Ipsos Corporate Reputation

Taking a stand – do the rewards of corporate activism outweigh the risks?

Corporate activism is both an opportunity and risk, with Council members acknowledging both sides of the debate in equal measure.
There is widespread acknowledgement that corporate activism is expected by consumers, but is also very hard to do well.
Authenticity is the key, with campaigns that are true to your corporate values having the greatest chance of success.

In 1966 Robert F. Kennedy made a speech in which he referred to a Chinese curse “may he live in interesting times”. The world was an uncertain place in the 1960s, with risk and opportunity both abundant.

It seems history is very much repeating itself as social and political disruption gathers pace, alongside the myriad opportunities being created by the digital economy.

So what’s the role of business given this backdrop? Can it be a force for progressive change in a world where anti-establishment beliefs are in the ascendancy? Or, indeed, will more companies choose to adopt a tone of ‘regressive activism’, for equally pragmatic or idealistic motives? More fundamentally, can the voice of business even be heard when the prism of fake news is applied to so much communication?

Well, Council members believe that businesses do have a licence, or even an obligation, to speak out on the big socio-political and cultural issues of the day (the environment, tolerance and diversity, and social justice are most often mentioned).

"BUSINESSES ARE PART OF THE COMMUNITY SO THEY SHOULD HAVE A VIEW. LEADERSHIP SHOULD NOT STOP AT FINANCIAL ISSUES."

This is nothing new – think of Lever Brothers, or Carnegie and Rockefeller in the US. In a world that seems more connected, but more polarised, than ever, the pressure is growing on businesses to connect with people in an authentic and meaningful way — to tackle issues that really matter to society as a whole rather than focusing purely on the bottom line.

In large part, Council members attribute this pressure to the growing expectations of customers, opinion formers and especially employees, who want to understand more about a company’s purpose and values, before they invest their money, time or goodwill. Nowadays what your business stands for is as important as what it sells. People want reassurance that businesses can be on their side, understand their issues and be prepared to fight their corner.

This is borne out by a 2016 Ipsos study across 23 countries, in which 63% of the public said they tend to buy brands that reflect their personal values – up from 54% in 2014. And in fast-growing economies such as India, China and Indonesia, the proportion was higher still.

Council members tend to agree. More than half (56%) say their consumers expect them to take a stand on socio-political issues, against a quarter (23%) who disagree.

"THEY ARE MORE SOPHISTICATED CONSUMERS AND THEY PERHAPS SEE THERE IS NOT MUCH FUNCTIONAL DIFFERENTIATION BETWEEN BRANDS, AND MAKE THEIR DECISIONS MORE ON WHETHER IT IS THE SORT OF COMPANY THEY WOULD LIKE TO BE ASSOCIATED WITH."

In reality, of course, decisions about when and how to take a particular stand are complex. But we can distil the views of the Reputation Council into five guiding principles.

1. Above all, be relevant and authentic.

Any public position must reflect the genuine purpose, values and actions of the company. To paraphrase Mark Zuckerberg, focus on the fundamentals. Trust in businesses (along with other elites) is low, there’s lots of noise, and people are quick to sniff out self-interested, trivialising or opportunistic positions.

On the other hand, a stance which is aligned with a strong social purpose that is true to your values can bring benefits beyond the purely altruistic – creating a real connection with customers, helping to attract the best talent and leading to better engagement with influencers. A clear social purpose also acts as a road map, clearly outlining the issues a business will, and will not, engage on (particularly useful guidance when resources are limited).

"AS A BUSINESS YOU NEED TO FIND THE AREAS THAT ALIGN WITH YOUR PURPOSE AND YOUR BRAND AND, AS LONG AS YOU HAVE A POLICY, IT IS EASIER TO DEFEND THE AREAS THAT YOU ARE SUPPORTING AND THE AREAS THAT YOU DON’T WANT TO GET INVOLVED IN."
2. Practice what you preach.

Any stance will lack credibility if the business can’t show a track record of action. If you’re taking a stand on diversity, you’d better be sure you measure up within your own business. And wherever possible, show the tangible value of your work to people’s lives.

The companies which Council members most admire are agents of change, not bandwagon-jumpers. Qantas’ campaign in support of same-sex marriage in Australia, despite opposition from some influential stakeholders, is cited by a number of Council members as a genuine, powerful example.

"I THINK THE CHALLENGE FOR BUSINESS IS TO COMMUNICATE THEIR ROLE IN THESE SOCIAL POLICY DEBATES IN A MEANINGFUL WAY AND NOT LOOKING PERHAPS SELF-INTERESTED, AND BEING CREDIBLE AND BEING IN IT FOR THE LONG TERM AS WELL. AND ACTUALLY BEING ABLE TO DEMONSTRATE THE VALUE OF WHAT YOU ARE DOING."
3. Don’t get party political.

Council members are strongly of the view that companies should avoid
issues which are closely aligned with party political agendas – at least publicly. In the main, such themes (Brexit and the Trump presidency are mentioned a lot) are seen as too polarising, too short-term and above all too risky for corporates to get embroiled in. But as major social and cultural movements become increasingly politicised, this may be a fine distinction for activist companies to negotiate.

"I DON’T THINK THAT COMPANIES SHOULD GET INVOLVED IN POLITICS, THAT IS NOT WHAT WE DO AND IT IS NOT WHAT WE SHOULD DO… I DON’T WANT TO BE TOLD BY MY EMPLOYER OR BY THE COMPANIES I INVEST IN HOW I SHOULD BE VOTING."
4. Understand the risks.

Taking a bold stand will be inherently divisive, and can be a bruising experience. It might bring rewards, but it will definitely carry risks. Three in five Council members (59%) believe the benefits of taking a stand are greater than ever. But three quarters (77%) say the risks are greater too. So it’s important to be selective. But if an issue lies at the heart of your corporate purpose, and the expectations of your stakeholders, then not speaking out may be the bigger risk.

 

5. Not every company has to be a direct social activist.

Council members often have to think about how a particular position will play out in different global markets, or among stakeholders with conflicting expectations, or have to work within regulatory restrictions on what they can say.

These businesses may have less of an appetite for controversy, perhaps preferring to engage collectively via trade associations or industry bodies. However, is important to bear in mind that they still feel they are engaging constructively on important issues – perhaps not taking such an overt, confrontational stand, but still having a principled point of view and being part of the discussion.

"FOR GLOBAL ORGANISATIONS, YOU HAVE TO WEIGH UP THE CONSEQUENCES TAKING A STAND IN ONE PART OF THE WORLD WILL HAVE ELSEWHERE, AND ONE ALWAYS HAS TO DEAL WITH THAT AMBIGUITY."

Final thoughts

Activist consumers and stakeholders increasingly demand to know where corporations stand on the issues which matter to them. They are looking for leadership that places social progress (in whatever way they define it) at the heart of the corporate agenda.

However, speaking out carries risks and can be divisive. But if it genuinely reflects the social purpose and values of the business, and is backed up with evidence of action, the reward can be a powerful, positive impact on reputation and relationships.

Methodology: 127 interviews conducted with Reputation Council members between April and August 2017.

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The Reputation Council Report 2018: Full Report

Welcome to the latest briefing from the Ipsos Reputation Council.

This – our thirteenth sitting – has been the biggest and most international yet, involving 154 senior communicators from 20 countries.

As Paul Polman, CEO of Unilever, once said: “reputation has a habit of arriving on foot and departing on horseback”. In the past year, a welter of high-profile reputation scandals affecting businesses, their leaders and even whole industry sectors has, once again, focused our minds on the risks and rewards of this powerful but potentially volatile asset.

Some of these scandals have posed a genuine threat to companies’ continued survival or licence to operate. Others have fizzled out. In this edition, we examine how Reputation Council members distinguish between issues which might blow up into a genuine reputation crisis, and others that are just day-to-day turbulence. What indicators or early warning systems can communicators draw on, to help them build resilience?

The technology sector has been wrestling with some unprecedented reputation issues recently. Concerns around privacy, data leaks, advertising practices, AI and automation have come together to create the phenomenon of ‘techlash’. We talk to Council members about the implications for their own businesses and the lessons that communicators can learn from the way in which the technology sector is responding to techlash.

We’re also beginning to see greater scrutiny of the role that CEOs should play in external communications, against a backdrop of issues such as pay ratio reporting, gender inequality, shrinking CEO tenures and the ‘celebrity leader’. In this edition, we explore Council members’ playbook for CEO-led communications, and look at how the CCO can ensure that these communications build, rather than destroy, reputation value.

The opportunities and challenges that come with communicating in a global context is a theme we’ve examined in past editions. In this sitting, we ask Council members how they strike the right balance between global and local messaging and narratives, and how they keep a finger on the pulse of their reputation (or reputations) around the world.

Lastly, we’ve introduced some new, ‘quickfire’ sections, in which we analyse Council members’ views on a number of contentious, topical talking points, such as the death of CSR, the distraction posed by social media, the need to pick a side in a polarising society, and whether consumers will overlook poor corporate behaviour if the price is right

I hope you enjoy this edition of the Reputation Council report. Please do get in touch if you’d like to find out more about any of the issues covered or discuss how they might affect your own business.

Milorad Ajder
Global Service Line Leader
Corporate Reputation
milorad.ajder@ipsos.com

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Global Perspectives on Sector Reputations

Which industries are facing the greatest reputation challenges at the moment?

NORTH AMERICA

Media: 44%

Tech: 44%

Pharma: 31%

Despite lingering reputational issues still plaguing the financial services sector, the recent assault on media and tech means that these two industries are seen to be facing the greatest reputational challenges in North America. Each of these industries is named by 44% of Council members.

Beyond these two industries, pharmaceuticals now holds the third position in terms of reputational challenges at 31%. Cost and value continue to drive the conversation, and with the US government putting more of a spotlight on drug costs, these reputational challenges are likely to continue.

"[Media has] got a constant drumbeat of ‘fake news’, how do you overcome that?"
"These are self-inflicted wounds [in the tech industry] – companies are not thinking through the implications of their actions on their customers."
LATIN AMERICA

Construction: 50%

Energy: 41%

Mining: 34%

In Latin America, construction rises to the top as the industry facing the greatest reputational challenges this year (50%). A number of corruption charges have embroiled not only specific companies throughout the region but also politicians and civil servants.

Energy (41%) and mining (34%) round out the top three most challenged industries, predominantly due to environmental concerns and a perception that they bring limited benefits to the local markets.

"There is a public perception that mining pollutes, does not produce profits for the country, and is a group of companies that do not add local value but add value to those who extract the material and take it away."
EUROPE

Finance: 44%

Energy: 43%

Finance remains one of the industries facing the greatest reputational challenge in Europe (mentioned by 44% of Council members). In the words of one Council member, “this crisis has not been solved yet, given that the image reconstruction process appears to be very slow.”

Additional challenges for the financial services sector include cyber security concerns and emerging FinTech players challenging the traditional financial companies.

Energy also continues to face reputational challenges, cited by 43% of Council members in Europe. Issues continue to focus on environmental concerns, climate change, sustainability and consumer costs.

"When energy companies don’t immediately pass on price savings from a barrel of oil to a consumer or to a client, then the negative repercussions are there immediately."
ASIA PACIFIC

Finance: 88%

Energy: 71%

Media: 71%

Consistent with last year, the financial services industry continues to suffer reputational challenges in APAC, though mentions are higher this year at 88% (up from 73% in the last wave). Council members continue to cite the lingering effects of the financial crisis.

The energy sector is also mentioned more frequently than last year (71%), and while affordability and sustainability are still key reasons, government policy is now referenced far more frequently by Council members.

This year, media is also mentioned by 65% of Council members in APAC, with many attributing this to a changing media landscape as well as the resounding cry of ‘fake news’.

"The energy policy is a mess. Can’t separate from political environment."
"The Trump phenomenon and the constant hammering of ‘fake news’."

In full: how Reputation Council members around the world perceived each sector's reputation

Methodology: 154 interviews conducted with Reputation Council members between 25th June and 12th November 2018. Base: All Reputation Council members – Global (145), North America (16), Europe (80), Latin America (32), APAC (17).

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