Corporate Reputation Management

Chapter 13

Corporate Responsibility
Presented by Group 6 Siyanat Fatima, Saad Sheikh, Jawad Naseer, Farah Mohsin, Durre Shawar & Umair Zia

CASE STUDY NIKES JOURNEY

CASE STUDY: NIKES JOURNEY

Global brand that symbolized excellence and performance soon acquired following attributes;
Greed Exploitation Indifference to human sufferings

The reasons behind Nike acquiring such degradable attributes;

By 1996, media coverage brought into light that; Indonesian factory worker were paid less and worked overtime Pakistani children were stitching soccer balls Vietnam factory managers subjected workers to verbal, physical and sexual abuse and toxic chemicals Governments in North America and Europe banned imports of sports goods made with child labor

Nikes response Denial of all allegations

Asserted no responsibility for the conduct of the companys suppliers Cancelled contracts and donations to Universities

Nikes approach changed

Adopted code of conduct Acknowledged responsibility for social and environmental conditions Monitored its supply chain Raised minimum working age to 18 In all this communication played vital role In 2005, disclosed every contract worldwide where its products are made Nike proved to have shown best practice in corporate responsibility

Corporate Responsibility

Corporate Responsibility
It encompasses corporate efforts to meet the financial and non-financial expectations of various stakeholder groups

THE BUSINESS CASE

Human rights are now a business concern Environmental performance is another focus of corporate responsibility Corporate responsibility improves the bottom line by managing risk

CORPORATE INITIATIVES
Voluntary Minimum standards set by companies Pressure frequently spreads from high profile easily targeted brands to an entire industry sector

3 Key Issues

Key Issues: 1 How Should a company respond to critics?

Public Criticism; Catalyst to address corporate responsibility Worlds Largest Oil Company December 1995, Royal Dutch/Shell Shell devised its policy Active engagement in critics, human rights Active monitoring of human rights risks where company operates

Key Issues: 1 Continued

1998, Shells competitor B.P faced same issue United states advocacy group, Human rights watch accused BP of human rights abuse BP entered into a dialogue Participated in process & developed voluntary standards on security & human rights Pipeline project by BP was opposed by human rights & environmental groups Amnesty international released a report on impact of the project on human rights

Key Issues: 1 Continued

Most companies are cautious & reluctant to engage in corporate critics 2003, Coca Cola received a letter from Human Rights Watch Child labor in production of sugar cane in El Salvador Coca Cola distance itself from the issue of working conditions Leading companies ILO, UNICEF Expertise regarding workplace standards & social protection programs

Key Issues: 2 How much responsibility is too much responsibility?

Leading companies evaluate & prioritize corporate responsibility issues Devote corporate responsibility resources accordingly Corporate responsibility programs; opportunity for a company High degree influence carries high degree of responsibility Example: apparel brand, oil company, arms manufacturers Companies operating in China such as Nike, Mattel & Gap follow a certain code of conduct Companies sphere of influence determines appropriate scope for corporate responsibility program

Key Issues: 3 How can a company connect corporate responsibility to business strategy?
Stakeholders expect corporate responsibility and integral part of business strategy Investors who value information wants what company is doing as a long term strategy Customers, Employees & partners look for signals Every Business function should be equipped to articulate corporate responsibility Corporate responsibility initiatives weight the greatest when led by CEOs & Senior Executives

Key Issues: 3 Continued

Corporate responsibility efforts are most effective when integrated & well understood Leading companies adopt initiatives that align business & corporate responsibility objectives Companies need to move away from defensive actions into a proactive integrations of social initiatives into business competitive strategy Michael Porter 2001, Starbucks developed supplier program Provides financial incentives who meet financial transparency, social & environmental conditions Starbucks improve labor standards and quality improvements

Communicating corporate Responsibility

Communicating Corporate responsibility

For companies in industries, demonstrating corporate responsibility has become an increasingly important performance goal Actions speaks louder then words when communicating corporate responsibility

Attempting to spin issues of CR is worse

Communication that avoids or hides the underlying facts never meet the expectation of the stakeholders

Communicating Corporate responsibility

For effective communication we need to understand:
1. Audiences 2. Principles 3. Accuracy

4. Transparency
5. Credibility

Audience
Leading company takes into account the expectations of its audience Communicating to internal audience is as important as reaching external audiences Choosing language carefully is particularly important

Principles
Most effective Communications are accurate, transparent and credible

Accuracy
Facing accusation of irresponsible practices, company must first provide accurate information Without a clear understanding on ground, companies can not respond to critics or improve performance

Accurate information minimizes legal and regulatory risks associated with public communications.

Transparency
Communicating accurate information that is complete, revealing and meaningful More information is better than less It allows greater credibility, incentive of continuous improvement and potential adoption of best practices by others Leading companies communicate completely to present a clear picture Companies embracing full disclosure risk becoming a target of critics E.g. wall-mart resisted any transparency in its factory monitoring program and failed to meet stakeholder expectations

Credibility
Accuracy and transparency earn credibility The company should demonstrate that their corporate actions are aligned with the goals and expectations of stakeholders

Credibility Conti.
Nike case Third party assessments add value Adopting widely accepted standards earns credibility Companies are now engaging stakeholders via workshops, group consultations, stakeholder interviews This allows companies to build healthy relations with stakeholders In the end, you make your reputation and you have your success based upon credibility and being able to provide people who are really hungry for information what they want. Brit Hume

Tools for Communicating corporate Responsibility

Tools for Communicating Corporate Responsibility

Traditional Communication Channels

Advertising Media News letters

Unique Channels
Codes of Conduct Monitoring and Certification Training and Education Corporate Responsibility reporting

Tools: Codes of Conduct

A Code of Conduct communicates minimum standards for employees, suppliers or business partners. Codes also convey messages to stakeholders. It communicates a companys priorities and can help define the limits of companys responsibility A Code references widely accepted standards eg: Universal declaration of Human rights A company can be subjected to criticism if it fails to live up to the standards they set

Tools: Monitoring and Certification

Companies seek to ensure code compliance by monitoring performance through audits, surveys, inspections and other means. Most Companies now publish their monitoring reports to external parties to show compliance and noncompliance to the code.
The Certification itself, if issued from a credible source communicates compliance to minimum standards. Eg: ISO9002.

Tools: Training and Education Companies are devoting more resources to corporate responsibility training and education Companies after adopting codes and monitoring are now investing in building the capacity of suppliers and business partners to improve performance and meet minimum social and environmental standards

Tools: Corporate Responsibility Reporting

Companies have begun to report publicly on nonfinancial performance, these reports provide:
Primary information source for investment analysts A vehicle for communicating with employees A knowledge management tool A driver of sustainability strategy Tool for improved risk management

Tools: Corporate Responsibility Reporting Effective corporate responsibility reports:

Prioritize issues Place a companys efforts in the context of business objectives and strategies Reference best practices and widely accepted standards Provide sufficient detail for stakeholders to make their own assessment of performance Serve as a basis to measure future performance Acknowledge obstacles and challenges, such as issues for which a single companys efforts and insufficient

Legal Considerations

Legal Considerations
What the companies can and cannot say publicly about its corporate responsibility efforts Considering Public statements as
Commercial statements or free speech ? Government can regulate commercial statements for false or misleading statements

However there are no universal set standards for Corporate responsibility reporting and Companies are trying to define common reporting standards

ThankYou!