This is not because of the weight of words expended on this subject by companies, lobbyists and politicians. It is because companies that are less exposed to social, environmental and ethical risks are more highly valued by the market.

Much has been made of the storming performance of tobacco stocks over the past three years. Their popularity was highlighted by the Citywire “BrainsTrust” survey of leading fund managers featured in FTfm on July 7.

But over a longer period, both the Dow Jones Sustainability Index and stocks in the FTSE4Good index have outperformed. Since its launch in 1994, the DJSI has outperformed the FTSE World Index by 17 per cent.

Price/earnings ratios are also higher for sectors that find it easier to enter the goody-goody indices. The 10 sub-sectors in the FTSE Actuaries UK series with p/e ratios higher than the All-Share average of nearly 18 are dominated by the relatively clean: software, telecoms, media and
pharmaceuticals, for instance.

Industries that find it more difficult to jump through environmental or health and safety hoops are more lowly rated, such as mining, chemicals, construction, aerospace and defence. Tobacco is on little more than about 12 times, dragged down by the low rating of BAT, which is exposed to American litigation.

In other words, investors are already pricing in social, environmental and ethical factors.

This is not sentimental behaviour. It represents a cool appraisal of various costs. These include the legacy bills of industries such as tobacco and the ratcheting up of regulatory requirements. In chemicals, for instance, the European Commission is contemplating testing nearly 30,000 substances first sold before 1981. If implemented, the new authorization regime could cost
Euros 32bn by 2020.

One way of looking at corporate social responsibility is as an insurance policy. The value being insured comes in two pots. One is intangible – the goodwill that goes with a brand name and a company’s reputation. According to Hemscott, the business data provider, intangibles represent about 27 per cent of the market value of the FTSE 100.

The other is very tangible – the company’s profits. Deep pockets attract lawsuits and taxes justified on environmental or other public-good grounds.

Crudely speaking, companies with well-known brands, healthy profits, old sites in the developed world and significant activities in the developing world have significant value at risk. This alone should justify board-level interest in the subject at every brand-led and multinational company.

But the downside of this increased scrutiny is that it has its own costs in form-filling, answering queries from investors and lobbyists, as well as setting up and policing internal procedures.

It also represents a defensive approach to management. If too much time and energy is spent insuring against old problems and anticipating new ones, too little will be devoted to risk-taking and wealth creation.

It is also true that some companies can pass all the CSR tests going, but still be badly managed.

Profitability must come first. Indeed, one of the dangers of a loosely-defined CSR movement is that it has become a Trojan horse for political or social agendas that are inimical to profits.

Some of the attacks on drugs patents – which keep some medicines beyond the means of poor countries, but protect returns on investment – veer into this territory.

The bureaucratic, political and financially illiterate aspects of CSR have given it a bad name. Companies and investors should be more willing to unite in opposing unreasonable criticism and excessive red tape.

In this cause, it would be better if fund managers fully integrated the monitoring of CSR into the service they offer, as they do increasingly with corporate governance. If the market is anything to go by, this should represent a smaller step than it appears because so much risk is already
priced in.

At company level, the amount of scrutiny should be determined by a cost-benefit approach, not by whatever campaign is in the news.

On this basis, smaller, less famous companies operating in familiar territory would face much less of a burden than BP or Royal Dutch/ Shell.

Occasionally, CSR may present a business opportunity. The Body Shop was launched on the basis of fairer prices for fairly produced cosmetics. Anit Roddick, its founder, generated so much favourable publicity that the company did not need to advertise: a win-win on the cost-benefit front,
leaving aside the do-gooding.

A defensive activity like CSR will rarely deliver such top-line benefits, but taking care of threats to reputation and profits is almost as important as investing to sustain and expand the business.