Knowledge Centre:
News Digests

Stay abreast of what’s happening internationally with developments in corporate public affairs. Here is news that you may find useful and interesting:

Miracle growth hides a looming China syndromeND


Ian Holliday, Australian Financial Review, 1 February 2007

While China continues to be an attractive to foreign investors, Holliday warns that issues around weak legal systems and environmental problems remain. Over the past few years, the local media and various provincial governments have taken a lead in discussions around CSR, and governments at various levels are clamping down on environmental problems. However, corporate behaviour in China still has a long way to go, compared to other countries. As Holliday suggests, ‘The issues corporate managers…need to ponder is whether a looming China syndrome of irresponsible corporate practice might amass long-term reputational costs that outweigh the short-term profit gains’. For more information, see www.afr.com.au

Beyond the green corporationND


Pete Engardio, Kerry Capell, John Carey and Kenji Hall, BusinessWeek. 29 January 2007

This story anticipates a world in which eco-friendly and socially responsible practices improve a company’s bottom line. In the last five years there has been increased understanding that social and environmental practices can yield strategic advantages such as growth and innovation, and avert costly setbacks from environmental disasters, political protests and human rights abuses. There is overlap between a company’s business drivers and social and environmental interests. For example, Dow Chemical is increasing R&D in products such as roof tiles that deliver solar power. Understanding and preparing for ‘megatrends’ can constitute a valuable intangible asset. For more information, see www.businessweek.com

Business education – global warming has become a hot topic ND


Rebecca Knight, Financial Times, 29 January 2007

Business schools in the US and Europe are increasingly including climate change as part of its units on corporate social responsibility. A survey of 91 US business schools by the World Resources Institute and Aspen Institute, showed that 54% of business schools require a course in environmental sustainability or CSR (up from 34% in 2001). At MIT’s Sloan School of Business, a climate change course has been developed which requires all students to read the Stern Review on the Economics of Climate Change. Students also study business models and how they create strain on the environment. At London Business School, issues of climate change are discussed within the core required course on business ethics and corporate responsibility, as well as covered in various electives. For more information, see www.ft.com

Sales go up $6 for every $1 companies add to giving budgets, report saysND


Ian Wilhelm, The Chronicle of Philanthropy, 19 January 2007

University researchers say that donations are helping to generate a significant amount of income for many businesses. Researchers from the New York University Stern School of Business and University of Texas examined corporate giving of 251 corporations from 1989 to 2000. The study found that companies that sell directly to individual consumers, such as retail stores, financial institutions, and electronics manufacturers are the ones that receive economic benefit from giving. The study suggests that businesses should do more to promote its giving programs. For more information, see www.philanthropy.com

McDonald’s offers ethics with those fries ND


Kerry Capell, BusinessWeek, 9 January 2007

McDonald’s 1,200 outlets in the UK now only sell coffee from growers certified by the Rainforest Alliance. Late in the year, the ethically sourced coffee will be available in more than 6,200 outlets in Europe. This is the latest initiative to overhaul the company’s image, increase customer trust, and position the company as a leader in the sustainability movement. In response to consumer backlash, McDonald’s Europe has also added organic products to its menus and insists that all of its European suppliers use only non-GM products and ingredients. For more information, see www.businessweek.com.

Why good companies still get suedND


James Krohe, The Conference Board Review, January/February 2007

Class action and collective action lawsuits have become an increasing threat to companies in the US. Lawsuits can emerge from any number of sources, from employees to shareholders. This practice is not limited to one type of company; even those companies abiding by employment laws are vulnerable. One reason for this is significant differences between US federal, state, and municipal laws, all of which companies must abide by. This is made more difficult by the fact that legislation is complex and ever-changing. One thing is certain: class action lawsuits drive employment law, and this will not change in the near future. Many companies are thus choosing to find ways to reduce the costs associated with such filings. For more information, see www.conference-board.org

Business puts its people where its mouth isND


Fiona Smith, Australian Financial Review, 28 November 2006

In the past five years, corporate volunteering has taken off in Australia with many larger companies establishing programs and employing coordinators. Companies are getting more out of their relationships with nonprofit organisations and seeing an impact on employee engagement, recruitment and retention, as well as an improved reputation in the community. Nonprofits are getting a willing part-time workforce and establishing closer relationships which often extend to further funding and long-term partnerships with business. Many companies have policies that allow for grants for volunteers, a couple of paid days volunteer leave per year, as well as policies for longer-term volunteering commitments. Key challenges will be to ensure there are enough genuine volunteering opportunities and that corporate volunteers are able to offer useful labour and skills and have expectations are understood. For more information, see www.afr.com.au

Not for profit: non-profit sector in the frameND


Emily Piesse, WA Business News, 23 November 2006

Changing perceptions of corporate social responsibility and work-life balance are changing corporate approaches towards volunteering. Instead of casual dress days and informal fundraising, companies are increasingly setting up corporate volunteering programs. Younger people are also looking at the wider culture of an organisation which is now important in attracting new employees. This approach to volunteering also benefits the company as well as employees and nonprofits, with workers developing invaluable skills assisting their own learning and development. Kylie Cirak, manager of the Alcoa Foundation and environmental partnerships manager, says that corporate volunteering ‘helps us to have our employees more in touch with the community – it makes us more rounded individuals.’ For more information, see www.wabusinessnews.com.au

Caught in a jamND


Gina McColl, Business Review Weekly, 16 November 2006

Culture jamming is the use of websites, blogs and graffiti to disrupt and hijack a message. This method of communication, whilst originally used by anti-corporate activists is now being used by the corporations themselves to fight activist campaigns, anti-corporate messages and consumer cynicism. For example, McDonalds Australia launched its ‘make up your own mind’ campaign which uses a documentary style ad to challenge consumers misconceptions and then directs people to a website to find further information and make an informed choice. However, this problem with corporations using this communication method is that it can be jammed right back. A digital marketing agency, Clear Blue Day, bought a similar domain name which redirects users to the Fast Food Nation website, illustrating how easy it is for others to use your campaign, and promote their own message. For more information see www.brw.com.au

When blogs put brands at riskND


Sarah Murray, Financial Times, 8 November, 2006

New media channels such as blogs and videos on websites present challenges to those responsible for corporate communication and reputation management. Sites such as MySpace and YouTube enable anyone to post online, without any technical expertise, and have helped create a more level playing field, according to Tracy Frauzel, online communications manager for Greenpeace. Blogs often have zero accountability and are able to quickly mount negative corporate campaigns. Alan Marks, head of media relations at Nike, believes that these new forms of communication can be used positively by marketers and for CSR. Corporate blogging initiatives can also backfire, with online users quick to uncover ‘floggers’ (fake bloggers) and chastise company for their actions. Communication consultant Rob Key says that corporations should engage in online debates, however their communications must match their actions as ‘there is a level of vigilance that didn’t exist two or three years ago’. For more information see www.ft.com

CFOs can give us straight talk on sustainabilityND


Andrew Savitz, Financial Times, 26 October 2006

While finance heads have tended to be sceptical about the value of sustainability, many CEOS are now applying their analytical skills to strengthening their company’s sustainability programs. CFOs play an important role in building the business case for programs, measuring the results in financial terms and communicating to investors about the value of sustainability. This article provides examples of CFO involvement in sustainability programs at DuPont and PepsiCo. For more information, see www.ft.com

Beyond the bottom lineND


Telis Demos, Fortune, 23 October 2006

Vodafone was the top-ranking company in Fortune’s annual ranking of how well the top 50 global companies conform to socially responsible business practices. The telecom company’s stakeholder consultation process has enabled it to set up programs where it can use its services and infrastructure to help further economic development in places like Africa. The top companies (from 2nd to 10th place) were BP, Royal Dutch Shell, Electricite de France, Suez, Enel, HSBC Holdings, Veolia Environnement, HBOS, and Carrefour. Interestingly, the top 10 companies are all headquartered in Europe, where CSR is more embedded. The top US company was General Motors (at number 12). For more information, see www.fortune.com

Separating smart from greatND


Simon Zadek, Fortune, 23 October 2006

Recent set-backs for BP and Ford, two sustainability champions, highlights the difficulties in embedding accountability into business practices. As Zadek explains, “Comprehensive accountability – that is, accountability to stakeholders representing social and environmental interests as well as economic ones – requires companies to align their vision, strategies and innovation not only with today’s competitive markets but also with the social and environmental conditions that will shape the markets of tomorrow”. Zadek groups companies in four clusters: ‘rearview grazers’ (companies such as Berkshire Hathaway that provide no information on social and environmental impacts), ‘reluctant incrementalists’ (eg. Exxon Mobil – who cautiously address issues with a small group of stakeholders), ‘engaged learners’ (such as Allianz who are engaging with stakeholders to learn more about issues), and ‘strategic leaders’ (such as Shell and IBM – who are pioneering new approaches and activity shaping society expectations for their sectors). For more information, see www.fortune.com

When disaster strikes ND


James Thomson, Business Review Weekly, 19 October 2006

Events such as September 11, Hurricane Katrina and the outbreak of SARS can have a significant impact on business. Business continuity has become an increasing priority for companies in the past few years, and communications and IT companies are doing particularly well from of the focus on continuity. It is estimated that 83 per cent of companies in the US now have a formal business continuity plan, a trend similar to that in Australia. Kevin Nevrous, business continuity partner at Deloitte Touche Tohmatsu, advises that companies should focus on business continuity management rather than its planning. For more information, see www.brw.com.au

Asia’s most admired companiesND


The Wall Street Journal, 16 October 2006

Singapore Airlines retained its first place ranking on the Wall Street Journal’s annual list of Asia’s most admired companies. Singapore Airlines has held the top ranking since the survey started in 1993. This year it ranked first in reputation, service quality and long-term vision. Listed companies are rated on five attributes: reputation, quality of products and services, management long-term vision, customer innovation and financial soundness. The following companies are the most admired in each of the countries surveyed: Woolworths (Australia), Haier (China), Cathay Pacific (Hong Kong), Infosys Technologies (India), PT Unilever Indonesia (Indonesia), Toyota (Japan), Maxis Communications (Malaysia), Singapore Airlines (Singapore), Samsung Electronics (South Korea), Taiwan Semiconductor Manufacturing Company (Taiwan), Siam Cement (Thailand). For more information, see www.wsj.com

Corporate social responsibility: beyond the bottom lineND


Martin Thompson, The Independent, 13 October 2006

Business schools are increasingly including CSR in their teaching. For example, Nottingham University Business School has its own CSR professor, Jeremy Moon. He was co-author of a 2003 survey which showed that two-thirds of European business schools provided some kind of CSR education. Part of the push for CSR to be taught in higher education is driven by the students themselves. For more information, see www.independent.co.uk

We use them, but love to abuse themND


Neil Shoebridge, Australian Financial Review, 9 October 2006

A recently released survey of 2,000 Australian consumers (‘The Australian Report’) has found that most think large companies are ‘slow, bureaucratic, impersonal and run by overpaid chief executives’. 84% say CEO salaries are too high, 75% say big companies are cold and impersonal and 45% say big business is a risk to their health and well-being. In other survey responses, 61% of consumers want more regulation of big business, 78% say large companies in Australia are ‘probably’ committing human rights abuses, and 83% say big business should be forced to clean up the environment. The survey, conducted by STW Communications Group, showed that consumers see small businesses as ‘the backbone of Australia’, in contrast to the negative views towards large companies. While big business is seen as necessary, many think large companies are out of touch with community needs. For more information on this report, see www.afr.com.au

Guidelines on corporate responsibility simplifiedND


Ian Bickerton, Financial Times, 6 October 2006

Amsterdam-based non-profit agency Global Reporting Initiative, has unveiled revised CSR reporting guidelines. The guidelines have been simplified to encourage smaller and medium-sized companies to report on their environment and social impact. The revisions are aimed at increasing the number of companies that prepare reports as there is now an ‘entry level’ option, which allows companies to report on a limited range of issues, rather than all aspects. The number of businesses adopting the GRI guidelines is increasing with more than 2,000 businesses participating. For more information, see www.ft.com

Companies see the gains in going greenND


John Gapper, Financial Times, 2 October 2006

Companies are enthusiastically ‘going green’ and becoming ‘carbon neutral’. This is a surprising development in the US, given the government’s indifference to environmental issues. For energy-consuming and some energy-producing companies, ‘environmental action creates a rare degree of alignment between being socially responsible and increasing shareholder value.’ Companies can improve their reputation for innovation and environmental awareness by making energy efficient products and reducing their use of energy. For more information, see www.ft.com

Responsible returnsND


China Economic Review, 1 October 2006

In the past, Chinese businesses have been reluctant to focus on CSR in business, even as the government has increased pressure to become better citizens. However, as more Chinese organisations want to globalise, they see that CSR is a necessary business characteristic as other global companies say they cannot afford to align with companies who disregard the importance of CSR and the triple bottom line. For more information see www.chinaeconomicreview.com

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