According to the OECD, more than 75 % of all registered companies in the industrialized world are family businesses and not just small and medium-sized ones. About a third of listed companies in the ‘Fortune 500’ have families at their helm. Forty-three of Italy’s 100 top companies are family-owned; 26 of France’s and 17 of Germany’s.

Family companies employ about 50-60 per cent of the workforce in the industrialised world. At the same time, publicly traded companies in most countries are controlled by a remarkably small number of great family dynasties. In the simplest cases, the family owns a majority of the shares.

Family control is exercised as a single block via a voting agreement, holding company or foundation. But many families also use legal devices to lock in their control as the company grows. Many of these families have also built vast corporate pyramids, also known as shareholding cascades or “Chinese boxes.” The family controls a public company, which in turn controls other public companies, each of which controls yet more public companies. Family control is maintained throughout but at each stage public investors chip in. The family ends up controlling assets worth vastly more than its real wealth. Following the prolonged recession, recent corporate scandals and the collapse of the stock markets, there has been a return to the kind of values prevalent in family owned companies. For family businesses that survive their own internal succession dramas have tended to take a long – term view. In general, they do not live and die by earnings per share.

The Corporate Social Responsibility index was launched on 12th March, 2003 at London by an UK based consortium of 700 companies - Business in the Community (BITC). BITC is devoted to improving their positive impact on society. The index being the first of its kind benchmarks the Corporate Social Responsibility (CSR) performance of companies. This year 122 companies voluneteered to be assessed.

The index aims at rating a company based on its CSR strategies and how well they have been able to integrate these strategies into the overall operations of business. Company management practices that impact the community, environment, marketplace and work place are also taken under consideration by the index to assign rates.

The index chooses to list companies alphabetically in five groups or quintiles rather than disclosing the companies publicly. The first group of companies scored over 82 per cent while the last group scored under 52 per cent, the average score being 67.87 per cent which happens to fall in the third quintile.

Companies like Shell, BP, DOW, Unilever occupied the first quintile, with DOW topping the chemical sector with the score of 90.14 per cent. DOW has been rated highly on its corporate strategy and environmental performance. Areas of improvement for DOW included formal community-based objectives and targets for their Board members.

Media companies like British Sky Broadcasting and Reueters expressed their disappointments for being ranked in the fifth quintile.

While Reuters received "As" in management practice in the community, in the marketplace, and in the workplace, it received a "C" in management practice on the environment, which means the company is beginning to measure progress.

The companies were allowed to choose seven out of eight social and environmental impact areas to report on.

BITC expects the index to serve as a tool for companies to compare their performance to best practice, as well as a tool for investor analysis. BITC is making an attempt to establish links with various investment fund managers and financial analysts to facilitate the use of the index for benchmarking.

(Source: Socialfunds.com)

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