Hill+Knowlton Strategies

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

“If mankind is not to perish after all the dreadful things it has done and gone through, then a new spirit must emerge.  And this new spirit is coming not with a roar but with a quiet birth, not with grand measures and words but with an imperceptible change in the atmosphere – a change in which each one of us is participating…”

If ever there were a New Year’s wish for humanity, this beautiful prose from Albert Schweitzer would fit the bill perfectly.  A new year, a new spirit, a new chance to live and work responsibly and sustainably.  It is the season for looking back and looking ahead, and I’ve been doing a lot of both lately.  Colleagues, clients and friends have been asking me what I’m seeing in terms of coming trends in corporate responsibility and sustainability.  Here’s what I’ve been telling them.

In spite of changes in Congress, questions over the validity of research, and a general “green fatigue” on the part of many Americans, climate change will still be accepted as the primary environmental issue and challenge of our time.  Research strongly suggests that citizens expect businesses to play a role in mitigating it, and act in concert with government to address it.  Additionally, business risk related to climate change will remain increasingly important to mainstream investors, and many will continue to scrutinize corporate sustainability reports and other collateral as a window into the company and its exposure. 

Leading companies are recognizing and responding to consumer demands for action and information regarding climate change, and embracing this as an opportunity for reputation building and thought leadership.  To stand out, companies will need to rethink where and how they share and celebrate their climate change related programs, policies and partnerships with customers and stakeholders.  As is often the case, one innovative and memorable effort will be worth more than dozens of smaller ones.

External influencers and organizations will continue to impact consumer brand perceptions more than corporate PR or CSR reports.  Research suggests that consumers want more information on a company’s commitment to corporate responsibility and sustainability, but need that information in simpler ways and where it connects to them.  In response to these changing influences on consumer brand perceptions, sector leaders will need to integrate their company’s CSR story into mainstream consumer communications channels – from marketing and television advertising to in-store displays and product packaging to digital communications.      

Interest in the environment will remain strong on the part of both businesses and consumers. We will also continue to see an increase in firms applying for LEED certification for their facilities, and entering into strategic partnerships with environmental conservation organizations.  It will be essential for companies to carefully navigate “green” opportunities and partnerships, as vocal consumers, activist NGOs and government regulators such as the Federal Trade Commission continue to call firms out for greenwashing, fraudulent claims and abuse of marketing communications.        

Water use, availability and scarcity will continue to be of growing concerns in nearly every part of the world, posing a major operational and reputational issue for companies.  This is especially true for firms in water-intensive industries, but since every company uses water, it will be an issue for the entire business sector.  Companies will need to get in front of the water issue first by conducting assessments of their true water “footprint”, taking steps to minimize use throughout their supply chains and product lifecycles and then highlighting success stories and sharing best practices with customers, partners, regulators and other stakeholders.

As companies and individuals continue to take action and find new ways to be more responsible and sustainable in the year ahead, 2011 presents an opportunity for humanity’s finest hour.  The critical changes we need don’t have to come with a roar or with grand measures, to paraphrase Schweitzer’s poignant words, although many of our greatest challenges certainly deserve and require them.  In the spirit of an ambitious New Year’s resolution for the world, it would be wonderful to see every individual, organization and company ask themselves how they can participate in that imperceptible but meaningful change.

In November of 2010, the Canadian government rejected an $800 million copper-gold project of Taseko Mines, called “Prosperity” in my home province of B.C. Although the federal government ultimately cited environmental concerns in declining the license to operate, relations between the company and the First Nations communities in the areas around the mine really hit rock bottom during a federal environmental review process for the project.

Taseko’s “Prosperity” mine had potential to generate significant economic wealth for the Williams Lake region of BC, an area hard-hit by other economic factors and desperately in need of jobs. However critical stakeholders, such as the First Nations in the area of the proposed mine believed their communities would not benefit from the mine in their territory and actively opposed the project during the environmental review.

Interestingly, on the same day the Canadian government rejected the Taseko Mines Prosperity project, it approved a $915 million copper-gold project (“Mount Milligan”) in a different area of the province. In speaking about its decision, the federal government indicated that the Mount Milligan project (Prosperity mine rejected, Mt. Milligan approved) had designed appropriate mitigation measures and minimized environmental impacts and that as a result, was likely to cause significant adverse environmental effects. 

In further contrast to how Taseko Mines managed key stakeholders such as the First Nations communities in the area around their proposed mine, Thompson Creek Metals (Mount Milligan copper-gold project) reached out to First Nations communities in a meaningful way, and adopted Principles for Sustainable Relationships with First Nations, a framework developed by the Association for Mineral Exploration BC.

The Mount Milligan project had First Nations support in the form of a revenue-sharing agreement between the province and the McLeod Lake Indian Band – only the second such deal in the province. Further, Thompson Creek Metals partnered with post-secondary institutions to create an environmental training employment program for First Nations – allowing them to participate in project operations.

Although neither mine is without opposition, nor serious environmental and local concerns, it is an interesting contrast of the employment of two very different stakeholder strategies. It is also a powerful narrative about the power of relationship building for economic prosperity, and recognizing stakeholder dynamics as a critical component in a company’s social license to operate.

What is the cost of developing a solid CSR program that incorporates social and environmental responsibility concerns into the cost of business? In this tale of two mines, the path chosen made all the difference.

Disclosure: Taseko Mines and Thompson Creek Metals are not clients of Hill & Knowlton.

At ResponsAbility, our goal is to share and celebrate best practices and new ideas in corporate responsibility.

We share highlighted news items, offer our expertise and provide insight into ways corporations can improve their social standing. It’s also important for our readers to know we also practice what we preach.  Every year, Hill & Knowlton’s DC office hosts a toy drive for needy families around the holiday season. We do it not because it improves our reputation, but because it feels good.

I’m one of the fortunate individuals who looked forward to this holiday season every year. Food would always be on the table, a fire in the fireplace, and a Christmas tree with presents underneath every year.  As a new parent, I can truly appreciate what my parents did to make my holiday a bit brighter.  My daughter, just four months old, will hopefully look back years from now and remember with fondness the family holidays.

But as a new parent, it also breaks my heart to know some kids might wake up and not have a gift to open, a large dinner on the table or even a warm fire to sit next to. That’s exactly why I’m so proud of our agency for making a real difference.  We’re proud to be working with Martha’s Table to collect food and toys for families in need.

There are so many ways you can help kids smile this holiday season. Just by donating canned goods, toys or even clothing, you can bring a smile to a child’s face and relief to a parent’s heart. This holiday season, let’s make a difference together.  Forget bottom lines, smiles are worth millions.

I stumbled upon an article recently about the summary of the recent removal of Shell from the Dow Jones Sustainability Index (DJSI).

According to the article in The Responsible Investor, Dow Jones and its partner SAM, dropped Shell from the index in September.  DJSI rules allow for elimination of companies from the Index following extraordinary events (for example, BP was removed in June following the Gulf of Mexico oil spill) however, there seems to be no specific reason given for the decision to remove Shell from the index that I have come across. It’s pretty clear that Royal Dutch Shell (in a post on their website) was very surprised by the move too.

Curious, I decided to look up Shell’s most recent Sustainability Report (2009). Sustainable development happens to account for 20 percent of their executive compensation scorecard.  For 2010, the Dow Jones sustainability Indexes assessment of Shell’s performance accounts for half of the sustainable development element in the scorecard for members of the Executive Committee. It’s no surprise that Shell is seriously re-considering this executive bonus program as a result (“Shell to review Dow Jones Sustainability Index as bonus metric after being dumped from benchmark“). Being dropped (unceremoniously) from the DJSI is a serious hit to potential compensation, and there are likely a lot of concerned executives about this event.

What I hadn’t realized (until I dug a bit) is that this is part of a wider trend for Dutch businesses to seriously consider, and link, sustainability performance with senior management compensation packages. In fact, Royal Dutch Shell is one of a number of Dutch companies (including Dutch life sciences giant DSM, and postal operator TNT). According to Sustainable Sourcing this kind of incentive plan was pioneered by Akzo Nobel which based its long-term bonus payment structure according to its position in the Dow Jones sustainability index for chemical companies.

I am now very curious about other companies tying their executive bonus packages with external sustainability indices. Clearly, this kind of association will cause real shifts in decision making around sustainability within organizations. Do you know of North American companies who are experimenting with new models for their senior management compensation packages?

@TaraKnightHK

By Andy Cuneo, Senior Account Executive, Washington, D.C.

It’s one thing to preach energy sustainability – it’s another lead by example. That’s just what the White House is doing here, as President Obama is having solar panels placed atop the beautiful mansion at 1600 Pennsylvania Avenue. The panels will serve as a means to power the entire house – from press room to the President’s basketball court – serves as a reminder of the differences we can make – one panel at a time.

President Jimmy Carter was the first to implement solar panels when he had them built to heat the White House water. President Carter made a famous prediction that day, saying: “In the year 2000 this solar water heater behind me will still be here supplying cheap, efficient energy. A generation from now this solar heater can either be a curiosity, a museum piece, an example of a road not taken, or it can be just a small part of one the greatest and most exciting adventures ever undertaken by the American people.”

President Obama and many others around the U.S. are relying on new energy means to power this country. For generations, we’ve relied heavily on coal and foreign oil to heat our homes, power our transportation, towns and cities.  Today, we have an incredible opportunity to do what no generation has done prior. We can utilize advanced technologies to take advantage of the wind and solar energy we have in the U.S. Plus, technology is also allowing us to safely obtain near infinite amounts of natural gas and use nuclear as yet another means.

President Obama took the first step. He’s placed solar panels on his residence.  What will you do to match?

Hill & Knowlton works with the CASEnergy Coalition,  the America’s Natural Gas Alliance and other companies within the solar and wind energy sectors.

Last week, I had the opportunity to review the final draft of the International Standard ISO 26000, Guidance on Social Responsibility with Robert White, who sits as a Canadian Representative and Expert Member of ISO 26000 Social Responsibility Working Group. Approved in September, the ISO 26000 guidelines will be officially published in November 1, 2010.

If you haven’t been following the story, it’s been a long wait for this standard – ISO 26000 has been in development for well over five years. Given that CSR as an area of business concern is relatively new, rapidly evolving, and frequently difficult to accurately define, it’s no surprise that this document has been subject to vigorous overview and discussion. A multi-stakeholder effort, 400 people took part in developing the standard, which makes it ISO’s biggest working group to date.

So what is it? ISO 26000 sets out an international consensus on definitions and principles of Social Responsibility (SR); identifies seven core issues to be addressed, and provides guidance on how to integrate Social Responsibility throughout the operations of an organization. Significantly, the standard has been intentionally written to be accessible to non-specialists, and unlike many other ISO standards, it is a voluntary guidance standard, meaning it is not eligible for certification.

You can review an overview of the contents of ISO 26000 here. If you are looking for the ‘quick hit” version, ISO 26000 defines seven core principles of Social Responsibility, as: Accountability, Transparency, Ethical Behavior, Respect for Stakeholder Interests, Respect for the Rule of Law, Respect for International Norms of Behavior and Respect for Human Rights.

Under these principles of SR, the guidelines lay out an additional seven core subjects to consider in integrating Social Responsibility in an organization. These are organizational governance; human rights; labour practices; the environment; fair operating practices; consumer issues; and community involvement and development. Economic aspects, as well as aspects relating to health and safety and the value chain, are dealt with within each of these core subject areas.

Final word? For organizations that feel daunted in even considering or initiating a Social Responsibility program, or processes, ISO 26000 will provide valuable structure and guidance in helping to shape and define Social Responsibility for organizations big or small (or just smaller). For those organizations already leading the way, ISO 26000 may help illuminate areas where Social Responsibility governance or practice is not as developed as it could be, and provide guidelines for improvement. In short – there is something here for everyone to learn.

Which organizations do you think are already leading here? Are “the leaders” too far ahead to benefit from this guidance? I am very curious if organizations that do not currently track their CSR policies/programs will choose to take advantage of this effort and utilize the ISO 26000 guidance standard prior to implementing CSR reporting or policies.

@TaraKnightHK

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By Andy Cuneo, Senior Account Executive, Washington D.C.

As a former student at Boston’s Northeastern University, our institution’s former president, a man I respect and admire, would work tirelessly to build Northeastern’s reputation on the U.S. News & World Report college rankings. He succeeded in moving NU from high 150’s into the top 100.

A new ranking, reported on by the Washington Post, takes into account a new standard ranking produced by Washington Monthly that looks at three distinct categories when rating institutions: Social Mobility (recruiting and graduating of low-income students), Research (production of cutting edge scholarships and PhD’s) and Service (encouraging students to give something back to their community).

You’ll see in the report that public colleges fair amazing well – far better than private institutions. But what I really like about this rating system is that it’s not just an alternative way to view success and opportunity in higher education institutions, but rather what prospective students are now looking for in their college experience. In July, USA Today’s Trevor Hughes illustrates that point here.

In addition, more institutions are making the most of their opportunity to become more sustainable. We’ve written on this blog work being done by our local universities here in DC. 

There is a growing enthusiasm from our next generation. I remember stepping onto campus for the first time more than 11 years ago, ambitious in thinking I could change the world. And these people are doing it!

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

Hard to believe that the end of another summer is upon us.  Earlier this month I was on Cape Cod, enjoying a week of vacation, which included eating a lot of fresh seafood.   The menu included cod (of course), clams, flounder, haddock, lobster and scallops.  All of it was delicious, but with every bite there was a little remorse.  Ever since I first read the United Nations Environment Program’s (UNEP’s) prediction that the world’s fisheries could be depleted by 2050, I have suffered a tinge of guilt with every plate of broiled scrod, every cup of seafood stew, every lobster roll.

According to UNEP, 30 percent of global fish stocks have already collapsed – meaning that they now yield 10 percent or less of their previous potential.  I also know full well that some one billion people around the world, most of them from developing countries, rely on seafood as their primary source of protein and a major source of their sustenance.

Responsible fisheries management and improved practices here in the U.S. and around the world are a good start and help alleviate some of my guilt.  Fish farms also have a role to play in meeting the world’s growing demand for seafood, but they are not without their challenges or critics.  And while I’m intrigued by the promise of genetically altered fish, there are many unanswered questions and many associated risks still to be addressed.

Although my concerns about the health and vitality of the world’s fisheries are rooted in a desire for ecological sustainability and preserving biodiversity, a connection between overfishing and societal health and wellness (in America at least) is becoming increasingly clear.  I’m talking specifically about portion sizes and how (and how much) we consume.  The seafood platters I saw this summer were huge – as big, or bigger, than I can ever remember.  This trend isn’t limited to fish, and it certainly isn’t limited to Cape Cod.

A new report from the Center for Science in the Public Interest (CSPI) shows that at restaurants across the country, “regular” portions are now super-sized:  two, three (or more) times USDA and FDA recommendations.  No surprise then that CSPI believes this is contributing directly to the two-thirds of adults and one-third of children who are obese or overweight.

The same nation that now heralds the organic, fair-trade and locally-grown food movements is the same one that spawned the massive portion trend and the “endless,” “bottomless,” “unlimited,” “all you can eat” buffet.  I’m no expert on the economics of running a restaurant, but I’ve never understood how these buffets can be profitable.  Nor do I understand how such limitless consumption – of seafood or any other food – can be sustainable.

Businesses must make a profit, but there is increasing evidence that they can do so by encouraging sustainable consumption on the part of their customers.  From the television programs we watch, to the clothes we wear, to the toys we buy our kids, businesses play a major – maybe even a central – role in conditioning us as consumers.  Businesses help us define what constitutes value and normalcy in the products and services we consume. 

This is a discussion that every company in every sector should be having and many are, encouraged and aided by a great Business for Social Responsibility report – The New Frontier in Sustainability: The Business Opportunity in Tackling Sustainable Consumption.  Clearly, it’s bigger than restaurants – but food (and seafood in particular) is great place to start.

More often than not this summer, my wife and I shared the huge seafood platters at the restaurants and clam shacks we frequented.  If any of them had offered half-sized portions for half the price, they would have seen a lot more of my business.  Don’t tell them, but I would even have paid a little more than half.

By Lauren Wilson, Account Executive, Washington D.C. Office

Washington Women in PR hosted a brown bag luncheon last week at the National Education Association  where Bill Novelli served as guest speaker on Corporate Social Responsibility (CSR).  Does the communication firm Porter Novelli ring a bell? Bill Novelli founded the agency that bears his name and left the company in the 90s to pursue a slew of non-profit and CSR roles including: Executive Vice President of CARE, President of theCampaign for Tobacco-Free Kids, and CEO of AARP. Currently, Bill is a professor in social responsibility at Georgetown’s McDonough School of Business.

Corporate Social Responsibility, the idea of incorporating responsible practices in daily business operations, has emerged as a strong focus over the last few years with companies restructuring their operations and making this practice a top priority.  Through Bill’s role at Georgetown, he discovered that there is a high student demand to learn about CSR and to pursue this work after the completion of their graduate studies.  In fact, many of his students and their peers are willing take pay cuts to work in a CSR role. Bill’s goal is to help students and communications practitioners understand the value of this responsibility so that they can serve in roles that produce social change, which will ultimately lead to the betterment of our society.

One member of the audience asked: How do you move organizations to adopt CSR practices in a down economy?  “It is important to convince your organizations to act socially responsible because that is often the expectation from its constituents and stakeholders. Organizations that have strong CSR campaigns often exude more confidence and uplift employee morale,” Bill responded.

Bill also noted that in this down economy, volunteerism has risen.  According to the Corporation for National and Community Service (CNCS), volunteerism jumped by 1.6 million last year, the largest increase in six years. Over 8.1 billion hours of volunteer service was donated by Americans last year. Corporate Social Responsibility has emerged as a sustainable practice and organizations often have success when they participate in this practice over time.  This audience was very receptive in learning about  Bill’s current role as a CSR enthusiast and many expressed how they felt empowered to challenge their organizations to adopt CSR initiatives. If each organization did their part to implement a CSR program, then the idea of “doing good” would eventually be seen as normal corporate practice.

[Disclosure: Hill and Knowlton represents CNCS]

by Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington

“Business started long centuries before the dawn of history, but business as we now know it is new – new in its broadening scope, new in its social significance.  Business has not learned how to handle these changes, nor does it recognize the magnitude of its responsibilities for the future of civilization.”

        Wallace Donham, Dean of Harvard Business School – 1929

I love this quote.  Sadly, it rings as true today as it did 80 years ago.  Business had not yet learned how to handle the changes that were happening then in terms of the real impact the sector had on society.  And while incredible progress has been made in the decades since Donham’s prophetic observation, it’s clear that business still does not recognize the real power it holds in shaping the future of our planet and its people.  There are great models of responsible, sustainable corporations and glimmers of hope from enlightened enterprises.  But there are too many BPs out there – companies with lots of promise but little execution.

As someone who used to live in the Gulf Coast region and who holds a solemn respect for our natural world, the BP spill—coming to me live via 24/7 spillcam—continues to crush my spirit.  As a communications professional, it continues to astound and amaze me.  There are many important communications, public relations and corporate positioning lessons to be learned from the BP saga (no doubt, detailed analyses and dissections of the event are already appearing en masse in the PR and communications trade journals).  But the longer term story here is that BP’s spill now joins the annals of corporate communications landmark events – the flashpoints in our collective consciousness that create lasting legacies, sometimes good (think Tylenol) but usually bad. 

Every individual has their own mental list – and what’s on it depends a lot on where you live, what you do and when you were born.  For some, the list begins with watershed, game-changing books like Rachel Carson’s Silent Spring or Ralph Nader’s Unsafe at Any Speed.  For others, it is a laundry list of mismanagement, malfeasance and missed opportunity – Barings Bank, Bridgestone/Firestone, Enron, Parmalat, Societe Generale, Toyota, Tyco, WorldCom…  Exxon’s Valdez oil spill ranks high on most of our lists, but for many, the list is topped by Union Carbide’s 1984 gas leak in Bhopal, India.  More on that in a moment. 

Plenty of companies have slow simmering issues and scandals that play out over time, but I’m convinced that the ones that are largely event-driven are more powerful to the human psyche – regardless of their actual impact.  As a result, these legacies live on sometimes for generations.  Some may argue that Prudhoe Bay or the Texas City refinery explosion would already have landed BP a place on the list, especially because of how antithetical those events were to the culture of responsibility and environmental stewardship that the company (through the voice of Lord John Browne) spent a decade building, or at least talking about.  That may be true, but those events—as unfortunate as they were—were nothing compared to the disaster in the Gulf of Mexico.

Some consumers have short memories, but many more do not.  I know people who are still punishing Exxon for the Valdez spill – going out of their way to another service station even if the price is a few cents higher per gallon.  And this brings me back to Bhopal.

Bhopal remains the world’s worst industrial disaster.  It also remains one of the early, principal milestones and demarcation points for when the world woke up to what it should expect of corporations.  And while Bhopal may still top our mental lists, until recently, it was largely a talking point in CSR speeches and a footnote in text books.  Dow, which bought Union Carbide in 1999, has maintained a quiet microsite on the event and resulting settlement, but the tragedy hasn’t been much of an issue for them, at least publicly.  That changed a few weeks ago, when sentences were finally handed down in the long running case.  Although seven former employees of Union Carbide were found guilty of death by negligence, their two year prison sentences have been hailed by survivors and their advocates as a slap in the face, prompting a torrent of fury and protest.  And there are renewed calls for Dow to do more in terms of site remediation and accepting greater responsibility to compensate victims and bring about true justice.

A full 25 years later, and Bhopal is still generating community outrage, criticism from NGO activists and a robust online campaign, pointed media coverage, interest from policy-makers and reputational risk for Dow.

So, if the recent echoes of Bhopal are any indication, it appears that the very actions by which BP hoped to save a little time and a little money are going to cost them plenty more of both.