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UBS Investment Bank publishes new Q-Series report on Corporate Social Responsibilities: 'Why try to quantify the unquantifiable?'

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UBS Investment Bank announced today the publication of a new Q-Series report on Corporate Social Responsibilities (CSR) entitled 'Why try to quantify the unquantifiable?'. This is the first thematic piece by the recently created Socially Responsible Investment (SRI) team who aim to capture aspects of industry structure that drive CSR issues.

The report asserts that the handling of CSR issues is an integral part of the management of business risk for companies. There are regular examples of firms changing their business models in response to social issues; such as changes in advertising practices in the food industry; changes to pricing and patent decisions in the pharmaceuticals industry; and changes in the operating practices of utilities firms.

In this report, the value of a firm is defined as its enterprise value - this being the sum of the market value of all claims on the business. The UBS SRI team view potential corporate social liabilities (unrecognised social costs) as another claim on the business, alongside debt, equity and pension provisions. This makes it clear that social costs can compete with shareholders' equity. Hence, social issues are not only integral to business risk, they are also potential value drivers.

Identifying the important CSR issues is determined by how any given industry works, what society sees as important and how costs are (or will be) distributed. This approach suggests that the key issues include competition issues such as the use of advertising and the arrival of new technology; environmental considerations such as climate change; regulatory change for hazardous substances and waste; human rights; product responsibility including access, safety, risk, disclosure, labelling and packaging; respect for and risks to privacy in general and finally, the soundness of business practices in general.

Created in December 2004, the UBS Investment Bank SRI team produces original research on areas of risk to corporates. They also organise collaborative research on companies and industries around emerging SRI themes, and are responsible for quantifying the effects on share prices. UBS' Q-Series initiative is focused on continual questioning, leading a firm wide commitment to thoughtful, proprietary, valuable research. By engaging in an intellectually challenging, constructive dialogue with clients, Q-Series reports anticipate and answer pivotal questions enabling clients to make informed investment decisions.

Gemma Piggott +44 20 7568 9822
William Dentzer +1 212 882 5692