【正确答案】Private and institutional shareholders Shares in public listed companies are held by a range of individuals and institutions. In most stock exchanges, it is convenient and relatively cheap to buy or sell shares (usually on an internet-based application) and many individual people often buy and sell shares in companies in this way. A second type of shareholder is the institutional shareholder. This is an organisation,rather than an individual, and accordingly, the number of shares held is usually much higher than individual ‘private’shareholders hold. Some investors buy shares directly in companies through the stock exchange whilst others purchase a small part of a larger fund, such as that at R&A. Institutional shareholders tend to be large financial institutions with large capital sums and include pension funds, insurance companies, banks, and specialised investment companies. They have many clients buying into a certain fund, such as the one at R&A, and this fund is then managed in some way with the agreement of the clients who have placed money into that fund. The fund attracts a management cost (to pay for the transactions and the fund management costs) which is deducted from the gains (or losses) made. Agency issues and institutional shareholders The agency problem exists whenever there is a separation between the ownership and management of a company. It is called a ‘problem’ because it is partly the role of management to ascertain the wishes of the shareholders in order to most effectively manage the strategy to maximise shareholder satisfaction. The agency problems are potentially more complex with institutional shareholders than when private shareholders buy shares directly in companies. Because R&A owns shares on behalf of clients, the final shareholders are one stage removed from the shareholdings. In other words, the R&A clients might find it more difficult to convey their preferences to the companies they hold shares in and must effectively delegate this responsibility to the fund manager employed by R&A. This means that individuals or organisations who buy into R&A funds do not receive company information for each of the shares held by the fund and not everything which the individual companies do may meet with the expectations of each client of the fund. In addition, it is difficult for the boards of those companies to determine the wishes of the clients because they are ‘concealed’ behind the fund manager and the confidentiality systems of R&A. There are many shareholders who are members of each fund. Although it is likely that they all share the general objective of capital growth, there may be disagreements on corporate social responsibility (CSR) matters such as the extent to which R&A should be investing in house building companies in order to deliver a certain social good. A shareholder seeking, for example,to maximise long-term returns might not see the purchase of the house builder as a priority or necessarily one which can add most value to their portfolio. In this regard, because the R&A client is a member of the R&A fund, no client would have a direct voice in supporting or challenging company policy (on CSR or on other strategic matters such as the purchase of Natcon). The shares held in a certain fund might change over time as some shares are purchased and others are divested by the fund manager. This means that the client (the investor in the fund) might not know the identity of the companies the fund is currently holding. Unless the investor is very active, by say, checking the composition of the fund on a weekly basis (usually on the internet), it is likely that they would not know which shares they indirectly own and this would restrict their ability to hold principals to account, even if this was their intention and desire.

【正确答案】Distinguish between CSR strategy and strategic CSR To have a strategy for CSR is to have a set of policies which guide and underpin CSR activities. This means that some causes or areas of activity are favoured over others, in line with the strategy adopted. So, for example, a company might have a policy to invest in some communities or charitable causes and not others. The policy or strategy may be agreed based on a number of issues: perhaps the preferences of the employees, the preferences of senior people in a business, or the preferred outcomes may be chosen based on strategic concerns. When CSR is undertaken to maximise its effects on the long-term economic benefit of the business, it can be described as strategic CSR. When CSR activities are strategic, they generally support the main business areas of the business. So a financial company such as a bank might favour financial education causes whilst a medical supplies company might prefer medical or nursing research causes or overseas medical efforts. It would be seen as strategically wasteful to use CSR to support activities which are not aligned to the core activities. An assumption underpinning strategic CSR is that all assets in a company belong to the shareholders and so all activities, including CSR, should be configured in such a way as to support shareholder value. Argument that the purchase of the house builder is strategic CSR The purchase of the house builder is described in the case as a departure from R&A’s longstanding strategy of investing in listed companies as part of its holding of passive funds. In arguing that it is nevertheless strategic and therefore in the long-term economic interests of the R&A shareholders, several points can be made. The case scenario describes a ‘shortage’ of low cost housing and whenever demand exceeds supply, prices rise. This has the capacity to make the prices chargeable for the new properties higher than might be expected and the large reserves of land (land bank) are also likely to increase in value over time if demand continues to exceed supply. So although it may be described as a CSR measure by R&A, it is likely that substantial returns may be made on the investment at the same time.Because it serves both ends (CSR and the strategic good), it could be argued to be a good example of strategic CSR. As with other CSR initiatives, the development of affordable homes may make some reputational capital for R&A, especially as it frames its purchase in terms of meeting a social need. If the housing developments are conveyed to the public as R&A exercising its social responsibility, it may increase the company’s profile generally, and also enhance the favourable perception by which R&A is viewed. These joint effects may make it more likely that people will invest in R&A either as shareholders or clients, thereby ensuring the company makes an economic return on its CSR. Because R&A is an investment company which purchases shares but does not control the companies it invests in, the outright purchase of a company represents a diversification of its business activities. It could be argued that such a diversification represents a strengthening of the robustness of R&A’s business as it means that risk and return become more widely spread.

【正确答案】Stakeholder claims are the outcomes sought in a given situation by a specific stakeholder. If a stakeholder has a voice (such as a university, a local government authority, a trade union, etc), then the claim can be articulated clearly in terms of which outcome is being sought. If it does not have a voice (such as future generations), then its claim is less certain and the best outcome is not always clear. Stakeholder claims are often in conflict. This means that two stakeholders want different outcomes in a certain situation. The university in the case does not want new housing to be built whilst R&A and the local government authority are both in favour of the development. This is an example of stakeholder claims in conflict because both preferences cannot be accommodated; one must ‘win’ over the other. In any stakeholder situation, including those which are in conflict, the influence can be ascertained by the Mendelow matrix.This is one way of mapping the influence of stakeholders. Identified stakeholders are assessed according to their relative power and interest. Those stakeholders with the highest combination of these variables are those with the most influence over outcomes. The local government authority has a higher structural power than the university because of its ability to grant or withhold planning consent. This is a statutory power devolved to local government authorities from central government, although it is usually required that local consultation be entered into before final approval is granted. It also has limited power as a shareholder of R&A and possibly some influence as an investor in R&A’s funds. As an external stakeholder being an authority interested in the construction of low cost housing and both a client and a shareholder of R&A, there are considerable conflict issues. It has a social obligation to see the development approved as this will allow lower cost housing to be built where most needed. The local government authority’s interest in the activities of R&A therefore derives from two sources: its interest in providing low cost housing and its concern for the profitability of the R&A company in which is holds shares. The university has less power over the planning decision because it has no statutory power, is not a shareholder in R&A directly and has a lesser investment in R&A’s funds than the local authority as an R&A client. It is likely that the views of such an important local institution would be taken into account, however, because a successful university is important in the development of Housteads as a town. The local government authority must balance the claims of a number of stakeholders when taking decisions of this type, including the economic interests of R&A. The interest of the university is over the spoiled view from one of its buildings (sometimes referred to as a visual amenity). The university is of the opinion that the new houses will reduce the view over countryside currently enjoyed. The weight given to the value of the view over and against the social value of the new housing development to the local government authority and the local community is an ethical matter and one which, in this case, seems to have been decided in favour of the development.