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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:

Five flashpoints in Singapore’s general electionND


Mark Wembridge, Financial Times, 7 September 2015

Singapore’s election will take place this Friday, September 11, with some commentators suggesting it to be the city-state’s most important election since independence. The People’s Action Party faces a challenge for the first time in its half-century of unbroken rule. All of the country’s 29 electoral divisions are fielding opposition party candidates. The ruling People’s Action Party is virtually certain to retain power however public dissatisfaction is gaining and the opposition is becoming increasingly vocal, as Singapore’s economic model begins to show some signs of weakness and Singapore retains its position as one of the developed world’s most unequal societies. The five flashpoints dominating this poll are immigration, the dominance of the PAP, the economy, pensions and housing, and transport. For more information see: www.ft.com

Uber drivers' lawsuit granted class-action statusND


Fast FT, Financial Times, September 2 2015

A ruling in California has paved the way for the launch of a class-action law suit against ride-sharing app Uber, in an employment law case that will have strong implications for large parts of the “sharing economy”. The case will determine whether California’s 160,000 Uber drivers should be treated as full employees of the company rather than contractors. If Uber were forced to take on the full costs of employing its drivers, it could weaken the economic model of one of the most highly-valued tech start-ups and set a precedent that threatens other companies that rely on organising an army of freelance workers. It is estimated that labour costs for most sharing economy companies would rise by between 25-40 per cent if they were forced to switch from being simple marketplaces to full-service companies. For more information see: www.ft.com

China’s 20 Percent Problem: Millennial Migrants' Discontent ND


Damien Ma, Foreign Affairs, August 25 2015

China has approximately 260 million “domestic migrants”. This equates to roughly 20 per cent of the population. These migrants live as second class citizens because of a system known as hukou which prevents them from settling and easily accessing basic services such as health care, social security, primary education for their children, and decent housing. This system was implemented in the 1950’s to ensure a sufficient labour force was maintained in rural areas to produce food for the populace. The average millennial migrant (about 50 percent of the whole migrant cohort) is under 35 and holds a college degree, yet earning potential is scant when compared with their urban counterparts. A tool to control the population has evolved into a tool which entrenches inequality. Today, what was once viewed as a social stabiliser has become an instrument that could potentially lead to serious social unrest. For more information see: www.foreignaffairs.com

Do we still need boycotts when you can send an angry tweet?ND


Oliver Balch, the Guardian, July 30 2015

The efficacy of boycotts as a means of influencing corporate and political behaviour has received attention of late. Global consumer action against companies such as The Gap and Nestlé have received considerable attention, as has the BDS Movement targeting Israel. If boycotts are to be effective they need to have a direct impact. For example, the Spanish bank Santander, which was accused earlier this year of financing deforestation in Indonesia, was the victim of a Greenpeace campaign which encouraged supporters to shift their funds from Santander bank accounts. The bank rectified the situation quickly. “Boycotts are most effective when targeting one clearly identifiable product, ideally one which is never a necessity, and where alternatives are easily available”, says Robin Oakley of Greenpeace. Increasingly, “engagement” is gaining traction as a popular alternative to boycotts. Campaign groups are gradually seeking to negotiate directly. Paul Caulfield of Nottingham University Business School claims that the days of mass boycotts are over. He cites a swing from embracing boycotts to expressing grievances on social media. “Boycotts are effective, but they don’t have to happen now”, he says. “Thanks to social media, the fear of a bad hashtag means that damage is done before a boycott actually has to happen.” For more information see: www.theguardian.com

Twitter: the start-up that never grew upND


Tim Bradshaw and Hannah Kuchler, Financial Times, July 31 2015

When Jack Dorsey recently took over as interim chief executive of Twitter, he asked its leadership to define what Twitter is for. There was little consensus — some suggested it was a media platform, others a community, and others a sanctuary of free speech. When Twitter’s finance Chief said “we have not communicated why people should use Twitter, nor made it easy for them to understand how to use Twitter”, it prompted a 14 per cent fall in its share price. In October 2013, when Twitter filed to go public, it had 218 million monthly active users posting 500 million tweets every day and a quarter-on-quarter growth rate of 7 per cent. By the end of June this year, that quarterly growth rate had slowed to less than 1 per cent. While the overall number of Twitter users has increased in the past two years to 304 million, the number of daily tweets they are all posting remains flat at about 500 million. Facebook on the other hand has continued to grow. In October 2013 it had 1.19 billion users and now has 1.49 billion — adding the equivalent of Twitter’s entire audience in less than two years. Snapchat is one of several social apps to have come up rapidly behind Twitter, including Instagram with its 300 million monthly users and WhatsApp with 800 million. For more information see: www.ft.com

Mobile banking tipped to wipe out 600 branchesND


James Eyers, Sydney Morning Herald, August 2 2015

A recent UBS report titled, "Is a bank in your pocket the next big thing?” has suggested that the use of smartphones for consumer banking will continue to transform the industry. Functions including tap-and-go functionality at the point of sale, image capturing for deposits and payments, and social media banking apps contribute to this transition. Within three years, 46 per cent of all banking transactions were expected to be mobile-related, up from 25 per cent today and 13 per cent two years ago, the survey found. These changes are expected to lead to closures of bank branches globally. In Australia this is expected to lead to the closure of about 600 branches over the coming years. The report said that mobile banking could provide cumulative 10 per cent cost cuts and a 6 per cent revenue boost for banks. It also said that the banks with the best mobile strategies in the world were Spain's BBVA, Bank of America and Fifth Third from the US, Swedbank and Canada's TD Bank. For more information see: www.smh.com.au

China’s middle class surges, while India’s lags behindND


Rakesh Kochhar, Pew Research Center, July 15 2015

Between 2001 and 2011 both China and India achieved large reductions in poverty. This led to a fast growing middle class in China but it did little to increase the amount of Indians who can be classified as middle income, according to recent research from the Pew Research Center. In that time, the share of Chinese who are considered middle income rose from 3 percent to 18 percent. The share of Indians who are middle income remained barely changed, rising from 1 percent of the population in 2001 to 3 percent in 2011, which is the latest year for which data are available. According to the IMF, China produces 16 percent of the world’s goods and services and India just 7 percent. This contrasts with 1991 when China and India each accounted for 4 percent of global output. For more information see: www.pewresearch.org

Gates to double investment in renewable energy projects ND


Christopher Adams and John Thornhill, Financial Times, 25 June 2015

Bill Gates has announced plans to double his personal investment in innovative green technologies to $2 billion over the next 5 years as part of the wider effort to combat climate change. Gates has already invested approximately $1 billion in early stage companies including battery storage, next-generation nuclear and free air carbon capture — with hopes they will develop “breakthrough” technologies. While supportive of global efforts to raise awareness of climate change, Mr Gates has said that the only way the world can begin to see very positive scenarios is through great innovation. Rejecting calls from environmental campaign groups for shareholders to dump holdings in oil and gas companies, he instead has urged “high-risk” investment in new technologies. He also described the lack of incentives provided by governments to encourage risk and try to develop new technology as is the case in the pharmaceutical industry. For more information see: www.ft.com

Is divesting from sectors such as fossil fuels really the best way to force companies to be more responsible?ND


John Authors, Financial Times, 25 June 2015

The campaign to divest from fossil fuels is increasingly receiving widespread attention. Norway’s sovereign wealth fund, the world’s biggest, recently announced that it would sell all of its stock in coal companies, following in the footsteps of several major university endowments. The divestment campaign is just one of a large range of different environmental, social and governance (ESG) investing approaches. Globally, more than 30 per cent of institutionally managed assets have some kind of social responsibility dictate, accounting for $21.4 trillion in assets. In Europe 58.8 percent of invested assets are run according to an ethical mandate. Since 2012 the global sustainable investment market has risen from 21.5 per cent to 30.2 per cent of professionally managed assets in the developed world. The efficacy of divestment has been called into question and an increasing number of ethical investors now opt to be actively involved with a company and to exert pressure from within. For more information see: www.ft.com

Big and small companies alike find ways to start closing the gender wage gapND


Rachel Barron, Guardian Sustainable Business, 17 July 2015

In the United States women on average earn $0.77 for every dollar earned by men. African-American women earn $0.64 for every dollar earned by white men, and those of Latin American heritage earn $0.56. This is in despite of the 1963 passage of the Equal Pay Act, which requires men and women to receive equal pay for equal work at the same place of employment. This article singles out Telstra as a major corporation working to close its gender wage gap ever since a 2007 salary audit revealed its pay equity problem. By comparing salaries of men and women who have been doing the same role for the same length of time at the same level of performance, for example, Telstra is able to identify the differences in average salaries within the company. Telstra also delves deep into the data to find pay disparities occurring at the individual level. The company has also set aside a budget to make up pay discrepancies. For more information see: www.theguardian.com

U.S. Chamber of Commerce Works Globally to Fight Antismoking MeasuresND


Danny Hakim, The New York Times, 30 June 2015

The tobacco industry is a major recipient of support from the U.S. Chamber of Commerce. According to government ministers, lobbyists, lawmakers and public health groups globally, the U.S. Chamber of Commerce, alongside its more than 100 foreign affiliates, has engaged in a wide reaching attempt to fight antismoking laws of all kinds. This strident support has emerged as the industry faces one of its greatest threats yet, a global treaty negotiated through the World Health Organisation mandating anti-smoking measures and ratified by 179 countries. The U.S. Chamber of Commerce has annual revenue of $165 million and spends more on lobbying than any other interest group in America. For more information see: www.nytimes.com

Wise Leaders Invest in Media TrainingND


Bridgitte Anderson, Edelman, 26 May 2015

The 2015 Edelman trust barometer highlighted the public’s distrust of those in positions of leadership. CEOs have a responsibility to communicate effectively and also demonstrate that they are a trusted source for information. The Edelman Trust Barometer survey shows 16 key attributes to building trust which include taking responsible actions to address an issue or a crisis; and communicating regularly and honestly on the state of its business. Investment in media training is imperative and will facilitate one’s ability to; define your position, protect your reputation, prepare for a crisis, promote your brand and to build trust. Also, the public regularly makes a decision about whether they trust someone based on appearances, so media training can provide a safe place to practice performance based skills. For more information see: www.edelman.com

Good or bad for wellbeing? Three ways to judge the impact of big brandsND


Josephine Moulds, Guardian Sustainable Business, 27 May 2015

A range of tools are now available to help discerning consumers determine if everyday products are making a positive contribution to society. Oxfam’s Behind the Brands assesses the impact of major multinationals on the wellbeing of farmers, local communities and the environment. It takes into account workers’ rights, women’s rights and land use, and produces a score. Unilever currently tops the Behind the Brands scorecard. Britain’s Social Stock Exchange, launched in 2013, lists stock and bonds from companies deemed pro-social and pro-environmental. In 2001, FTSE launched the FTSE4Good range of indices to measure the performance of companies demonstrating strong environmental, social and governance (ESG) practices. For more information see: www.theguardian.com

The good, the bad and the ugly: sustainability at NespressoND


Mark Gunther, Guardian Sustainable Business, 28 May 2015

This article accentuates the difficulties Nespresso faces in fulfilling its sustainability goals. Nespresso, is an industry leader on coffee sourcing. It has a strong corporate sustainability program, including a 38 point list of commitments indicating how it creates value for suppliers, consumers and society. It trains local farmers, pays premium prices and recently has invested in reviving coffee production in Southern Sudan. However, the capsules used to make a cup of its coffee are an environmental hazard. As of 2012, Nespresso had sold 27 billion of its aluminium capsules world-wide and refuses to say how many of these capsules are recycled. Transparency plays a critical role in sustainability and this is where Nespresso falls short. For more information see: www.theguardian.com

An organisation-wide approach to good decision makingND


Larry Neal, Harvard Business Review, May 2015

The use of a comprehensive framework to achieve quality decision-making throughout an organisation remains rare. Most companies have no official corporate-wide approach to making major decisions. This may reduce the efficacy of decision making within an organisation. An organisation-wide approach increases the speed of the decision making process and increases transparency around how decisions are made. This generally will contribute to increased efficiency and greater profitability. Two decades ago Chevron began experimenting with a system they termed ‘Decision Analysis’. The process involves considering a range of potential scenarios, their probability of happening, and the results (financial or otherwise) of each. Possibilities are then compared with alternatives and decisions are made based on appetite for risk and tolerance of uncertainty. For more information see: www.hbr.org

China uses prison visits to scare officials straightND


Charles Clover, Financial Times, 25 May 2015

China’s President Xi Jinping has embarked on the biggest anti- corruption crackdown in China’s recent history, in an attempt to clean up the enormous Communist party bureaucracy. More than 100 senior officials have been placed under investigation for corruption since 2012, and tens of thousands of lower-level officials have been arrested. Now, in an attempt to instill fear, officials are being sent on prison visits in a new approach to constrain the acceptance of bribe taking. Earlier this month 70 officials from central Hubei province spent a day touring the local prison and met with former colleagues whom are currently incarcerated. For more information see: www.ft.com

Sustainability supporting Unilever’s growthND


Unilever, The Guardian, May 2015

The commitment made by Unilever to minimise its environmental footprint and enhance its social impact is achieving considerable success. Unilever has reported that it is realising success in terms growth, cost efficiency and business resilience. Unilever brands attaining notable success on sustainability are also the brands achieving the best growth, while reducing waste, water use in manufacturing, and CO2 from energy use, and simultaneously creating cost efficiencies. More than 55 percent of Unilever’s agricultural raw materials are currently sustainably sourced, with its target being 100 percent by 2020. Unilever brands that contribute to one or more of its sustainability goals, termed sustainable living brands, have grown at twice the rate of the remainder of the business. Its latest report indicates that it is on track to achieve nearly all of its goals. For more information see: www.theguardian.com

5 facts about the BP oil spillND


Seth Motel, Pew Research Center, 17 April 2015

The explosion at the Deepwater Horizon drilling rig on April 20, 2010 in the Gulf of Mexico killed 11 workers, and by the time it was capped had sent approximately 5 million barrels of oil into the Gulf. Data collated by Pew Research Center surrounding the incident makes for interesting reading. The 5 facts the article uncovered were; support for offshore drilling plummeted after the 2010 spill, but has largely recovered since; the months-long BP story was one of the two biggest stories of the year in terms of news interest; public interest went hand-in-hand with the vast amount of news coverage of the spill; the public trusted news organisations more than the federal government and far more than BP for information about the leak; and while support for offshore drilling has largely rebounded, many Americans also support investments in alternative energy. For more information see: www.pewresearch.org

Should the CEO be social? ND


Dionne Lew, Smart Company, 14 April 2015

There is increasing awareness of the importance of social media among senior executives but participation remains low and there remain disagreements as to whether CEOs should use it or not. Socially active CEOs are viewed positively. Eighty-one percent of executives want the CEO to be social while two thirds of customer’s have increased trust in a company if the CEO is social, and 82 percent of employees think a social CEO helps shape reputation. Being social amounts to much more than whether the CEO should post or tweet, which is where much of the debate sits right now. Being social has broader advantages and has been shown to help with strategic development, executive team development, risk management, leveraging opportunities and creating an engaged and productive culture. For more information see: www.smartcompany.com.au

Changing the nature of board engagementND


Bill Huyett and Rodney Zemmel, McKinsey and Company, April 2015

Company directors are required to adapt to an ever evolving business environment. They remain under pressure from numerous stakeholders, regulation is increasingly demanding, and businesses are becoming more complex. Research by McKinsey and Company shows that the most effective directors are rising to these challenges by spending twice as many days a year on board activities than their peers. Board members and executives at Prium, a New York based forum for CEOs, discussed these issues. The ideas that surfaced, while not conclusive, provide helpful advice for boards. A prevailing theme is that boosting effectiveness is not only achieved by spending more time; it entails changing the nature of the engagement between directors and the executive teams they work with. This paper offers five enlightening tips for directors and CEOs striving to make the most of their limited time. For more information see: www.mckinsey.com

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