Table 2 Strengths and concerns in KLD categories (based on Bird et al. (2007))

Community

… measure various contributions that the company makes to the community such as charitable contributions and support for the disadvantaged.

,,, measure activities that are judged to have had a negative economic impact on the community and/or possibly mobilized community opposition.

Corporate governance

… are present when activities such as limited compensation for the management and the company has multiple ownership strengths.

… are present when managers receive high compensation and there is low reporting quality.

Diversity

… measure the activities of the company in such areas as providing employment opportunities for minorities and providing working conditions that meet the special needs of minorities.

… measure things like the non-representation of minorities in senior positions within the company and major controversies on affirmative action issues.

Employee relations

… are practice such as strong worker involvement within the company, generous profit sharing across the majority of employees, good retirement benefits and/or a good safety record.

… arise when ac company might have bad union’s relations, a poor safety record and/or a poorly funded pension plan.

Environment

… are a result when a company performs environmentally sound practices such as pollution prevention, and recycling.

… will arise when practices such as producing hazardous waste and/or environmentally unfriendly products are present.

Human rights

… are present when the company has a set of high quality of labor rights or follows human right policies imposed by society.

… are measured by activities such as support for controversial regimes and low quality labor rights.

Products

… measure activities such as high product quality, high innovation and the development of products to meet the special needs of the disadvantaged.

… are present when the company has low product safety, controversies over how it advertises its products and other product-related community concerns.