddik said. And in the end, it was agreed that CSR was not an obligation, a duty, a charity, or a legal requirement; instead, it was a voluntary behavior based on commitment from the company. The Vigeo standard definition of a socially responsible company became this: A “socially responsible company” is one that not only fully complies with the obligations of applicable legislation and conventions, but one that accounts for ...
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Final Answer


Running Head: CASE STUDY


Vigeo and CSR - The Daughter of Globalization
Student’s Name
Institutional Affiliation



Vigeo and CSR - The Daughter of Globalization
Qn. A
Corporate social responsibility is the company’s commitment and self-regulation that
focuses on economic, environmental, and societal development and well-being. As a result,
companies are expected to operate within their corporate social responsibility requirements.
Qn. B
All company stakeholders, such as suppliers, customers, employees, community,
government, and shareholders, are interested in the CSR (Daren Publishing, 2018). Shareholders
need assurance about the company's sustainability, while customers require quality assurance of
the market's products.
Qn. C
Corporate social responsibility develops a positive image in public and among the
company's stakeholders and reduces general costs. For example, contributing to environmental
conservation measures creates a positive image of the company and the government. Acts like
environmental conservation and customer relations at...

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