Referat fra:
Parallell sesjon
Communicating CSR
Referenter: Emilie Leruste and Grace Tang
Page 1
COMMUNICATING CORPORATE SOCIAL RESPONSIBILITY
Peggy Simcic Brönn, associate professor at BI, started her presentation by quoting
Socrates : “The way to gain a good reputation is to endeavor to be what you desire
to appear”.
Based on this assumption, three main impacts on corporate reputation are to be
deducted : delivering quality products and services, meeting stakeholders needs
and expectations, and being an admired or successful corporation. Then,
communicating CSR is required because whether a company communicates or
not, an image of how the company handles or fails to handle sensitive issues will
be communicated for them. If you don’t communicate, somebody will do it for
you ! The main protagonist in this trend is media : companies are more supervised
and exposed. Today media is focusing on terms of employment, child labor,
human rights, exposed groups, recruitment ethics, corporate governance, bonuses
and remuneration.
Sethi highlighted in 1977 the legitimacy gap : the differences between business
performance (activities and policies) and stakeholders’ expectations which are
mainly based on facts, values and policy. Indeed, the public demand for
information on companies’ CSR efforts exceeds the companies’ current level of
CSR communication, leading to an increasing gap.
Then the main reasons for communicating CSR can be stated into a trust-worthy
effort which permeates the whole company ; active choices which require
knowledge ; the external environment which can set the agenda and impact the
image of the company ; and value and responsibility which are increasingly
important parts of business competition.
Cause-related marketing is done to enhance the firm’s sales or image. It tackles
the use of the firm’s communication mix to market the organization’s corporate
Page 2
social responsibility position in order to achieve some desired outcome (an
exchange), or to brand/market the firm with a basis in corporate social
responsibility. This has caused some to consider it to be unethical.
Reputation (or “corporate brand”) handles what people remember and say about
an organization ; what they identify with that organization.
Sir Richard Branson said : “increasingly, brands are driven by values… values
and brands are inextricably linked”. It is true noticing that the trend changed from
the 1950’s : the rational appeal based on a unique selling proposition evoluted in
the 80’s to the emotional appeal, based on brand personality and earlier to the
relational appeal related to matching values. Today, “who you are and what you
stand for are becoming just as important as what you sell” (Richard Barrett).
That’s why reputation may be the biggest asset of companies. Intangibles can
represent a large part of your market capitalisation (96% for Coca Cola, 83%
for IBM). Last year, a poll of 25,000 citizens across 23 countries on 6 continents
showed that perceptions of companies around the world are shaped more by
corporate citizenship (56%) than either product quality (40%) or business
fundamentals (34%).
Keys to create successful CSR campaigns are highlighting factual information,
involving several departments within the company, addressing various
stakeholder groups, including long-term goals and encompassing several
strategies. Other critical success factors are worth to remind : link company’s
ethical visions and commercial results ; keep a humble tone in communication and
avoid exaggeration ; and communicate through action.
According to a survey of sustainability experts, the most important aspects for
corporations to communicate are about “safety of products during use and
disposal”, “employee health and safety” and “human rights” ; and in Norway,
“work place environment”.
But corporate communication can be wrong as soon as it deals with corporate
gloss, global noise, irrelevance and monologue. Companies should give greater
Page 3
importance to transparency/honesty, local concerns, materiality and dialogue, and
manage to use media as a communication vehicle rather than as a crisis tool.
According to Brönn, CRM is linked to overall business mission and strategy. The
top “organizational strategy” is to reflect corporate position on social
responsibility ; then the “corporate social responsibility strategy” is about carrying
out social responsibilty. Finally, the “CSR communication strategy” is to
communicate organization’s position on social responsibility , including
marketing communication, management communication and organizational
communication.
As a conclusion, Brönn reminded us that one of the main way to communicate are
publicity campaigns, as illustrated by those of EADS or Target : the first one
promotes the picture of a good-looking woman with a touch of freedom ; the
second gives the opportunity to its customers to get free books !… which are
really relevant in terms of communication towards their appliers and customers as
they give an image of happy employees and/or customers promoting.
Comparative Analysis between Norwegian and European:
Companies’ use of Internet for Corporate Governance Disclosure
Background for Study
This research carried by two MSc students from BI Norwegian Business School
has been aroused by two articles published on Business Weeks. One of them is the
ISS Corporate Governance Ranking 2004, in which Norway was rated the last
place with a CGQ (Corporate Governance Quotient of Top Ranked Firms) score
of 74.3, and the last second place with an Average CGQ scored 14.7 among all
investigated countries around the world. The other report is FTSE Developed
Index Highest and Lowest Rated Three Countries, where Norway is among the
three lowest rated countries together with other two Nordic countries, Denmark
and Sweden. Storebrand, which is a big company in Norway, was scored 2.8 at
the bottom place. (A complete list can be found in appendix). However,
Strorebrand is known domestically to invest comparatively more and have more
CSR staff on corporate responsibility than other listed Norwegian companies.
Page 4
Therefore theoretically Stroebrand should seem to concern more about CSR.
When the company was informed about the situation, it turned out to be a shock.
This incident brought big interests to the researchers. What made this gap happen?
If it is communication problems, what efforts should corporations make to
improve it?
Corporate Governance
Organizations need to start by examining how their corporate governance
practices are communicated. This is often the number one interest of many
stakeholders. Communicating corporate governance practices is one of the
greatest challenges facing organizations. These practices can provide a framework
and process for creating value and building reputation. They are also powerful
tools for developing strong and lasting relationships with stakeholder groups.
Today the internet is the primary medium for firms operating in the international
arena to communicate their practices, but it seems that there are a great many
firms in need of assistance. There remains a paucity of literature in
communicating corporate governance, particularly in the international arena.
Communicating Corporate Governance demands an interdisciplinary approach
including corporate communications, finance, law, language and rhetoric.
Research Review
It is helpful to review how the researches have been carried out. There are two
researchers working independently. Level of disclosure is the number of variables
out of 48 on which firms have provided information. 5 best and worst Norwegian
firms, 5 best and worst European firms are listed. Sample is companies from the
Business Week 2004 article. They have tested for significant differences between
websites of best and worst European and Norwegian on level of disclosure. The
guideline throughout the research is FTSE-ISS Corporate Governance Index. The
working model for research is to perceive degree of transparency from level of
disclosure of company’s attitude toward stakeholder management, corporate
governance and stakeholder communication.
Corporate Governance Index and CGI Rating variables
It is necessary to identify the guidelines used. What is FTSE ISS Corporate
Government Index? Tracing FTSE ISS website, one will find the following
information: “The new FTSE ISS Corporate Governance Index (CGI) Series
Page 5
assists you with company analysis, portfolio management and stock selection
against selected companies with a proven standard in corporate governance”.
There exist more than 60 corporate governance criteria across five broad themes:
Compensation systems for Executive and Non Executive Directors, Executive and
Non-Executive stock ownership, Equity Structure, Structure and independence of
the Board, and Independence and integrity of the audit process. CGI Rating
Variables are ranked by order of importance within each theme. The overall
company CGI rating is a combination of each of the five themes’ ratings. The
Indices can be used as a tool to evaluate corporate governance “risk” across an
international portfolio using a single, integrated index and ratings system, as a
basis for company engagement programs, as a risk management tool for portfolios
looking to overweight the best and to underweight the worst corporate governance
practices, as a benchmark for corporate governance weighted funds, as a
benchmark to measure governance practice across international markets, as a
global standard that allows for within-sector and cross-sector comparison as well
as regional or country comparisons, and as a basis for company engagement
programs.
Corporate Reputation Management
It is also important to identify two important issues. Who rewards corporate
governance in companies? Is it local communities, employees, consumers or
customers, investors, business partners and suppliers, governments, NGOs and
Activists, or Creditors? Good governance practices will result a good
international reputation and an easy access to capital markets, which are important
assets for firms. Heidelberg is a good example which focuses on transparency and
communication.
Therefore, level of disclosure is a key issue for firms. For more and more
stakeholders, higher level of disclosure almost gives more transparency. Later
investigation found that on Storebrand’s website, there is not enough information
that meets the CGI Index, and there are no public available documents either.
Therefore Storebrand unintentionally put itself on a disadvantage position. It is
not that they don’t care about CR, but that they are ignorant about how to
communicate CSR.
Page 6
Companies’ Use of Internet for CGD
The research compared differences on web use of companies form Norway and
other European countries. It evaluated website from scannability, readability and
accessability. Scannability stands for whether the website contains clear title, clear
headings and subheading, and the use of typography and skimming layout like
bold fonts and highlighted words. Readability stands for use of different text to
differentiate between titles, headings and text as well as the use of background
images. Accessability stands for the speed of internet, PDF files vs web files,
brower compatibility and search facility.
The advantage of web reporting is that web, as a transmission tool, has wider
reach, can send out more information less expensively, has variety of content
characteristics and reduces ability of firms to act as gatekeepers of information.
The disadvantage of web reporting is that it may hide information, contains outof-date or overwritten information, and lacks of site promotion, which means
stakeholders have to actively search for it.
Based on ISS Guidebook on how to recognize information on 48 variables, the
result shows that in general, except accessibility with no significant difference
between Norwegian and European companies due to high technology
development in Norway, Norwegian companies score lower on all other variables.
Regarding the issue of two-way communication, all companies had it, either in the
form of e-mail address or additionally in the form of internet forums. However,
they all have some jobs to do there to make the communication more effective and
efficient.
Potential for Improvement
Potential for improvements from the researchers are focused on board and
compensation system. Besides audit committee, auditor rotation, shareholder
approval of option plans and option expensing, issues like board attendance,
changes in board size, board served on CEO, board vacancies, outsider advisors
available to board, board performance review, meeting of outside directors and
CEO succession plan are among the more important.
Page 7
THE RHETORIC OF CORPORATE MISSION STATEMENTS : VIRTUES
AND EMOTIONS
Maria Isaksson, Norwegian Shool of Management BI, started her study with a
definition of the “mission statement”, as a key expression of organizational
identity. It acts as a carrier of the organization’s philosophy, culture, ethos and
ideology. It projects the organization’s pride, soul and commitment, instills
loyalty and creates allegiance. Moreover it can be developped as a management
tool for promoting corporate culture.
New business communication genre focuses on mission, trust, identity, ethos,
credibility, reason and emotion, reputation and responsibility, values, virtues and
ethics, codes of conduct. Based on Aristotle ideology, it is seen as an expression
of ceremonial (epideictic) rhetoric. Mission is at the crossroads of vision (which
stands for emotional and philosophy), values (which stands for emotional and
logic), codes of conducts (which stands for principles and behavior) and strategy.
This study attempts to show how virtues and emotions are used to express
corporate ethos (credibility) and pathos (expressiveness) in mission statements ;
and whether virtues and emotions vary across business cultures.
Virtues are defined as corporate ethos and are assumed to be constituted of
reputation (public image), visions (goals, values, strategies), authority (universal
truth, competence, experience) and consubstantiality (the use of “we” in corporate
communication, solidarity, cooperation). On another hand, emotions – or
corporate pathos – is composed of affection, charisma, pride, commitment, justice
and magnificence. Based on this classification, our study consisted into
identifying virtues and emotions, analysing units into mission statement texts
(sentences, words, phrases in (sub-)headings) and testing these units for virtues
and emotions. Materials used in this study consisted of the following sub-texts of
mission statements accessed from organizational sites in April and July 2005 :
purpose, objective, goals and values.
Page 8
As a result, ethos seems to show greater variation than pathos. Consubstantiality
and vision are the most frequent ethos appeals ; whereas magnificence,
commitment and justice are the most frequent pathos appeals. Food, oil, banling
thus seem to show greater variation in how they represent themselves than in what
they do and how they do it. Banking show stronger pathos-profiles for pride,
commitment, justice and magnificence than food and oil. Food is strongest on
affection and charisma ; and oil is outstanding ethos-profile for vision and
remarkably low on consubstantiality.
In a word, whereas ethos and pathos show some consistency across business
cultures, they don’t across national cultures.
 illustration : Heineken, “respect for passion” :
Heineken wants its customers to be seducted by their beer : it creates a balance
between passion and respect and promotes a “cosmos of dark green liquid”.
“Serving a perfect Heineken” is described as a ritual translated into poetry.
The following paragraphs were extracted from Heineken website and analysed in
terms of pathos and ethos criteria : “company and strategy”, “values and
principles”, “respect”, “enjoyment”, “passion for quality”, and “vision”. Heineken
uses repetitive words belonging to :
-
magnificence : “sustainable business growth”, “sustainable development”,
“significant investment”
-
affection : “passion”, “respect”, “social experience”, “enjoyment”
-
justice : “governing business principles”, “policy of responsible alcohol”,
“transparency”
-
pride : “honour”, “quality”
To conclude, language matters in corporate communication as it communicates
the identity and image of firms and promotes passion (emotion) and respect
(virtues) to give credibility to business. When used strategically it becomes a
powerful tool manifesting and justifying corporate existence.
Page 9
COMMUNICATING CSR FROM A FINANCE PERSPECTIVE
Two issues
First, it is the question of what and with whom to communicate corporate
governance information. Are all the stakeholders equally important?
Second, whether there is the rhetoric of finance. Where is the logo, ethos and
pathos from finance perspective?
Corporate Governance Model
Stakeholder types and stakeholder preference
There are many types of stakeholders who hold different preferences as well.
There are owners who cares high return to capital; Creditors who concern credit
repaid; Employees who care about job security, meaningful work, high wages;
Customers who care good products, firm survival; Community concerns
employment growth, high tax revenue; next generation cares about moderate
greenhouse effects.
Corporate governance disclosures and finance
Corporate governance disclosure is crucial when owners belong to the following
three situations:
1. Delegating: If it is one person firm, there is no delegating problem. When the
ownership is separated from control, owners require delegates to provide CG
Page 10
information, for instance, size of board, female percentage etc. to learn about
how the firm is run.
2. Institutional: In this case, corporate governance disclosure is passive. It is the
outside monitors, like regime, civil law which require corporate governance
disclosure.
3. International: One governance system fits all firms. Thus national differences,
in laws for example, require corporate governance disclosure.
Major objective of CG regulation is to prevent the worst governance, not to foster
the best. Thus, in sum, it is uninformed, hands-off, foot-loose owners who
demand CG disclosure and it is more important for firms to stop scandals from
happening again.
The Rhetoric of Finance: confessions of a barbarian
From finance perspective, major communication tool is the annual report in the
form of board statement, accounting or finance data. The communication
concerns how to comply with regulations, avoid litigation and give healthy image
impression. Generally speaking, due to the nature of finance which should be full
of data and facts, the style of financial report is more technical, specialistorientated. The language used in it is impersonal, dry and as objective as possible.
Thus financial report has never given attention to the aforementioned issues of
logos, ethos or pathos. The question left is whether it is necessary to do so from
financial aspect?
Page 11