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:

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

How much does customer social media angst really matter?ND


Morra Aarons-Mele, Harvard Business Review, 3 April 2015

In 2013 just 30 percent of brands had a dedicated customer service handle on Twitter, and only 10 percent of those brands with customer service handles reply to more than 70 percent of their mentions. Most brands operate “social listening” programs, ranging from merely observing software to the scanning of feeds to actively minimise bad feedback and magnify positive feedback. The efficacy of these methods is not always clear and the high rate of unanswered feedback should be seen as a missed opportunity. For more information see: www.hbr.org

Digital hives: Creating a surge around changeND


Arne Gast and Raul Lansink, McKinsey Quarterly, April 2015

This article offers a new take on employee engagement and the use of social media to improve problem solving, unlock previously tacit knowledge, and speed up execution in the workplace. A prerequisite to comprehensive engagement is an understanding of organisational culture and its social dynamics, an emotional interest in what prompts new behaviour, a willingness by management to encourage a non hierarchical structure, and an ability to demonstrate how digital activities complement off-line or other real-world events. If these fundamentals are achieved maximum utility can be gained from social media platforms. The specific approaches offered by this paper are; engaging the workforce in better strategy; connecting silos with a social chain; enlisting key customers to improve the proposition; and uniting a dispersed sales force to drive higher sales. For more information see: www.mckinsey.com

Calculating the market value of leadershipND


David Ulrich and Allan Freed, Harvard Business Review, 3 April 2015

Traditionally investors have examined financial reporting of earnings, cash flow, and profitability to define the market value of a firm. However, financials alone have been found to predict just 50 percent of a firm’s market value. To gain greater insights into a specific firm, investors increasingly focus on intangibles like strategy, brand, innovation, systems integration and collaboration. Investors are also working to measure and track such intangibles. The next step for investors is an increased focus on leadership. Intelligent, long term investors are aware that leadership affects a firm’s performance. The authors of this article have created a leadership capital index by interviewing and surveying investors and by amalgamating dozens of studies of the impact of leadership. The leadership ratings index has two dimensions: individual and organisational. Each dimension has five factors. For more information see: www.hbr.org

How a private-sector transformation could revive JapanND


Georges Desvaux, Jonathan Woetzel, Tasuku Kuwabara, Michael Chui, Asta Fjeldsted, and Salvador Guzman-Herrera, McKinsey & Company, March 2015

Japan’s manufacturing industry currently lags behind comparable US and German sectors in labor productivity by almost one-third. Its productivity growth has stalled below 2 percent for much of the past 20 years, its working age population is shrinking, and a continuation of current trends would see annual GDP growth of only 1.3 percent through to 2025. A recent McKinsey Global Institute report, ‘The future of Japan: Reigniting productivity and growth’, highlights potential avenues for growth and renewal, emphasizing areas where the private sector can take the lead. The report determines that if Japan can double its rate of productivity increase by acutely focusing on increasing value added and cutting costs, it could boost annual GDP growth to around 3 percent. For more information see: www.mckinsey.com

Power to the new people analyticsND


Bruce Fecheyr-Lippens, Bill Schaninger, and Karen Tanner, McKinsey Quarterly, March 2015

The management of HR talent in business typically revolves around personal relationships or decision making based on experience, rather than deep analysis. Advanced analytics uses advanced techniques to recruit and retain those who excel at innovation and have accomplished leadership capabilities - those who drive superior value in companies. Advanced analytics has contributed to major achievements in several organisations. A major healthcare organisation for example attributes these techniques to it saving over $100 million, while at the same time making gains in employee engagement. Another corporation attributes the use of predictive behavioral analytics for it reducing retention bonuses by $20 million and employee attrition by half. For more information see: www.mckinsey.com

Harvest of FearND


Anne Hyland, Financial Review, March 2015

A recent public health scare involving frozen berries, led to fear of a Hepatitis A epidemic in Australia. Some experts quoted potential exposure rates at around 450,000. Known cases, attributed to the contamination, are yet to reach 20. Crisis management expert Ross Campbell, chief executive of RCA Crisis Management says managing such an event is about speed. “The public expresses their view very, very quickly about incidents like this, and start to talk to each other on social media, with social media and with traditional media and start to paint a picture very quickly. If you're not ready for that, you're really not ready to protect your brand." Having a crisis management plan ready to go that has been tested regularly and which assumes the worst is essential, according to Campbell. He highlights four steps in responding to a crisis — assess the incident, acknowledge the problem, determine the response and then implement it. For more information see: www.afr.com.au

The truth about CSRND


Kasturi Rangan, Lisa Chase, Sohel Karim, Harvard Business Review, February 2015

Many companies have long managed their corporate social and environmental responsibility programs with the broad goal of contributing to the improvement of the societies in which they operate and depend. Many companies also feel obliged to dress up their CSR programs as a business discipline that delivers business results. This article argues that to ask this of a firm is demanding too much from CSR programs. The authors claim it distracts from what should be a company’s primary objective which is to align a company’s social and environmental activities with its business purpose and values. This article examines why firms should be refocusing their CSR activities and it also provides a systematic process for conveying consistency and discipline to CSR strategies. For more information see: www.hbr.org

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