Chris Nelson 3 May 2012

2012 Christopher Nelson

Understand how issues work Get your company to integrate its approach Know your critic and what they really want Recognize your credibility deficit Stick to your knitting Look at the issue in the context of your business: whats the real impact?

Financial impact Audience perceptions Ability to create customers over time

2012 Christopher Nelson

 2012 Christopher Nelson

Business

Government

People

2012 Christopher Nelson

Consumers Voters Employees / Workforce NGOs / Activists

When stakeholder expectations diverge from organizational reality

it can generate indignation that gains traction as people with similar feelings come together
2012 Christopher Nelson

In any democracy, business exists only with a mandate from the public Economic democracy is effective

2012 Christopher Nelson

Public Company

2012 Christopher Nelson

Competition Chases Customers

Activists Boycott Banks

Activists Pressure Partners, Business Customers, And Consumers Activists Buy Shares / Introduce Resolutions

Public Company

Plaintiffs Attack Company

Voters Push Congress

2012 Christopher Nelson

Social / political forces that grow to undermine a companys public mandate and ability to do business.

2012 Christopher Nelson

 2012 Christopher Nelson

Many forces influence the relationship business has with its stakeholders

Political

Social

Economic

Trends take root and change perceptions over time

2012 Christopher Nelson

Monitor Trends & Stakeholder Perceptions

Sales data Business metrics Customer service data Competitive intelligence Analyst reports (esp. industry reports) Consumer research Internet, news media, opinion leaders Legislative, regulatory, and legal developments Activist priorities

2012 Christopher Nelson

Monitor Trends & Stakeholder Perceptions

Sales data Business metrics Customer service data Competitive intelligence Analyst reports (esp. industry reports) Consumer research Internet, news media, opinion leaders Legislative, regulatory, and legal developments Activist priorities

Constantly Review Business Operations

Omnipresent business risks (ERM analysis) Corporate strategy shifts Esoterics

Plan Against Scenarios

State of the business in three to five years Potential shifts in mindsets Multiple outcomes of key initiatives

2012 Christopher Nelson

Create a multidisciplinary team

Sensitize leaders to importance of issues management develop anticipatory mindset Gather information from every corner of company Push information on sensitivities, issues, and allegations

2012 Christopher Nelson

 2012 Christopher Nelson

Create a multidisciplinary team

IM Task Force Agenda

News: big issues stories this month Developments on top-tier issues Revise impact scenarios Assign to dos New corporate policies / policy updates Strategy discussion (if necessary) Sensitive business developments Report from all departments New issues identified Discuss scenarios Prioritize / Assign to dos New info from ally groups & GR Issue preparedness needs What does our CEO need to know?

Regularly review state of issues Establish corporate policies Create leadership positioning Create strategies to close gaps Drive stakeholder understanding Report quarterly to CEO

2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

2012 Christopher Nelson

Now issues can gain national prominence and political power almost immediately

Legislative Resolution

Issue Begins to Develop

This used to take 12 years

2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

2012 Christopher Nelson

Some stakeholder expectations not met by organizational reality

2012 Christopher Nelson

Catalyzing events New issue champion self appointed Shift in advocate/NGO group focus Customer complaints

Customer service Independent websites, blogs, Twitter

Trend data suggest shift in direction

2012 Christopher Nelson

Begin initial analysis

Identify scenarios for business impact Potential for escalation / speed Potential for impact

Assign a priority level

Determine next steps Begin issue tracking

2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

2012 Christopher Nelson

Several people arrive at similar dissatisfaction Information sharing leads to unity A leader steps forward

Community organizer Citizen journalist/crusader Professional activist Lawyer Politician

2012 Christopher Nelson

Determine nature of the organization

Review past tactics and campaigns Forecast potential issue scenarios Identify opportunities for dialogue and/or compromise

Concerned citizens Moderate special interest Dyed-in-the-wool attacker

2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

2012 Christopher Nelson

Immediate Corporate Response Thats not true.

Negative Media Inquiry

Stakeholders/ Advocates Find News Hook

Victims Villains Visuals Drama

2010 Ketchum Issues & Crisis Management

Profit Motive Business As Usual

Superficial Corporate Denial No Real Concern

Hidden Practices Exposed

Verdict: Guilty!

Victimized Stakeholders

2010 Ketchum Issues & Crisis Management

Immediate Response Were concerned. But, look what were doing to be leaders

Negative Media Inquiry

Stakeholders/ Advocates Find News Hook

Customer Service Consumer Education High Workplace Standards Science/Tech and Safety Leadership Risk Management / Continuous Improvement Positive Media Coverage Third-party Allies
2010 Ketchum Issues & Crisis Management

Maintain the high ground Commit company resources

Identify mutually workable resolution, where possible Preempt flashpoints Play your game, not theirs

Shape trends, understanding Build consensus and commitment

2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

2012 Christopher Nelson

Driven by legislative or regulatory body Resolution will benefit key constituents (not often the company)

Diminished opportunity for gains Forces company into defensive posture

Often very high profile

2012 Christopher Nelson

With any luck:

Ongoing work to build consensus around corporate policies among pols and regs Reinforcement of leadership positioning of the company

You never get to this point or Youre driving strategically beneficial legislation

2012 Christopher Nelson

Critic Group Action Issue Escalation Critic Group Organization

Legislative Resolution

Industry Compliance

Growing Stakeholder Adoption Some Stakeholder Action Issue Begins to Develop

Broad Stakeholder Consensus

2012 Christopher Nelson

The game is over Only one remaining option

Live with the law/regulation Produce goods or services to meet dictated standards rather than company standards Endure financial burden: skinnier margins Evaluate overall damage to reputation

2012 Christopher Nelson

Re-evaluate trends Review initial scenarios Measure stakeholder perceptions Determine new options for issue action programming

2012 Christopher Nelson

Understand how issues work Get your company to integrate its approach Know your critic and what they really want Recognize your credibility deficit Stick to your knitting Look at the issue in the context of your business: whats the real impact?

Financial impact Audience perceptions Ability to create customers over time

2012 Christopher Nelson

 2012 Christopher Nelson

Shareholder Activism

Poor Demand / Consumer Uncertainty

2011 Christopher Nelson

All company actions

Executive Compensation Force Reductions Capital Raises Labor Negotiations Lobbying Litigation Proxy Contests M&A Bankruptcy

are being judged against a new standard by:

Congress The Administration Regulators Shareholders/Activists Employees/Unions NGOs/Special Interests Media Plaintiffs Bar

2012 Christopher Nelson

Some Influences
Regulatory uncertainty Deadlocked government (Tea Party effect) Presidential elections Slow NGO donations Focus on: Hard economic issues Local, tangible issues Frustration

People severely disenfranchised Massive distrust of those in power Consumers feel bad NGOs fighting to regain traction on big priorities of last decade Environmental issues: now focused on local and tangible goals Emergence of corruption issues Support for dictators Bribery / FCPA Workers rights Child labor Land grabbing Rise of populist movements

2012 Christopher Nelson

 2012 Christopher Nelson

VW: EU carbon emissions standards

Mattel: Asia Pulp & Paper

Toxic chemical release in manufacture of clothing

Nike, Adidas, Puma, and H&M have folded

2012 Christopher Nelson

Critical
Economic issues Jobs / stimulus Taxation / tax dodging / tax abatement / cash repatriation Entitlement costs / austerity Currency fluctuations Financial stability / systemic risk and interdependence Cost cutting on activists priority programs Populism Privacy / data security Energy Deep-water oil exploration Fracking, oil sands Nuclear safety Immigration Workers rights / unions Public sector Private sector Child labor

Sustained
Homeland security Healthcare financing Housing finance Energy Fossil fuel dependence Climate change / carbon emissions Wind farms Corporate governance / executive compensation Intellectual property Intl legal framework Piracy (esp. developing world) GMOs crops, animals, labeling Environment Biodiversity loss Deforestation, palm oil prod. Facility sites dams, plants, etc. Corruption / FCPA Diversity / multiculturalism Corporate political involvement Health issues Drug research ethics Drug access / shortages Drug marketing Commercial education Gambling social impact Endocrine disruptors Animal welfare Humane agriculture Animal research Marketing to children

Emerging
Water security Human rights Arab awakening Business social contract Nanotechnology Synthetic organisms Geoengineering Land grabbing / rights of indigenous peoples Socially responsible tourism Food pricing, availability Sustainable food production Fishing / Cocoa / Coffee Energy consumption in food production Use of cooling agents Plasticizers Obesity / soda / HFCS Asthma / allergic diseases Multiple-chemical syndrome Microbial resistance Pesticides Preservatives Phthalates

Trends
Rising entitlement costs Deficit spending Aging populations Increasing preference for locally grown food; shift away from factory farming Fragmentation of journalism Evolution of social media Societal impact of video games Increasing conflict between open source and proprietary technology Global migration to cities Increasing religious tension Increasing skills gap not enough well trained workers available and too many structurally unemployed Increasing prominence and power of multinational corporations Increase in transnational crime

2012 Christopher Nelson

Some Influences
Regulatory uncertainty Deadlocked government (Tea Party effect) Presidential elections Slow NGO donations Focus on: Hard economic issues Local, tangible issues Frustration

Whats To Come?
Populists: frustrated, fragmented, and then focused Activists adapt to austerity 2012 elections Social media evolution Recession will end & NGO donations will rebound The Giving Pledge

2012 Christopher Nelson

Chris Nelson 3 May 2012

2012 Christopher Nelson