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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:

A balancing act in corporate citizenshipND


Luke Johnson, Financial Times, 23 July 2013

In this opinion piece, the author queries whether consumers really support companies that are responsible or whether corporate citizenship is ‘just politically correct hot air’. He compares Marks and Spencer which has undertaken significant efforts to be a good corporate citizen and low-cost retailers that have had booming sales despite using suppliers based in Bangladesh and involved in the recent factory collapse. He suggests that suppliers care more about prices rather than where products are sourced, but then concludes by saying ‘business can be both self-serving and ethical’. Companies rarely survive in the long run if they offer bad quality products and service and treat employees, suppliers and other stakeholders badly. For more information, see www.ft.com

Raising the bar on nonprofit impact performanceND


Tris Lumley, Stanford Social Innovation Review, 10 July

Ten years ago, critics dismissed impact measurement as too difficult, misleading, or simply not important. Today, 75 percent of charities measure some or all of their work, and nearly three-quarters have invested more in measuring results over the last five years. The author reduces the system of measuring nonprofit results to three sets of actors: funders providing resources, nonprofits delivering services, and beneficiaries receiving products. The author cites research carried out in the UK that shows that funder requirements are the primary driver behind an increase in impact measurement among nonprofits. Improved strategy and services are the main benefits that they see as a result; by understanding the impact of their services, they are able to improve what they do. The paradox is that nonprofits measure their results to satisfy funders, but the main reward is a better service, not increased funding. The author suggests that in order to ensure that impact measurement results in improved services and increases impact, then we have to make sure it works for the nonprofit. Only then should we turn to what funders want out of impact measurement. For more information see www.ssireview.org

Choosing the right eco-label for your productND


Magalia Delmas, Nichols Nairn-Birch and Michaela Balzarova, MIT Sloan Management Review, Summer 2013

With more than 435 ‘eco-labels’ available globally (according to the Ecolabel Index directory), there is much confusion about which are the most appropriate to use. This article provides a framework across three dimensions: consumer understanding and awareness, consumer confidence, and willingness to pay. Eco-labels should be simple, have resources allocated to the communication about the label, and the organisations behind them should be transparent. It is advantageous to use those that are multi-product, have endorsements from governments and large retailers, and the support of multiple partners. Willingness to pay is increased when these labels emphasise better quality, health benefits and leverage peer pressure. The authors caution that companies need to check the credibility of partners and avoid any conflicts of interest. For more information, see www.sloanreview.mit.edu

Designing trustworthy organisationsND


Robert Hurley, Nicole Gillespie, Donald Ferrin and Graham Dietz, MIT Sloan Management Review, Summer 2013

Results from the Edelman Trust Barometer show that trust in business continues to be low, despite government reforms, corporate spending on ethics compliance and increased training. While business trust violations are often blamed on individuals, the authors argue that it is more often a result of failures in the corporate system, including a culture that serves the interests of one stakeholder group at the expense of others. Also, there are often inconsistencies in embedding trust within organisations. This article provides a model of organisational trust and a guide to embedding trust within the organisation. For more information, see www.sloanreview.mit.edu

The executive’s role in social businessND


David Kiron, Douglas Palmer, Anh Nguyen Phillips and Robert Berkman, MIT Sloan Management Review, Summer 2013

A study of over 2,500 business executives from 99 countries shows that more companies are realising the value of social business, which relies on effective senior leadership of social business capabilities. Social business is defined as the use of social media and networks, technology-based internal social networks, social software for corporate use, and use of data derived from social media and technologies. The role of a chief digital officer has emerged in many companies which “coincides with the convergence of a number of digital trends involving social business, the consumerisation of technology, mobile, the cloud, analytics and cybersecurity”. For more information, see www.sloanreview.mit.edu

The trouble with stock compensationND


Yuval Deutsch and Mike Valente, MIT Sloan Management Review, Summer 2013

The authors undertook research on the relationship between director stock compensation and social performance ratings for 1,100 US public companies and found that while providing outside directors with stock (and alignment of director goals to shareholders) is an important part of compensation schemes, it effectively an incentive to ignore other stakeholders (other than shareholders). The article suggests a few approaches for addressing this, including diversifying the board to include stakeholders who represent non-shareholder constituents; extend board roles to include social and ecological obligations (and tying compensation to this); positioning the company as a CSR leader so than any divergence from this has implications for competitive advantage. For more information, see www.sloanreview.mit.edu

Mapping China's middle classND


Barton, Chen, and Jin, McKinsey Quarterly, June 2013

The explosive growth of China’s emerging middle class has brought sweeping economic change and social transformation. The evolution of the middle class means that sophisticated and seasoned shoppers — those able and willing to pay a premium for quality and to consider discretionary goods and not just basic necessities—will soon emerge as the dominant force. McKinsey research has shown that this generation of Chinese consumers is the most Westernised to date. Prone to regard expensive products as intrinsically better than less expensive ones, they are happy to try new things, such as personal digital gadgetry. They are also more likely than previous generations to check the Internet for other people’s usage experiences or comments. These consumers seek emotional satisfaction through better taste or higher status, are loyal to the brands they trust, and prefer niche over mass brands. There will be not only challenges but also plenty of opportunities for companies whose strategies reflect China’s new constellation of rising incomes, shifting urban landscapes, and generational change. For more information see www.mckinseyquarterly.com

The power of giving back: how community involvement can boost your bottom lineND


Entrepreneur, 26 June 2013

A recent study in the US confirms that consumers consider a company’s social responsibility efforts when making purchasing decisions. Companies should look to build relationships within the community, get employees involved, establish a volunteer program that draws on the strengths of the business and employees, and let customers know what they are doing. For more information, see www.entrepreneur.com

Integrated reporting to walk more than the bottom lineND


Carol Adams, The Conversation, 21 June 2013

With the consultation draft of the International Integrated Reporting framework released this year, the author provides an overview of some of the concerns and advantages of using the framework. She suggests the key issues are that the framework emphases long-term thinking; it focuses on the ‘six capitals’ – financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital, and natural capital; and aims to create value by working with a broad range of stakeholders. For more information see www.theconversation.com

Corporate giving isn’t about making business feel goodND


Bronwen Dalton, The Drum, 5 April 2013

Companies should do more to measure the impact of their corporate social responsibility programs or risk reducing these strategies to little more than image management. In Australia, most companies report their corporate social responsibility activities by emphasising the dollars spent or the time employees invest in volunteering, rather than quantifying the outcomes of a particular social initiative or intervention. When CSR is measured at all, many corporate organisations focus on the value it gave to the company's brand and reputation, worker morale and commitment, customer satisfaction and sales. A survey of the Global Reporting Index contributions found the vast majority of the participating companies showcase only good news in their CSR reports. This is quite different to how other business unit treat their results. For more information see www.abc.net.au

Disaster at Rana PlazaND


The Economist, 4 May 2013

The collapse of a garment factory in Rana Plaza on the outskirts of Dhaka in April killed at least 400 people and injured many more. The spotlight is on multinational companies whose orders from local factory owners have led to the rapid recent growth of the garment industry in Bangladesh, the world’s second-largest exporter of clothing. Familiar brands are accused of exploiting poorly paid workers with indifference to their safety. The Economist states three options for companies: firstly, forget CSR, and simply exploit labour wherever it is cheapest; secondly, leave Bangladesh and buy from factories in countries where the risk of accidents is smaller; or thirdly actually try to change things. For more information see www.economist.com

Reputation management: when your business is disparaged onlineND


Cheryl Conner, Forbes, 28 April 2013

The principle behind the science of reputation management is one every company ought to master: communicate. When an issue happens, and ideally well before an issue can happen, your business should make the effort to communicate accurately, often and well. With this goal in mind, there are six tips to help manage an organisation’s reputation online: 1) monitor consumers’ online activity for new outlets and discussion threads, 2) encourage private feedback (rather than public), 3) avoid the temptation to censor and remove the comments that appear on your website or Facebook account, 4) align the reputation management team with customer services, to avoid sending mixed messages, 5) address every online complaint promptly, and 6) when the problem is solved, invite the recipient to post a follow-up. For more information see www.forbes.com

Business leads the way in sustainabilityND


Sarah Murray, Financial Times, 16 April 2013

While many companies have embraced energy efficiency or resource management, some argue that corporate leaders must go beyond incremental change and transform their business models. The UK’s Business in the Community (BITC) released its 2013 Corporate Responsibility Index, and asks the question: can companies make the ambitious strategic shifts needed to achieve global development that is sustainable? The results of the index indicate that some companies – at least those in the ranking – are performing well. It is becoming harder for companies to hide misconduct or environmental abuse. The spread of communications technology has made increased transparency on how companies make and sell their products a fact of life. However, many question whether improved transparency and the evolving sustainability strategies of a group of leading companies will do enough to address the social and environmental pressures that are facing the world. For more information see www.ft.com

US regulators embrace Twitter for market newsND


Jessica Holzer and Greg Bensinger, The Wall Street Journal, 4 April 2013

In a ruling that guarantees to change to how companies communicate with investors, the Securities and Exchange Commission said postings on sites such as Facebook and Twitter were just as good as news releases and company websites as long as the companies had told investors which outlets they intended to use. Several large companies, including computer-maker Dell and eBay, use Twitter to announce financial and other key information to investors. Many simultaneously send out news releases or report the information in filings to the SEC. Yesterday's announcement will allow them to use social media more. Only 14.4 per cent of companies communicate with shareholders via social media, according to a survey by the Conference Board and Stanford University, yet more than three-quarters of the companies in the survey said they used social media to interact with customers. For more information see www.wsj.com

Disasters in Asia: what role for business?ND


Richard Welford, CSR Asia, 3 April 2013

Asia was the most disaster-prone region in the world in 2012, both in terms of number of disasters and victims, according to the United Nations Office for Disaster Risk Reduction (UNISDR). There is little doubt that an increasing number of disasters are related to climate change. Asia is at the centre of typhoon activity that is on the increase, and many coastal areas are highly susceptible to increasing sea surges. The private sector can begin to engage with the climate change threats in several ways, including: engage in preparatory climate change adaptation strategies, engage in strategies that can mitigate and respond to environmental refugees, help to fund and develop micro-finance and micro-insurance initiatives, and move from philanthropy towards pro-poor development strategies. For more information see www.csr-asia.com

Beyond corporate social responsibility: integrated external engagementND


John Browne and Robin Nuttall, McKinsey Quarterly, March 2013

Traditional corporate social responsibility (CSR) is failing to deliver, for both companies and society. Executives need a new approach to engaging the external environment. A good relationship with NGOs, citizens, and governments is not some vague objective that’s nice to achieve if possible. It is a key determinant of competitiveness, and companies need to start treating it as one. That does not mean they have to initiate philosophical inquiries into social responsibility and business ethics. But it does require them to recognise that traditional CSR fails the challenge by separating external engagement from everyday business. It also requires them to integrate external engagement deeply into every part of the business by defining what they contribute to society, knowing their stakeholders, engaging radically with them, and applying world-class management. In other words, it requires the same discipline that companies around the world apply to procurement, recruitment, strategy, and every other area of business. For more information see www.mckinseyquarterly.com

Facebook presence is an important clue to a social venture's futureND


Peter Roberts, Harvard Business Review, 4 March 2013

Fledgling social entrepreneurs may have a lot of passion, but they usually don't have much of a track record, a circumstance that leaves would-be backers to wonder: Which have the potential to become genuine world-changers? It turns out one of the best clues may be on Facebook. In an analysis of data from roughly a hundred social entrepreneurs, we found a clear connection between a venture's Facebook presence and its commercial performance. The average annual revenue for ventures that had set up dedicated Facebook accounts was roughly $142,000, considerably greater than the $77,000 for ventures that hadn't set up such accounts. For those with Facebook accounts, the correlation between number of likes and revenue earned was a robust 0.38 (correlations range from zero to one). For more information see www.hbr.org

Oxfam report shows multinational companies failing on CSR goals ND


Jo Confino, The Guardian, 26 February 2013

Oxfam’s Behind the Brand scorecard has revealed that companies are failing their CSR goals, specifically in the areas of transparency and supply chain operations. Of the ‘Big 10’ multinationals reviewed, none secured a good overall rating on their public policies and commitment covering the supply chain. While Oxfam acknowledges that companies have made progress over the years, they assert that sourcing is still unjust and unequal, and that companies ‘cherry-pick’ their CSR initiatives in way that doesn’t address the core problems that the industry creates. While many of the problems are facilitated by poor government and deep-rooted social problems, Oxfam maintains that business has an active role to play in improving the situation in countries that they source from, and outlines a number of steps for companies to take in order to improve their CSR performance. For more information see www.guardian.co.uk

Global Reporting Initiative: a new framework? ND


Ben Tuxworth, The Guardian, 22 February 2013

Sustainability reporting has grown significantly over the last decade, with the GRI being one of the most widely used indicators. However proposed changes to the GRI, such as abandoning reporting levels and increasing the number of indicators, may risk making the reporting process too burdensome for reporters, and too complex for readers. Given the success of the GRI, efforts should be made to avoid the process becoming too complicated, both to ensure that those companies who have been reporting keep reporting, and to ensure that the reporting process is accessible to companies in emerging markets. For more information see www.guardian.co.uk

Communicating corporate social responsibility to a cynical publicND


Illia et. al., MIT Sloan Management Review, 21 February 2013

Given that corporations are increasingly engaging in CSR activities, it makes sense to communicate those achievements to stakeholders. However, in publicising CSR achievements, especially if they do so aggressively, corporations risk achieving the opposite result from what they intended — a so-called “boomerang response”. A key challenge for managers, then, is to minimise stakeholder skepticism and communicate CSR achievements without being accused of 'greenwashing'. Based on an investigation into the CSR communication practices of the largest (in terms of revenue) 251 European corporations and interviews with 69 managers handling CSR communications, this article outlines seven strategies to mitigate this risk. These are: 'don't be afraid of the media', 'don't underestimate the public', 'address big issues head-on', 'don't present a picture perfect company', 'control the conditions', 'use the whole company' and 'do what you say'. For more information see www.sloanreview.mit.edu

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