Reputation Report

Reputation Report will be back soon with a relaunch!

We apologise for the long hiatus. Reputation Report now has a new owner and a stack of new content coming.  Please stay tuned, as the changes afoot are exciting!

Make sure you subscribe by entering your email address in the subscription box at right (subscription is free), so you know when we are back on the air and don’t miss a thing.  You won’t be disappointed.  

Ed.

Closer to home, the Australian wool industry got a serious education in the new consumers’ expectations of CSR, and how the HOW in how (sorry) we do business, can impact the bottom line now and in the future. As a core business in our rural economy and the first step in the supply chain to fashionistas worldwide, Australian wool copped a beating in a global campaign to stop sheep mulesing.

People for the Ethical Treatment of Animals (PETA), famous for its shock value advertising (see video below) and protests, went global in October 2004 with a demand for Australian wool growers to end the practice of mulesing (literally cutting the butt out of a sheep to stop it being eaten alive by maggots laid by the great Aussie blow fly). It added weight to that demand by pressuring top end retailers and consumers (aided by celebrities) worldwide to boycott all product made with Australian wool.

The campaign, while somewhat misguided (in adding the issue of live sheep exports and claiming when all the wool was used up Australia shipped the old sheep off to an even worse fate) made headlines in the UK. It achieved the boycott of Australian wool by major global retailers Abercrombie & Fitch, J.Crew and Timberland, the support of Pink, Joaquin Phoenix and others, caused a public disagreement between two tennis greats and led to legal action from the Australian wool industry. It also achieved the writing of letters by Maneka Gandhi, an Indian MP and the daughter-in-law of the late prime minister Indira Gandhi, to more than 250 Indian retailers asking them to boycott Australian wool because “we do not need the blood of Australian sheep on our hands”. The PETA campaign also contributed to a dramatic fall in Australian wool prices, affected by the resulting lack of demand. Read the rest of this entry »

By now, there would be few people unaware of the problems facing companies that have globalised their supply chains, to devastating effect. The financial pressure on corporations to reduce manufacturing costs coupled with the thawing of diplomatic relations and resulting opportunities for trade have led to a mass sourcing of raw and finished goods from China. In many ways, it made sense. Global supply logistics as much as manufacturing costs could be enhanced by sourcing from China rather than the USA. 

But that initial financial pressure is pushed down the line, and just as larger companies want to extract as much profit as they can out of a process, so too do smaller companies. Corners were cut, cheaper ingredients used, few quality controls were in place, few safety or health requirements adhered to, and perhaps, few were understood.

The resulting fallout started as a trickle but has been cascading through industries and throughout the world since news first broke of pet deaths in the United States early in March this year, from food produced in China under major global brand names in which wheat gluten was substituted with the toxic substance, melamine. It is estimated that to-date, tens-of-thousands of cats and dogs throughout the US are dead as a result. North American manufacturers/distributors are losing customers, share prices are crashing and class actions are being prepared. Read the rest of this entry »

Make no mistake: The world view has turned. Like an ocean liner slamming on the breaks, it has taken a decade or more to slow down and turn to starboard, but turn it did. The old corporate mantras: profit for the sake of profit, unchecked exploitation of natural resources, the company good above all else - are not seen in the same light they were just a few years ago. This is particularly relevant to the Australian economy, dependent as it is on the current resources boom, and Australian companies, who are world leaders at exploiting those resources.

Investors in, and companies (and their investors) who buy from our miners, are starting to make demands that their suppliers make changes, make restitution, and transform their practices for the good of all stakeholders and not just shareholders.

This is one of the most significant actions a company can take – has to take – to ensure its own reputation is not tarnished by the actions of others. Norddeutsche Affinerie, a German copper refinery, almost did back in 2000 (more on this later).

No better example exists of reputation risk – specifically as it pertains to CSR claims (and the supply chain risk to others) – than BHP Billiton’s history in Papua New Guinea, at Ok Tedi. This single mine has the hallmarks of corporate behaviour outliving its time, of a drive for profit with complete disregard for social responsibility, and of a company so bereft of a sense of responsibility that it ultimately gave its shareholding away. It walked away from one of the greatest man-made environmental disasters in the world, deftly throwing the ball sideways to a hapless PNG government. Read the rest of this entry »

CSR – Corporate Social Responsibility – means different things to different organisations. Some see it and deliver it as greater corporate philanthropy. Others become more active in environmental issues; some start by reducing their own corporate carbon footprint.

And while more companies are beginning to engage in specific CSR activities, simply aligning all business practices with good socially responsible behaviour can be equally as useful. Do, and report that you do. (See previous post, Does CSR Really Matter?)

News Limited’s One Degree program is a good example of a company reducing its carbon footprint and expanding the impact of this by taking the message to its customers. I applaud the initiative:  Every person, every company, everywhere, just making one small change at a time, could result in some very big outcomes worldwide.

So too, is Westpac’s change in its lending policies for a more positive impact on environmental outcomes, another example of a company exerting its influence up the supply chain (vs down) – to encourage corporate banking customers to have better business and CSR practices. Read the rest of this entry »

We wanted to know, and from August through October, Publicis Consultants Worldwide (with which Reputation Australia is in alliance), conducted a major global research study asking three key groups (Financial Analysts, Financial Media, and Investors) their thoughts as to the value and usefulness of Corporate Social Responsibility (CSR) strategies.

The study is now complete and the findings have been analysed. Firstly, is CSR useful to an organisation?

According to an Ernst & Young Survey in 2002, 94% of company executives believe the development of CSR strategy can deliver real business benefits.

A survey of human resource practitioners conducted in 2006-2007 by the US-based Society for Human Resource Management (SHRM) in association with professional HR bodies worldwide, found slightly more than half of Australian businesses (52%) monitor the environmental impact of business decisions. However, it also found that cost and unproven benefits and a perception that CSR has “little to no effect on productivity or profit” were obstacles to companies implementing CSR programs.

A joint study between Slovenia’s University of Ljubljana, Faculty of Social Sciences, and Queensland University of Technology, School of Advertising, Marketing and Public Relations, called “A comparative study of CSR reporting in Australia and Slovenia” found specifically that reporting of CSR activity is extremely useful. It was determined to be an important communication tool or channel which can ensure greater corporate transparency and enable a better engagement with multiple stakeholders.

The Publicis Consultants Worldwide CSR study affirms the above information - CSR is useful, and it needs better communication to overcome remaining perception barriers. But, is CSR just a useful image boost or a significant intangible asset? Or both? Read the rest of this entry »

Life provides us with many examples of crises from which we can learn important lessons for application in business. One of the most significant results of crises is the impact on organisational and individual reputations. Perhaps the best analysis is comparative – same crisis, different scenarios. Take the bushfires of Greece a few months ago, and the bushfires of California in the past couple of weeks.

The fires in Greece burned more than half a million acres of forested and agricultural areas and destroyed entire villages. Five out of seven prefectures in the Peloponnese in southern Greece, along with central and southern Evia and the greater Athens area were burned. More than 20,000 people were forced to evacuate and 79 people died.

In California, the fires burnt forest and scrub from the Mexican border in the south, the mountain resort town of Big Bear in the East and to the San Gabriel Mountains in the North, ringing the cities of Los Angeles and San Diego. More than 600,000 people were evacuated, 2,000 homes were destroyed leaving a damage bill in excess of US$ 1.3 billion dollars. Fewer than 10 people were confirmed dead.

California emergency services were prepared and committed to a responsible maintenance of tourism services during the fires, and deserve recognition for their preparedness. Read the rest of this entry »

When I was writing for business publications, and more so when I was editor, the issue of accuracy in stories about companies and people was paramount. It was perhaps because of pride in my own work – I hated to be wrong – or perhaps the fear of legal action; or maybe because I came from the corporate side where I had held marketing and public relations roles and had seen first-hand the damage a badly written, ill-conceived article could do. Regardless, I and my peers at the time took the issue of reporting business and financial news seriously.

The importance of getting the facts right and not confusing opinion and speculation with reporting remains a key ingredient of a good story. Sadly, some journalists bent on getting a name for themselves disregard the facts, don’t understand the implications of their actions, and confuse “sensationalism” with journalism.

“Oooh, if I say it first I get the scoop!” takes the place of a more cautionary and experienced voice in their head that would sound (should sound) more like: “If I don’t get confirmation from the company that this is true and I run with it, I will look like a fool if it is wrong.” When I studied and started working in journalism I learned that if you don’t have confirmation, you don’t yet have a story. Could be, maybe, probably, perhaps, possibly, perchance, did not belong in the language of a reporter. Commentator, yes; reporter, no. Read the rest of this entry »

The headline of the article in today’s AFR said it all: Downgrade Burns Credibility at AGL Energy. You heard the news, saw it in the papers. It made headlines on SkyNews and the ABC. It is every CEO’s nightmare.

Just two months after giving a profit forecast to investors, AGL issued a three page statement to the market that could not have spelled it out any better than it did – section headers in bold drawing the readers’ attention to such unnerving detail as: Reduced Retail Energy Margins, Lower PNG Oil Profits, Higher Wholesale Gas Costs and more. There wasn’t even an attempt at finding any good news to break the fall.

And fall the share price did. A massive $1 billion wiped from its market cap in a few hours. It was a shock announcement, surprising analysts and unbelievably, management as well. This too, is now a well known fact and reflects poorly on both ability and disclosure within the organisation. Someone somewhere had to know things weren’t as rosy as painted a long time before Monday. Read the rest of this entry »

It seems the media is full of stories of corporate crises. From governance issues through product failings; sudden executive departures through physical disasters – the scenarios are apparently endless.

Some people assume that bad things only happen to big companies, but crises are indiscriminate. Whether you are a multinational or a privately-owned company in regional Australia or anywhere in between, how you act once a crisis begins often shapes your company’s future – and your own career. Companies face crises all the time - product recalls, plant closings, tainted products, a crime committed by an employee, a company leader making a poor personal decision and so on. 

A serious incident can severely impact on your corporate reputation. And that often means customers turn away from you, suppliers suddenly report they can no longer meet your orders and job seekers find themselves more interested in working for your competitors. It’s not enough to have contingencies in place.  You may be coping with the crisis, but it is crucial that the outside world can see that you are coping. The world will not assume that silence means everything is under control.   Read the rest of this entry »