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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:

China slows down, and grows upND

Ruchir Sharma, The New York Times, 25 April 2012

More than half of Americans think China is already the world’s leading economy — an astonishing misperception, given that China’s gross domestic product is still less than half of America’s. Now, however, there are signs that China’s growth is slowing. It is well known that developing nations hit a “middle-income trap,” and stop catching up to rich nations, when per-capita income reaches about $5,000 to $15,000 (in current dollars). What is less known is that even those rare economies that broke through the middle-class trap started to decelerate after reaching a per capita income of around $5,000 (in current dollars). This process is under way in China, and it signals a basic power shift in the global economy. A collapse in China to zero percent growth would be disastrous for the world economy, but it is unlikely, in large part because Chinese leaders understand that the current slowdown is inevitable. For more information see

Nestlé revamps PR support as protest loomsND

Sara Luker, PRWeek, 25 April 2012

Food giant Nestlé is on the hunt for corporate and public affairs support as the company faces fresh scrutiny from pressure groups. PRWeek has learned that the Switzerland-based multinational has held chemistry meetings with several agencies, with a view to asking a maximum of four to pitch. Nestlé currently uses Fishburn Hedges, which took on the account from Weber Shandwick in 2009. At the time, the brief was understood to be worth around £500,000 a year. The chosen agency will handle Nestlé’s public affairs, corporate affairs, corporate responsibility and social media activities. According to a survey by GMI Poll, Nestlé is one of the most boycotted companies in the UK. Previous protests against the company include Greenpeace activists dressed as orangutans invading Nestlé’s Croydon offices over claims that its KitKat range led to the deaths of the animal because Nestlé was using palm oil as a key ingredient. For more information see

Citigroup’s Chief rebuffed on pay by shareholdersND

Jessica Silver-Greenberg and Nelson D. Schwartz, New York Times, 17 April 2012

Citigroup shareholders rebuffed the bank’s $15 million pay package for its chief executive, Vikram S. Pandit. The shareholder vote, which comes amid a rising national debate over income inequality, suggests that anger over pay for chief executives has spread from Occupy Wall Street to wealthy institutional investors like pension fund and mutual fund managers. About 55 percent of the shareholders voting were against the plan. The votes are part of the Dodd-Frank financial overhaul that mandates that public companies include “say on pay” votes for shareholders to express opinions about compensation. Citigroup has had the worst stock price performance among large banks over the last decade but ranked among the highest in terms of compensation for top executives. Disapprovals of pay packages are rare. Last year, shareholders at 42 companies — out of more than 3,000 firms — voted against pay plans. For more information see

Understanding social media in ChinaND

Cindy Chiu, Chris Ip, and Ari Silverman, McKinsey Quarterly, April 2012

In addition to having the world’s biggest Internet user base— 513 million people, more than double the 245 million users in the United States—China also has the world’s most active environment for social media. More than 300 million people use it. The Chinese market characteristics often create challenging wrinkles for marketers to contend with. The sheer number of social-media users in China creates unique challenges for effective consumer engagement. For example, people expect responses to each and every post, for example. Another problem is the difficulty of developing and tracking reliable metrics to gauge a social-media strategy’s performance, given the size of the user base and a lack of analytical tools. However, these challenges should not deter companies. The similarity between the ingredients of success in China and in other markets makes it easier—and well worth the trouble—to cope with the country’s many peculiarities. For more information, see

Demystifying social mediaND

Roxane Divol, David Edelman, Hugo Sarrazin, McKinsey Quarterly, April 2012

The vast majority of executives have no idea how to harness social media’s power. Here’s how senior leaders can harness social media to shape consumer decision making in predictable ways. First, brand monitoring—simply knowing what’s said online about your products and services —should be a default social-media function, taking place constantly. Second, responding on a personal level can be important, for example in in order to counter negative comments and reinforce positive ones. Third, “amplification” involves designing your marketing activities to have an inherently social motivator that spurs broader engagement and sharing. This means having ongoing programs that share new content with customers and provide opportunities for sharing back. Fourth, Social media can be used most proactively to lead consumers toward long-term behavioral changes. In the early stages of the consumer decision journey, this may involve boosting brand awareness by driving Web traffic to content about existing products and services. For more information, see

Get ready: mandated integrated reporting Is the future of corporate reportingND

David Kiron, MIT Sloan Management Review, 13 March 2012

Trying to create reporting standards that integrate environmental, social and governance performance along with financial information is "fraught with conflict" and an "almost political adjudication process," says Robert Eccles, Harvard Business School professor and co-author of One Report: Integrated Reporting for a Sustainable Strategy. For most companies, the question of whether to pursue integrated reporting is optional, and one that they have not yet chosen to pursue. Eccles wants to change that. In an interview with MIT Sloan Management Review, Eccles explains why it’s critical that integrated reporting be mandatory, standardised and backed by clear enforcement - and why the current hodgepodge of overseers makes the field too chaotic. For more information see

Cash contributions from Australian and NZ remain staticND

Jackie Hanafie, LBG Report, 6 March 2012

Australian and New Zealand companies delivered more than $259 million in total contributions to the community in 2011 focusing on health, education, young people and emergency relief, according to the latest report by the London Benchmarking Group (LBG). However, the report found that cash contributions are remaining fairly static while the proportion of companies who contribute ‘time’ to the community has doubled. The report says that with more companies reporting in 2011 it has seen a slight increase in contributions however, contributions reported this year are less than contributions reported in 2009. In 2011 the average contribution per employee is up by $70 and is in line with figures reported in 2008. The average contribution per employee increased in 2009 due to support for the Victorian bushfires, and dropped back in 2010. For more information see

Fulfilling the promise of India’s manufacturing sectorND

Dhawan, Swaroop and Zainulbhai, McKinsey Quarterly, March 2012

India’s manufacturing sector has the potential to grow six fold by 2025, to $1 trillion, while creating up to 90 million domestic jobs. However, in order to achieve this growth, India’s manufacturers will have to improve their productivity dramatically. Indeed, more than half of India’s manufacturing companies do not return their cost of capital. But global economic growth is poised to create opportunities for low-cost manufacturers, and India has a massive workforce, an emerging supply base, and access to natural resources needed in production. The government will have a significant role to play in reducing product market and ownership, land market and labor market barriers. By improving their productivity and bolstering operations, Indian manufacturers could become an engine of economic prosperity for the whole country. For more information, see

Coke’s social experiment goes flatND

Chris Zappone, The Age, 1 March 2012

Coca-Cola is the latest company to feel the sting of a social media marketing effort gone awry, after customers began attacking each other on the company's Facebook page. As more companies adopt social media strategies, allowing customers to share their thoughts, they run the risk of more of this sort of backlash, according to industry experts. Online security company Symantec estimates that social media incidents cost the typical company $US4 ($3.7 million) each year. The group found that 46 per cent of incidents involved employees sharing too much information on public forums, while 41 per cent involved the loss or exposure of confidential information. More than a third of cases - 37 per cent - raised a company's risk of litigation. For more information see

The changing role of global leaders ND

Matthew Gitsham, Harvard Business Review, 14 February 2012

A new trend in corporate leadership is emerging. In research led by Ashridge Business School and the International Business Leaders' Forum to be published later in 2012 a consistent theme has emerged: today's global business leaders believe that it is essential for senior executives both to have a nuanced understanding of the major societal forces shaping our world, and to know how to respond for the good of their organisation and for society as a whole. Business leaders consulted in the study emphasised that they must be able to engage meaningfully with multiple constituencies and relate well with all kinds of different actors in society. They increasingly see it as their role to proactively energise government policy, industry competitors, and wider society. For more information, see

Nestle, Nike and the economics of forest-friendly supply chainsND

Steve Zwick, Forbes, 10 February 2012

Institutional investors are becoming increasingly concerned about supply chain risk. Investor concern was the impetus for the voluntary participation of eighty-seven major corporations around the world in Mitchell’s Global Canopy Programme and its Forest Footprint Disclosure Project (FFD), which analysed their supply chain risk. The FFD listed the best-performing company in each sector, but kept other results confidential. Investors get to see company reports and the 'SWAT' (Strengths, Weakness, Advantages & Threats) analysis, and companies get to see their own reports. The information was not released to the general public, as it was recognised that it would be disincentive to participate if firms believe they would rank low on the list. For more information see

Where CSR fits on the board's agendaND

Richard Crespin, Forbes, 10 February 2012

Boards and CEOs need to take a more expansive view of corporate responsibility (CR) and a more active role in CR leadership. In the 2011 Corporate Responsibility Best Practices Study, seventy two per cent of companies reported having a formal CR program, up ten per cent from 2010. Moreover, eighty six per cent of respondents said their CEOs believe CR is important, up five per cent from 2010. However, there is confusion about the role boards should play in CR. Many investors look at CR programs, especially those related to disclosure and ethics, as proxies for risk management. The NACD study also found that most boards characterise current disclosure and reporting requirements as ‘excessive’. Are we asking too much of boards? For more information see

China develops a learning habitND

Patti Waldmeir, Financial Times, 6 February 2012

Increasingly, businessmen and aspirant entrepreneurs in China are looking to pursue formal educations in business schools, as many believe they can no longer get by with on-the-job skills. MBA applications rose by twenty-five percent last year to ninety thousand according to the state news agency, Xinhua. A consequence of this trend is that there is no longer the rush to go overseas to study. One of the main reasons more Chinese entrepreneurs are seeking to study domestically is the recognition of the importance of having local business contacts. For more information, see

Innovation and creativity move to the heart of the curriculumND

Anjli Raval, Financial Times, 6 February 2012

Following the banking scandals of 2008-09, which saw the subsequent breakdown of trust in business, the US government, and business schools across America, have stressed the importance of investing in entrepreneurship, and many universities are devoting considerable resources towards increasing the focus on entrepreneurship in their business degrees. However, other schools say the increasing numbers of students opting to become entrepreneurs is not a reflection of the macroeconomic environment. A senior lecturer at the MIT Entrepreneurship Center notes that students are more focused on creating companies for the sake of it, rather than creating jobs. To create jobs, start-ups would need to grow by twenty percent a year. For more information, see

Seeking safeguards for unskilled workers abroadND

Eric Bellman, The Wall Street Journal, 5 February 2012

Indonesia, the Philippines and other developing countries are demanding more rights and higher wages worldwide for their unskilled laborers. Advocates are hoping the push for more rights for domestic workers will spread to other unskilled migrants as well. In home countries, politicians are starting to acknowledge the potential clout of the millions of maids and their families as an important block of constituents. They are quick to express outrage at reports of maid abuse abroad, and to threaten retaliation. Some countries, including India and the Philippines, are looking for ways to make it easier for their overseas workers to vote in elections. Tougher standards for more pay and protection for domestic workers also could curb demand in overseas countries. For more information, see

What’s in store for China in 2012?ND

Gordon Orr, McKinsey Quarterly, February 2012

Nine predictions have been forecast for China’s growth in 2012: government policies will spur consumption and investment; dominant models will emerge for reforming rural land ownership; real estate will stagnate; the fundamentals will cause further inflation in food prices; Chinese investment in green technology will spike upward; accounting scandals will continue; Chinese acquirers will be bolder; the automobile segment will be slow; and hospital reform will accelerate. For more information, see

The cost of reputation and trust: pricelessND

Steve Barrett, PR Week, 26 January 2012

Edelman's 2012 Trust Barometer contains some alarming findings for business and government leaders, and supports last year's prediction that the big issues would be around the relative positions of the 'haves' and 'have not’s'. This year's survey shows that governments and CEOs suffered their biggest drop in trust since the study started, over ten years ago. The only institution where trust increased was the media, with business, government, and NGOs all declining. Also, Edelman suggests the financial industry is only at the start of a reputation rebuilding process that will take ten years to complete. For more information, see

McDonald’s Twitter campaign hijackedND

Tim Bradshaw and Alan Rappeport, Financial Times, 24 January 2012

In the latest example of how social media marketing can backfire, McDonald’s recent Twitter campaign was high jacked by opponents whose critical tweets forced the company to shutdown its Twitter account. McDonald’s had bought two promoted tweets from Twitter’s emerging advertising system thinking customers would share positive stories about their experiences at McDonald’s. Instead, most commentary responses were hostile. The company had a contingency plan in case of an event like this and responded quickly by closing the account to minimise increased reputational damage. For more information, see

Corporate giving: Executives aren't just writing checks anymoreND

Eleanor Goldberg, Huffington Post, 20 January 2012

Executives are increasingly choosing to engage their employees in volunteerism, rather than simply donating money to charity. A global survey conducted by Forbes Insights and HP surveyed three hundred executives about their giving strategies, and found that seventy-two percent said that they primarily make donations to charities that will allow their employees to volunteer. The rationale is that these charities both help companies to connect more with their communities, but also increase loyalty and even productivity amongst employees, who can pursue their passions and support causes they care about. For more information, see

Firms with benefits: A new sort of caring, sharing company gathers momentumND

The Economist, 7 January 2012

The new ‘benefit-corporation’, also known as B-Corp, is a company that pursues strategies to benefit society as a whole, rather than focusing solely on profit maximisation. In California, legislation has been introduced to enshrine this concept. To qualify as a B-Corp in California, companies must demonstrate an explicit social or environmental mission, and a legally binding responsibility toward the interests of workers, the community, the environment, and shareholders. B-Corps are required to publish independently verified reports on social and environmental impacts in addition to financial results. Supporters believe that this type of legislation gives companies the freedom to reconsider their goals and provides more legal flexibility in the way they can conduct their business. For more information, see

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