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Socially Responsible Investment in Israel

Review of Corporate Social Responsibility (CSR) in a Start-Up Nation

Corporate social responsibility (CSR) is a fast-growing approach to modern business management that emphasizes social accountability and transparency to stakeholders and the broader public interest. CSR is primarily focused on improving environmental, social, and governance conditions within corporations. CSR provides business leaders an avenue for “doing good while doing well.”

In recent years, the Israeli market has emerged as an increasingly important CSR arena, with significant progress in leadership within the business sector, regulation ensuring high standards of transparency, and a growing diversity of assessment tools for socially responsible investing (SRI). This includes an expanding dialogue and partnership with the international CSR community. The Israeli government, through the Ministry of Economy and Industry, has adopted a formal role in facilitating CSR operations within the Israeli market, serving as National Contact Point (NCP) to the OCED Guidelines for Multinational Enterprises.

In parallel, Israel’s unique attributes have contributed to a flourishing local CSR culture. Israeli companies and organizations have pioneered innovative approaches to design, implement, and measure local CSR. For example, the Israeli CSR Index, a locally developed CSR management tool, integrates internationally accepted parameters with local priorities, market conditions, and business culture. Israeli CSR focuses predominantly on mitigating social disparities in support of inclusive economic growth, emphasizing the integration of marginalized populations in the workforce and building capacities within individuals, small businesses, and local communities. Efforts in these areas have contributed to doubling the rate of Arab employees in leading companies, pioneering activities for investment in employee development, extensive cross-sector collaboration, and innovative community projects.

Additionally, a growing sector of Israeli companies are gaining traction in the sustainable innovation fields, often by inventing solutions to address a lack of natural water and energy resources. Israel is well positioned to continue its impressive surge in CSR activity. Israeli CSR efforts tend to be ambitious, as the relatively advanced Israeli regulations have set a preexisting high compliance bar for CSR efforts to surpass.

Exposure to international conventions and networks is amplifying CSR activity in Israel, and global companies operating in Israel are contributing significant CSR resources and know-how. Tailored tools to incentivize and facilitate Israeli CSR activity are enabling participation of Israeli companies that otherwise may not bother to be a part of the CSR movement. Finally, the Israeli market’s adaptation for SRI enables the Tel Aviv Stock exchange (TASE) to offer responsible investment opportunities that represent half of the total market value of all of the companies traded.

There is also an opportunity for Israel to leap forward and ultimately punch well above its weight in the CSR arena. Locally developed Israeli programs, mechanisms, and tools may offer models for other countries currently working to catch up in this field. There is significant potential for innovative Israeli companies in sectors such as food, bio, med tech and sustainable building to gain greater exposure in global CSR communities and a greater internal awareness of the correlation between work and CSR activities.
Israeli social and technological innovation, if more robustly connected to the global CSR movement, may make a significant contribution toward pushing the needle on acute global challenges as defined by the UN Sustainable Development Goals (SDGs).

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