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Communicating Responsibility: Capstone research prepared for
NYU M.S. in PR & CC
by
Elizabeth Ghormley, New York University and Toni Muzi Falconi (Advisor)
May 2010
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Table of Contents
Chapter 1:: Abstract & Introduction……………………………………………..3
Chapter 2:: Fertile Ground: Theoretical Foundation…………………..…6
Chapter 3:: Definitions……………………………………………………………….23
Chapter 4:: Case Studies…………………………………………………………….24
Timberland………………………………………………………………………24
Brown-Forman…………………………………………………………………32
Hess Oil Company…………………………………………………………….39
*****
MS&LWorldwide………………………………………………………….…..43
WalMart…………………………………………………………………………..44
Chapter 5:: Conclusions……………………………………………………………..46
Discussion of Trends…………………………………………………………46
Going forward………………………………………………………………….49
Works Cited……………………………………………………………………………….51
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Abstract
This paper is a two-tiered exploration of Corporate Responsibility and
Communication. It begins with an exploration of the history, theory, and other
drivers of Corporate Responsibility, and is matched with qualitative research with
representatives from companies heralded for their CR practice to answer the
questions: ―what drives an organizations‘ CR communication? How does the
organization‘s communication support or conflict with its efforts to be sustainable
and meet stakeholder expectations?‖ Ends with commentary on trends in the data,
in the industry, recommendations for further research, and thoughts on the future
of CR.
Chapter 1 Introduction
Corporate Responsibility (CR), Sustainability, Corporate Citizenship and Corporate
Social Responsibility (CSR) are ubiquitous in the leading business press right now. The Harvard
Business Review, The Economist and the McKinsey Quarterly are just some of the leading outlets
to recently produce major research, significant reporting, and profiles of leading experts on these
issues. They are tapped into a larger trend: in the wake of the most recent economic crisis,
companies around the world are being called to operate more responsibly and CR is now a focal
point for business. What it means, who it targets, and how it is done is still nebulous to many,
though.
As the world builds forward from the recent economic crisis and corporations recognize
their responsibilities beyond stock price, the ―who,‖ ―what,‖ ―why,‖ and ―how‖ of CR is being
navigated on many fronts. Governments have legislated reporting on environmental indicators
like carbon. Some nation-states are considering legislation and regulation corporate reporting on
Responsibility and Sustainability issues. Corporate governance boards are shifting their
understanding of fiduciary duty. Supply-chains are being re-understood through a lens that
considers the commitment to sustainability of each contributor along the chain. Products are
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being designed from inception as sustainable and responsible. Consumers and employees are
being understood via their ability to champion or be lured by corporations‘ efforts on
sustainability and/or responsibility. KPMG found that nearly 80% of the world‘s largest
enterprises report on sustainability (The Economist, 2010, 16). And corporations of all kinds and
sizes are doing this: small-to-medium sized companies (SME‘s), private companies, government,
non-profits, educational institutions, and others, are also starting to report using GRI, UNGC,
and other standards.
At the heart of corporate responsibility is an effort to address a myriad of issues, in a way
that protects a business or organization‘s license to operate. The execution of CR by different
organizations fills a large spectrum of commitment, strategy, and authenticity. Leaders
recognize their impacts and goals and balance them against each other to strategize, and possibly
even protect, the company by being more responsible. Many companies do not understand or
recognize their impacts as deeply though. In those cases, the critical eye properly recognizes
―green-washing‖ including throwing money at charities or creating taglines to seem more
responsible, but not addressing practices and impact on the environment, society, or cultures.
With so many corporations claiming their commitment to CR, so many consultants
claiming expertise in CR, so many stakeholder groups being considered, addressed, and engaged
in CR, and so many different understandings of what that means, finding clarity in the
cacophony is a challenge. To understand how a body takes responsibility, however, is a first step
to clarifying this. Relationships and communication are an intrinsic element in CR. I have
sought to answer the questions: What drives organizations‘ CR communication? How does an
organization‘s communication support or conflict with its efforts to be sustainable and meet
stakeholder expectations? I argue that effective communication and stakeholder engagement is
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integral to corporate responsibility — not icing, but an inherently driving factor — and will
demonstrate with examples.
The paper will include:
A look at history to understand the roots, the complications, and drivers of CR
Exploration of underlying economic, governance, stakeholder, and
communication theories that inform CR practice
Mapping of key issues emerging in the CR practice
Primary research focused on leaders in CR from a variety of industries, who have
been awarded for their CR execution and communication1:
o Timberland
o Brown-Forman
o Hess Oil Company
o MS&L Worldwide
o WalMart
A discussion of the definitions of key terms and their use in practice
The challenges, patterns, and successes found in their practices
A comparison of these to the theory
Notes on trends going on now and for the future in CR and reporting
And, finally, suggestions for further research and final insights I have gleaned
from this research.
1 A note on awards as a measure of leadership: I do not believe that awards for “best practice” are
necessarily the best measure of leadership, innovation, or success. Often, awards winners are chosen from a small group of companies that have been self-selected or do not represent a full spectrum of those who could qualify. There are other issues with award systems, as well. With hundreds of different companies awarded for issues related to CSR, CR, etc. every year, the pool of award-winners, however is quite large. The effort here was to focus on companies that are being innovative or are heralded on some level as leaders, and include this point in the analysis of what they are doing and why. Also, there was an undeniable issue of access to people who were willing and able to be interviewed for this paper, and that accessibility of course influenced who was profiled.
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Chapter 2 Fertile Soil: Theoretical Background
Asking if a corporation‘s responsibility to society is purely profit-based or if it includes
more social goals has been contentious for centuries. The body of knowledge on economics,
capitalism, and corporations is infused with this conversation. Adam Smith, forefather of
modern capitalism supported more social responsibility in his seminal works (Smith, 1759). In
response to the push for a more socially minded corporate world in the 1970s, a student of Mr.
Smith‘s school of economic thought and renowned economist himself, Milton Friedman
dismissed the value of CR, writing in the New York Times, ―‗business‘ as a whole cannot be said
to have responsibilities‖ (Friedman, 1970). Friedman said famously, ―there is one and only one
social responsibility of business — to use its resources to engage in activities designed to
increase its profits so long as it stays within the rules of the game‖ (Friedman, 1962).
This perspective is firmly rooted in the debate on corporate governance: how should the
governance board be designed and driven? The two dominant theories in this area are the
stakeholder model and the shareholder, or Agency, model. Friedman and his work as a rational
economist from the University of Chicago neo-liberal school of thought is founded in the dogma
that profit is the only responsibility of a company and thus the shareholders – or owners – of a
corporation are the primary stakeholders of the organization. This model sprouted an
understanding of a governing board‘s fiduciary duty to be centered on making profit, only. Core
elements of this model include the ideas that ―Maximizing value for shareholders is the right
social goal for corporations because it is equivalent to maximizing the overall wealth being
created by a corporation‖ and, ―Financial markets do a good job of assessing the true value of
financial securities such as common stock. Hence stock price performance is the best measure of
value being created for shareholders‖ (Blair, 2002).
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The alternate view, or the Stakeholder theory perspective, argues that ―…the primary
responsibility of the executive is to create as much value for stakeholders as possible, and that no
stakeholder is viable in isolation of the other stakeholders‖ (Freeman, 2008). Contemporary
business literature defines stakeholders as ―those groups without whose support the organization
would cease to exist‖ (Stanford Research Institute, 1963, via Freeman & Reed, 1983). Freeman
says now that joint interests of the stakeholder group and the organization often forge
stakeholder relationships. He says, ―it depends on how value is created or destroyed‖ (Freeman,
2010). Donaldson and Preston offer categories into which stakeholders can be grouped: (a)
organizational (e.g. employees, customers, shareholders, suppliers); (b) community (e.g. local
residents, special interest groups); (c) regulatory (e.g. municipalities, regulatory systems); (d)
media stakeholders (Maignan, 2004). Others through a larger net including all groups who have a
stake in the corporation – including, but not limited to employees, government, local
communities, business partners, customers, public interest and non-profit organizations, unions,
trade associations, and investors of all kinds (Freeman & Donaldson, 1983). The role of the
board in this kind of organization is
not to be a monitor but, rather, a mediating hierarch—someone who balances the
often competing claims and interests of the groups that contribute to the team
production process, makes decisions on the allocation of team surpluses, and is
legally ultimately in control of a corporation’s assets and key strategic decisions
(Blair & Stout, 2001). Drawing from team production theory and organization
theory, we offer three prioritization criteria for this mediating process: the team
specificity of each stakeholder’s investment, the need to satisfy outcomes, and
the power of each stakeholder (Lan & Heracleous, 2010).
Understanding historical context for the theory can shine light on the issues raised and
theories presented. For example, looking only at the time period between 1960 and 1990, ebbs
and flows on the practical level undulate between a more stakeholder-based understanding of a
corporation in the United States, as compared with more shareholder-focused governance.
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Milton Friedman‘s piece in the New York Times was written at the end of the 1960s: a decade
filled with social upheaval from the Civil Rights, Women‘s Rights, Environmental, and other
movements (Freeman & Reed, 1983). These movements included rioting and protesting in the
streets that made the issues tangible and put pressure on companies and business in the United
States to re-conceive of themselves not just as businesses who wanted to make profit but
―corporate citizens‖ who had responsibilities to participate in improving the country.
Professor Robert Tomasko of American University cites examples including the
―National Alliance of Businessmen‖ and then-President Johnson‘s work bringing business
leaders together in summits to get their commitment to addressing issues of unemployment and
work opportunities for non-whites, and also comments that there was huge social pressure in the
business governing elite at that time to try to make things better (Tomasko, 2010). Friedman‘s
response to the business activity was a voice against this expansive view of responsibility that
came on the cusp of economic hardship in the United States throughout the 1970s, and validated
cutting CR programs, reinforced a lean focus on profit, and brought regulation that changed the
landscape. In the 1980s in the United States, hostile takeovers pushed business managers and
boards to focus on short-term financial results, necessarily focusing on shareholder perception
and disconnecting from other stakeholder views (Blair, 2002).
This type of dynamism around CR is not unique to this time period. The stock market
crash in the United States in 1929 also pushed for stakeholder interests beyond stock ownership
to be considered by Boards and managers (Duarte, 2009). And most recently, we see
corporations turning in the wake of the 2008-2009 economic crisis to a more expansive
understanding of what their responsibility is. Recently, Bonime-Blanc and Mark Brzezinkski
wrote on the same Op-Ed page of the New York Times where Friedman made his famous
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declaration 29 years prior, ―we are currently witnessing a transformation of global corporations
from a more or less opaque shareholder-centric model to a more transparence multi-stakeholder
model (Bonime-Blanc & Brzezinksi, 2009). They continue, ―as to global companies, increased
government pressure and stakeholder demands for accountability (from employees, investors,
customers, non-governmental organizations, and others) are creating a similarly catalytic turning
point that is beginning to yield a more transparent business model‖ (Bonime-Blanc & Brzezinksi,
2009).
Indeed, the Economist recent survey of business leaders presents a growing acceptance of
the stakeholder model, citing findings that ―many firms are stepping up efforts to identify
existing and emerging stakeholder issues…using issues management and analysis matrix to filter
and refine groups‖ and that ―…innovative firms see issues management and stakeholder
engagement as an opportunity for competitive advantage rather than an obligation‖ (The
Economist, 2010).
This shift back towards the stakeholder model builds upon the long-standing model, but
also is expanding the legal and practical definitions. On April 14, 2010, ―Maryland Governor
Martin O'Malley signed into law the nation's first legislation creating Benefit Corporations, a
new class of corporations required to create benefit for society as well as shareholders. Unlike
traditional corporations, Benefit Corporations must by law create a material positive impact on
society; consider how decisions affect employees, community and the environment; and publicly
report their social and environmental performance using established third-party standards‖ 2
officially creating the first legally-binding stakeholder incorporation model. At this point, the
legal incorporation is possible in seven states and is gaining traction in others, as well.
2 http://www.csrwire.com/press/press_release/29332-Maryland-First-State-in-Union-to-Pass-Benefit-
Corporation-Legislation
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Benefit Corporations, or ―B-Corps‖3 most likely will not represent the majority of for-
profit corporations. However, the legislation both represents the current effort to push for
accountability and responsibility to issues beyond profit by companies, and resonates with the
stakeholder ideals being more widely adopted. Post and Preston argue what that ―responsibility‖
looks like: ―mobilizing resources for productive uses in order to create wealth and other benefits
(and not to intentionally destroy wealth, increase risk, or cause harm) for its multiple
constituents, or stakeholders‖ (Post & Preston, 2002). Similarly, Maignan argues ―a business
acts in a socially responsible manner when its decisions and actions account for, and balance,
diverse stakeholder interests‖ (Maignan, 2004) and ―…organizations act in a socially responsible
manner when they align their behaviors with the norms and demands embraced by their main
stakeholders‖ (Maignan, 2004).
The Role of Relationships.
With the onus on corporations shifting from responsibility to solely producing profit, and
thus serve shareholders, to a broader responsibility to a variety of stakeholders, the concept of
CR overlaps with the need to communicate with a wider pool. Post and Preston‘ assert
―…corporate citizenship policies depend fundamentally on an understanding of voluntary and
involuntary stakeholder relationships, with special concern for any negative impacts the firm
may have on the involuntary community stakeholders‖ (Post & Preston, 2002). Of course, the
process of building relationships and acting in response to them is not one that happens
unconsciously. Vos is clear that ―the system of stakeholders … involves an element of choice‖
and ―the implication of a stakeholder perspective is a normative one [wherein] managers should
acknowledge the validity of diverse stakeholder interest and should attempt to respond‖ (Vos,
3 http://www.bcorporation.net/
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2003). Corporations‘ strategies to address different stakeholder groups cannot be determined
without communication between the two.
So, communication theory helps to realize how CR is defined, is strategized, and is
successfully achieved, or not.
Freeman argued in 2008 ―to understand business is to know how [stakeholder]
relationships work‖ (Freeman, 2008). Wheeler and Davies call on governance boards to engage
with and recognize relationships and ―social capital‖ — defined as ―the goodwill available to
individuals or groups… derived from a network of relationships possessed by an individual or
social unit‖— ―across the firm and with key stakeholders‖ (Wheeler & Davies, 2004). This
recognition of relationships between stakeholders and corporations brings the theoretical
conversation of stakeholders to a practical level where communication theory and public relators
are essential.
James Grunig‘s decades of research on communication, relationships between groups of
people, or publics, and given organizations informs the concept of CR in many ways. Grunig
defines Public Relations as ―the management of communication between an organization and all
of its publics — employees, members, the community, investors, donors, government
representatives and regulators, as well as customers and the media.‖ He continues, ―the central
focus of public relations is making the organization and its management more responsible to the
publics it affects. …Public relations is the practice of public responsibility‖ (Grunig, 1992).
Research shows that practically, communicators and PR people are increasingly working
for business leaders who recognize the stakeholder reality:
―Our leaders are seeking influence and even decision-making power in a
growing array of interests and activities, because our companies‘ fortunes depend
more and more upon the success of partners, suppliers, clients, national economies,
the global economy, university curricula and the health of our communities‖ (Arthur
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Page Society, 2007).
Reading from a PR perspective, it is difficult to deny the repetitive claim in Corporate
Responsibility literature that sustainability or corporate responsibility are ―not just PR‖ (UNGC).
This misnomer equates PR green-washing and other superficial approaches to CR. This
misunderstanding cripples the body-of-knowledge, as it cuts out theoretical models and ideas
that help build relationships that define the boundaries of responsibility for each organization,
give voice and balance to the conversations. In fact, Public Relations, the strategic practice of
managing relationships with publics or stakeholders, informs Corporate Responsibility in this
increasingly stakeholder-driven business world. Using the PR lens to understand best ways to
engage stakeholders and build relationships is vital to understanding CR, and should also be
considered in conjunction with the historic perspectives, research that has been driven by other
communication-related departments like marketing, and those who have written specifically
about sustainability (Werbach, 2009). The tone of the research that hopes to stake claim to
corporate responsibility and push other disciplines from the conversation does not serve the
practice nearly as well as overlapping the lenses and looking through the myriad of perspectives
will.
Public Relations research has explored the nature of relationships between organizations
and publics from many perspectives. Given the need to communicate with stakeholders, how to
do it is a necessary question. Grunig‘s Excellence theory set forth four models of public
relations, as outlined below:
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Model Description
One-Way Asymmetrical Press Agent/Publicity
Goal: favorable publicity for the organization.
One-Way Symmetrical Public Information Model
Organization makes information available to the public.
Two-Way Asymmetrical Organization researches publics to help communicate with them to achieve organizational goals.
Two-Way Symmetrical Organization researches publics to help achieve the objectives of both groups.
Figure 1 -- (Grunig in Doorley & Garcia, 2007).
While Grunig highlights a place for each of these communication formats in different
settings, his research shows that the two-way symmetrical model produces better long term
relationships with publics, generally is conducted more ethically, and produces effects that
balance the interest of organizations and the publics in society (Grunig, 1992).
To effectively exist, organizations must engage stakeholders and understand their
relationship to them. Says Duarte, ―organisations cannot achieve legitimacy from simple
acclamation in the sense of published opinions. Organisational (and decisional) legitimacy comes
from the ―opinion of the public‖, this time interpreted as a collective opinion achieved by a
group with a certain degree of consensus, which results from a debate of differing views. This
opinion becomes a form of social will, not necessarily dependant on publicity or mass media.
Those with whom we communicate are conceived as a special form of human association
capable to produce an autonomous and free collective will and with a wide range of interests
which go beyond its relationship with ―my‖ organisation. In this approach, decisions of course
imply bi-directional and simultaneous exchanges based on equality and dialogue.‖ (Duarte,
2007)
The Arthur Page Society echoes this in two of their three recommendations for practice in
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an authentic enterprise. They say, ―We must not only develop channels for messaging but also
networks of relationships‖ and, ―we must shift from changing perceptions to changing realities.
In a world of radical transparency, 21st century communications functions must lead in shaping
behaviour – inside and out – to make the company‘s values a reality‖ (Arthur Page Society,
2007).
Falconi argues that public relators―… not only support organizations in modifying the
external scenario by influencing stakeholders (and this is the most commonly understood and the
more operative role) but also – and possible more importantly – support organizations in
modifying themselves by correctly interpreting stakeholder expectations (and this is the least
commonly understood and more strategic role).‖ In his 21st century model for effective PR and
effective corporations he sees PR as a ―bridge rather than buffer relationships with influential
publics‖ – or stakeholders (Falconi, 2010).
Joao Duarte argues that a third party could be included in the conversations currently held
between organizations and their publics. He poses this third party potential as civil society and
suggests, ―...one central part of PR‘s responsibility is to help organizations involve third-party
interest in decision-making processes… [which] incorporates diversity in the sense that no longer
does is suffice to adjust or accommodate interests of two parties … but it is required that
decisions conform to patterns and values that represent the common good‖ (Duarte, 2007).
In all, the deeper understanding of Public Relations and the communication between
organizations and their publics is a driver in understanding how organizations deal with
Corporate Responsibility. Many researchers and writers have called Corporate Responsibility a
marketing or strategy issue. It is clear from the exploration of how communication occurs
between an organization and its stakeholders, or publics, that the strategy is dependent on the
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relationships and awareness of those stakeholders. The marketing element – driven towards
external publics – is inherently part of the normative public relations practice as described above.
Marketers note that ―…marketers can contribute to the successful management of CSR by
expanding their focus beyond consumers to include other stakeholders and by bundling together
various social responsibility initiatives‖ (Maignan, 2004) Indeed, this overlap happening in
organizations, as we will see later in this paper, where organizations have new roles focused on
communication and collaboration with those driving strategy and responsibility programs.
What do these communicators do? This is also part of the in-depth exploration later in
this paper of different company‘s approaches to the concept of Corporate Responsibility and
Communication. As before-mentioned, though, 80% of 250 leading enterprises around the globe
are now creating Sustainability Reports of some kind, this figure that is up 30% from measures
just three years ago (Economist, 2010). Reporting, which started for many companies an annual
way to demonstrate efforts on a variety of social, environmental, and cultural issues to key
stakeholders has evolved. Guidelines, initiatives, and advisory models including the Global
Reporting Initiative (GRI), the United Nations Global Compact (UNGC), and the King Reports
(King I, King II, and King III) from South Africa, respectively, are all global leaders in
addressing the issues of how and what is reported when. With organizations of all size and
sophistication, located around the globe, reporting in multiple languages and to a universe of
stakeholders, setting standards is difficult.
GRI provides a set of guidelines and suggestions for reporting, including a list of
―indicators‖ — or issues that a company could be expected to be responsible for and report their
performance on vs. the possibility for it. KPMG‘s research as of June 2009 showed that 77% of
the companies issuing sustainability reports used GRI standards (Ethical Corporation, 2009).
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GRI-tracked reports match their presentation of information against the indicators and then are
graded on their level of transparency and delivery of information, as well as their actual
performance. The extensive list of indicators is not intended for everyone to report on fully,
however. GRI is very much defined as a ―voluntary tool‖ to aid with reporting. It is a tool for
demonstrating issues of importance to stakeholder groups that the company many not yet have
identified as part of its active publics audience, but could, and even should. Issues that are
intrinsic to the business — for example water for a beverage company and human rights for a
manufacturing company — are considered material and recommended as the cornerstone issues
of reporting — and practice — for those companies. The most recent form of the GRI, the ―G3
Guidelines‖ addresses the concept of materiality directly and includes recommendations for
content, quality, and boundary for the report.4
The debate around GRI fills a wide spectrum. On the one end, there is desire to create a
reporting standard that is required on some level by all companies as to aid the process of
comparing them to see who is ―most responsible.‖ This desire, however, is met with many,
many qualifiers. In Denmark, companies are currently all required to report, or explain why they
are not reporting. This attempt at transparency resonates with what Mervyn King, GRI leader
and writer of the King Reports considers ―essential.‖ He says, ―you cannot legislate honesty or
competency‖ and that a law that required reporting would simply drive ―mindless compliance.‖
He believes the best way to address the topic is in mirror of the Danish model, pushing for
reporting and communication, not with legal force, but as an opportunity for quality, governance
over an abundant or ―quantity-focused‖ governance approach, that reports superfluously but does
nothing. ―Over-reporting is green-washing,‖ he says (King, 2010).
4 http://www.globalreporting.org/Home
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On the other side of the argument are those that feel GRI misses the point of
stakeholders, as it has grading systems and other comparative models that have not been
perfected to adjust for size, sophistication, etc. and drive companies to report, report, report as
much as possible to meet as many indicators as possible, and hope for a good ―grade.‖ This side
of the argument aligns with what GRI states as their goal: providing a framework for
communication to aid the process of both providing and receiving information. Critics like
Mallen Baker point out that ―most companies are writing reports for multiple stakeholder groups,
and no one is reading them.‖ He says, communication should start by asking stakeholders – a
company‘s specific stakeholders -- what they want to know and then report directly to them
about that (Ethical Corporation, 2010). GRI says they do just that, and empower both sides by
providing indicators that could or could not be relevant to seek and or provide above and beyond
on a global standard, but Baker says this is not what happens (Ethical Corporation, 2010).
The UNGC is ―a strategic policy initiative for businesses that are committed to aligning
their operations and strategies with ten universally accepted principles in the areas of human
rights, labour, [sic] environment and anti-corruption‖ (UNGC). Companies participate in the
UNGC by reporting annually on their work vis-à-vis those indicators. The UNGC has over
7,700 participants from all sectors from hundreds of nations around the entire globe, including
close to 5,300 for-profit corporations (UNGC). The UNGC hosts and joins conversations on the
issues related to reporting and responsibility, but does not act as a regulator. Critics say this lack
of teeth makes the UNGC an easy way for companies to look good without having to deliver on
any deep level of responsibility, or in some cases, any level of responsibility at all.5
The King Report on Corporate Governance is a code that must be followed by all
companies listed on the Johannesburg Stock Exchange. The most recent version of the report,
5 http://globalcompactcritics.blogspot.com/
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the King III, calls for increased governance measure, provides recommendations for how to
engage stakeholders and communicate with them, pushes for accountability to be assigned and
owned by specific members of the governance team, and seeks reporting on all issues, or an
explanation why the reporting is not done. It is comprehensive and complex, but still clear, and
recommends the use of the GRI recommendations as a guide for reporting (King, 2010). Mervyn
King argues, ―Stakeholders are the ultimate compliance officers. They will quickly tell you if
the corporation is not acting in line with their interests by either fleeing or supporting the
company once information comes to light‖ (King, 2010). Because of this, he believes the
mandated reporting with the voluntary option built in to explain why a company is not reporting
is essential, but that it also must be coupled with a law that ―when corporations fail, provides
someone for you to apportion blame to so that governance bodies do not push the responsibility
away‖ (King, 2010) to keep reporting and information available to the stakeholders who need it,
but keep punishment for irresponsibility off of those who find it and fixed upon those who were
and are in fact responsible.
With all these different standards, companies and organizations still report and
communicate in a wide variety of ways. While most reports began as books, similar to
traditional annual financial reports, the internet has provided interactive and customizable
options that make one set of data interpretable in many different ways (Elaine Cohen, 2009).
The internet not only serves to reach known stakeholders with data and information, but it fosters
the possibility of two-way symmetrical communication and the development of new
stakeholders, active publics from latent publics, and other relationships (Grunig, 2009).
Integrated reporting — that publishes required financial reporting with all sustainability
information for a company — is the way of the future, according to Eccles and Krzus. By
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combining the two sets of information, organizations demonstrate the intrinsic business strategy
elements of all sustainability issues, force any stubborn latent publics to face this interwoven
nature of financial information and responsibility indicators, and creates a process that forces a
company to ―locate any gaps in embedding sustainability into the company‘s strategy and
operations and be motivated to correct the situation.‖ They also note that public and
governmental interest in issues like climate and carbon are forcing more and more of this
information to be reported publicly, driving transparency standards up, and companies who fully
embraces this ahead of the requirements being legislated will be served (Eccles & Krzus, 2010).
Stakeholders are dynamic groups, simultaneously and continuously assembling and
disassembling themselves (Falconi, class notes 2009). Grunig defines stakeholders as ―broad
categories of people who might be affected by management decisions or who might affect those
decisions – such as employees or community residents‖ and ―active publics‖ as those who
―typically make issues of the consequences of organizational decisions‖ (Grunig, 2009). Other
groups he identifies include those ―who are not members of active publics, … passive or non-
publics — even though [an] organization might want them to be publics‖ (Grunig, 2009).
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What is it that makes a stakeholder and that pushes an organization to react to one, to
partner with one, to engage, to communicate? The stakeholder concept doesn‘t explain what
moves groups to action. Let‘s start with the question of how and when corporations engaged
Figure 2. Chart from Center for Corporate Citizenship at Boston College.
their responsibility. Different theories approach the question from different angles. The Center
for Corporate Citizenship at Boston College has presented a model of the five stages of
Corporate Citizenship measured by the organization‘s behavior versus a list of issues. This
model moves progressively towards full disclosure, innovation, and full business strategy
integration. The pinnacle or ultimate point of responsibility includes transparency. Many argue
that this needs to be included at step one.
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The chart raises the question: what does corporate responsibility look like for the
corporation that does not
integrate the issues deeply into
their strategy. For example, what
is the value of community
volunteering, giving to charity,
cause marketing and other ―lower
hanging fruit‖ ways of
participating in social,
environmental, or cultural issues.
Kevin Martinez, who has run
Corporate Responsibility various
responsibility functions – at
companies including Starbucks,
Home Depot, and KPMG notes
―it is important to do both,
especially depending on the kind
Figure 3. Chart from Harvard Business School Publishing.
of company that you are.‖ He cites Home Depot‘s volunteer work building playgrounds as a
very important part of the business taking action in an area that pertained to their business, even
if it wasn‘t fundamentally strategic (Martinez, 2010). Then, is the chart above measuring grades
of commitment to a responsibility, or is it a tool for organizations to understand their potential
and act as they see fit? I agree with Maignan and Ferrell on this point when they say, ―we argue
22
that organizations act in a socially responsible manner when they align their behaviors with the
norms and demands embraced by their main stakeholders.‖ (Maignan, 2004)
Harvard Business School has a different model to understand how corporations start to
understand their role as Responsible, based on ―organizational learning‖ (see: Figure 3). This
chart suggests that the end goal of acceptance and civil participation in responsible activity is the
goal and that all other stages are simply steps along the process.
Neither of these seems possible, despite the practical need for organizations to start their
recognition process somewhere, when the organization is understood as fully dependent on its
stakeholders. Resource-dependency theory ―states that an organization must attend to the
demands of those in its environment that provide resources necessary and important for its
continued survival‖ and since organizations‘ stakeholders were previously defined as ―those
groups without whose support the organization would cease to exist‖ (Stanford Research
Institute, 1963, via Freeman & Reed, 1983). Thus, due to the dependency of the organization on
the stakeholder, the demands of the stakeholder are dictates for the organization. An
organization cannot, though, respond to all demands of all stakeholders simultaneously or at the
depth the stakeholder seeks. The governance board must be the fulcrum over which the
organizations and stakeholders balance. The prioritization of publics creates a natural and
practical need for communication.
Freeman highlights what this communication should include. He says,
―stakeholder theory has gone off the rails by focusing too much on what to do when
stakeholder interests conflict. … The key insight of stakeholder theory is that there are many
stakeholders and they conflict. … Where there is conflict there is an opportunity to use
innovation and imagination to create more value for both parties, rather than picking one interest
over another‖ (Freeman, 2010).
23
Chapter 3 Definitions
I have chosen to wait to define Corporate Responsibility and sustainability until the end
of this theoretical section of this paper because the definition requires an understanding of the
relationships between an organization and its stakeholders is necessary to define what Corporate
Responsibility and even Sustainability are. While Corporate Responsibility, CSR, etc. are
thought of commonly as addressing impact on issues of social (including human rights),
environmental, cultural, governance (including anti-corruption), etc., the reality is that the
responsibilities are to the existence of the organization wherein it is conceived as a body to serve
and be supported by stakeholders. Thus, definitions like ―A concept whereby companies
integrate social and environmental concerns in their business operations and in their interaction
with their stakeholders on a voluntary basis‖ (Dobers, 2009) do not accurately fit Corporate
Responsibility.
Sustainability, defined as ―meeting the needs of the present without compromising the
ability of future generations to meet their own needs‖ shares more of the meaning, though
including perhaps the future as a stakeholder. Unfortunately, it seems these definitions are the
most common. Managers understanding Corporate Responsibility to be superficial acts of
―greening‖ rather than deeper issues cripple those who do understand and have the vision to
change strategy. Corporations are turning more and more to consultants to understand what
programs and plans can help them address their corporate responsibility, but consultants who do
not understand these deeper issues will further cripple both the practice by doing with the
misnomer CR — or CSR or Sustainability — and will not deliver top-tier consulting because
they will not understand the fundamental issue.
24
Chapter 4 Case Studies6
My primary research on this topic has centered around five companies — Timberland,
Brown-Forman, Hess Oil Company, WalMart, and MS&L— and these questions:
What drives organizations’ CR communication? How does the organization’s
communication support or conflict with its efforts to be sustainable and meet stakeholder
expectations?
Below I demonstrate my findings from reviewing public documents and interviewing leaders of
Corporate Responsibility, CSR, Communications, and Sustainability – depending on their chosen
or appointed title -- at these companies. These companies were chosen because I had access to
them and they are considered by many sources to be leaders, especially for their company sizes.
Timberland, Brown-Forman, and Hess Oil Company were researched in great depth. A
pharmaceutical company and WalMart were not as available for extensive interviews, but were
researched for their perspectives on the issues, as well. Finally, MS&L Worldwide brings the
perspective of a company that deals with CR internally, but also advises on the topic as external
consultants. In the final section, information about other players in CSR includes indices and
other tools will be briefly explored.
Timberland7
History & Structure & Philosophy
Timberland is an apparel company with close to 6,000 employees and a long-standing
commitment to CR. ―Our mission is to equip people to make their difference in the world,‖
explains Beth Holzman, head of CSR — Corporate Social Responsibility — at Timberland. The
company defines their commitment to ―CSR‖ as being deeply embedded in their business
6 Case studies are based on my analysis of public documents and cited interviews.
7 Interview: Beth Holzman, April 15, 2010. Phone interview. Jeff Swartz Stakeholder Call April 8,
2010.
25
strategy and view of the company. ―We probably err on the most transparent side of the
spectrum,‖ says Holzman, but she explains, that is part of the culture and the company‘s
understanding of what drives the best CSR and most authentic practice. ―Our approach to
building and sustaining strong communities includes civic engagement, environmental
stewardship and global human rights.‖ Says Jeff Swartz, CEO of the company, ―Moral mission
is imperative.‖
In 2007, the company recalibrated their CSR efforts, establishing four pillars – energy,
products, workplaces, and service – which speak to the company‘s core material impact. At that
point, the company began quarterly reporting through a variety of channels, including biannual
reporting on GRI indicators and quarterly abbreviated reports demonstrating impacts on a list of
metrics. The company believes that ―engaging with stakeholders every quarter fosters
transparency and accountability and creates actionable insights‖ and that ―only by building a real
network of real engagement through time will we be able to address the kind of
multidimensional solutions that are needed for the kind of challenges we are framing.‖
The overhaul lasted into 2008, when EarthKeepers.com was launched and other
transparency and accountability initiatives were unveiled. EarthKeepers is an interactive website
designed with the fundamental belief that Timberland is one player in the larger movement to
address issues all businesses should be worried about. The site hosts conversation spaces, where
the company has posted one question for each of the pillars — questions they do not have the
answers to — to seek stakeholder input. The site also hosts archives of Timberland‘s impact
reporting, stakeholder engagement calls between Swartz, leaders at Timberland, other industry
voices, and any stakeholders who care to join and ask questions. There is information about the
tree-planting initiatives that Timberland runs, profiles of ―EarthKeeper heroes‖ from outside of
26
Timberland, and many other tools for visitors to engage with other stakeholders, learn about
Timberland, follow dynamic conversations on key issues, and more.
The CSR team runs CSR as a subsection of the overall marketing department that also
oversees Public Relations, Corporate Communication, Sales, and a new department called
―Values-Marketing.‖ While the CSR team focuses on developing the strategy that covers target
setting and impact reporting, communication, reporting, and engagement over the four pillars,
they integrate their work across the larger group of departments. Corporate Communication
collaborates with CSR to develop ―CSR-branding‖ strategies. The Values Marketing team also
collaborates significantly with CSR, as they serve as a ―direct bridge between marketing and the
CSR team‖ focusing on how to translate information on impacts and other activity that has
traditionally been communicated on a GRI-level of sophistication to the broader consumer
audience.8
According to Beth Holzman, the current and recent economic hardship has not had much
effect on the CSR strategy overall, or the communication of it. Throughout Timberland, she
notes ―communication has changed to recognize and even greater need for credibility and
authenticity to get trust‖ from stakeholders across the board, and notes that now there is an
increased awareness and engagement with stakeholders in this current climate on issues like the
environment and social change. She adds, though, that Timberland very clearly understands that
all communication and all CSR must be done credibly and must start by ―walking the talk.‖
8 Since this was written, I watched a presentation by the head of this department at a conference. I was
struck by her tone and her approach to the information about CSR at Timberland. The authenticity of interest and use of inclusive language that reflected a deep understanding of the issues was nowhere at the level I had seen with Swartz or Holzman.
27
Definitions
Timberland emphasizes its commitment to being accountable, having authentic CSR, and being
responsible repeatedly and in various communications. Because these words mean so many
different things to so many organizations, I asked Beth Holzman to please define what these
terms mean to Timberland. ―Accountability,‖ she says, ―is something you own. It‘s about what
you are doing and what is worth doing. You are held accountable for the things you can control,
and following through on your promises for them make you authentic and credible.‖
―Responsibility,‖ in contrast, ―is what you‘re charged with implementing‖ and involves taking a
look at the bigger picture to ask, ―where can we be an agent for change?‖ When I asked her why
Timberland uses the term CSR to describe her practice and all the work described above she said
frankly, ―it was the catchall phrase five to seven years ago‖ and has carried with it the
association with green awareness and internal conversations about the issues. She notes, ―Maybe
it would be preferable to call it Corporate Responsibility because it includes social,
environmental, and more, and that would more accurate and comprehensive.‖
Stakeholder Engagement & Communication
Timberland identifies their stakeholders as anyone that can impact the company or that
the company can impact. That includes NGOs, civil society, peer companies, investors,
employees, consumers, etc. Different stakeholders are communicated to differently, though
primarily in public. Reporting and engagement are the two dominant ways that Timberland
communicates with the different stakeholder groups. They ―engage in a spectrum of reporting‖
that includes quarterly reports to ―tell stories and look at progress along the line in a more
digestible and shorter format‖ and biannual reports with updates along the way.
28
Biannual reporting is more dense and impact focused – though quarterly reports also post
updates on environmental and other impact-related indicators such as 2.5% emissions reduction
in the first quarter of 2010. These reports are based on GRI indicators and are dense. Says
Holzman, ―there is a place for that density across the stakeholder conversation, but we believe
we must fundamentally be walking the talk, and figure out how to talk about what our walk is, to
demonstrate our authentic ability to engage these issues.‖
Why does Timberland communicate about their CSR? Their goal is to ―create value and
manage risk‖ for the company. Holzman explains, engagement helps the company measure and
understand its impacts and also plan more effectively to build a collective understanding of
responsibility on larger issues like climate and social issues, but also intimately plan for
Timberland‘s approach to those issues. Holzman explains, and it can be heard many times over
on Jeff Swartz‘ stakeholder engagement calls that Timberland believes that business has a role to
play in impacting and improving climate change and social issues.
The EarthKeeper portal is the primary arena for conversation and interaction for
Timberland and its CSR stakeholders. Holzman notes about the internet and the changes it has
brought for engagement that, ―The web has changed everything because there is no more
‗control‘ of brand or conversation about it; the web forces a conversation that we hope to engage
and respond to appropriately.‖
Stakeholder conference calls are also used, and then archived on the EarthKeeper site.
Between the online and phone tactics, the company hopes to engage a wide breadth of
constituencies. And it seems they do. Though it is not visible who is on any given call, it is clear
that stakeholders including other companies, media, consumers, and non-profits are there as they
ask questions or speak with Jeff Swartz. Online, it is more public who participates, and a
29
combination of activists of many kinds seem to be the predominant group engaging there, though
profiles are posted for a wider range of folks. Timberland asserts repeatedly that they are ―very
much seeking ideas from all these conversations‖ on issues ranging from human rights to carbon.
Jeff Swartz refers to stakeholder as ―other sources of wisdom‖ and describes his interaction with
them as ―valuable engagement.‖
Of course, stakeholder engagement is not always pleasant for a company with a very
transparent record, like Timberland. A viral campaign launched by Greenpeace following the
release of 6 years research on Amazonian deforestation and its connection to apparel and shoe
companies supply chains put severe pressure on Timberland to address and change their leather
sourcing policies in Brazil in 2009. Online searches on the issue now demonstrate Timberland‘s
quick reaction to the campaign, signing on with Greenpeace to address the issue and partnering
with peer companies to address that and similar issues as an industry. Offline, though, the
conversation and situation seem to have been less cordial; Jeff Swartz often references the letters
he received from Greenpeace that read ―Die Corporate Scum.‖ Says Holzman of activist
engagement, ―Activists are challenging to engage but we don‘t have a choice and we learn a lot
from working with them.‖ She adds that they are part of the process of refining the issues,
understanding how to walk the talk, and that, ― Activism and partnerships allow for deeper
conversations and contrast to ‗greenwashing‘.‖
One of Timberland‘s challenges in their very open online approach to stakeholder
engagement, including activist engagement, has played out through their ―Voices of Challenge‖
element of the EarthKeeper site. There, Timberland has posed questions pertaining to each of
their pillars to the public. These are questions ―that we don‘t have the answers to,‖ says
Holzman. The conversation or online comment thread that has followed from some of the
30
questions — specifically the ―Workplaces‖ themed question — has led to an aggressive set of
labor activist attacks on Timberland and a sort of dialog between the company and these select
folks over specific issues. These kinds of challenges demonstrate the reality that no matter how
ubiquitous or infinite the possibilities of engaging all English-speaking people with internet
access may be; the conversation can still be limited and get caught within a few nodes.
Holzman also notes that not all engagement happens in the public eye. She mentions the
extensive partnering Timberland has done across the apparel industry, but also the fact that in
certain settings, to move contentious issues forward, the conversation is better held in person, or
more intimately the on public showcase.
Other challenges Timberland faces regarding CSR are focused on two specific
stakeholder groups: consumers and employees. The most recent stakeholder engagement call on
April 8, Swartz highlighted the challenge posed by consumers, who are not already issues-
activated and his deep interest in over-coming this challenge. Said Swartz on that call, ―we have
an obligation to include consumers in engaged citizenry‖ and to push more mainstream
consumers to think about carbon. Given that the research shows that ―consumers couldn‘t care
less‖ and that ―no consumer reads GRI reports,‖ Swartz believes there must be another way to
push the issue. He says, we realize now the ―need to integrate climate change almost invisibly
into the marketplace.‖
The EarthKeeper line of shoes was the first way they have tried to do this. The shoes,
which are made wholly from recycled and ethically sourced materials, also offer consumers
design and performance excellence, because, Swartz says, ―that is what consumers demand. You
cannot sell an ugly or underperforming product to consumer simply because it is good for the
environment… If you say carbon to consumers, they want to run out of the store.‖ Plans stand to
31
expand EarthKeeper standards to other shoe lines— and the communication with consumers
through signage and labeling that Timberland already uses — to grow the line and include more
and more of Timberland‘s products. This use of the product line to force the conversation is an
example of a company using the product to push the issue into the marketplace and forge a
conversation with consumers, who may not have asked for it.
Employees are the other challenge for Timberland right now regarding CSR and
communication. Beth Holzman says, ―We could be doing a better job of leveraging employees,
both as consumer citizens and brand advocates.‖ Issues standing in the way have included the
fact that resources have been primarily allocated to focus on conversations with external
stakeholder groups about the CSR program, achievements, and challenges. A varied level of
interest and education is also a challenge when looking at a very diverse group of employees
across the $1.4 million dollar company. Holzman candidly and repeatedly acknowledges this
challenge, though, and says the company is in a position to try to be more creative and engage
employees going forward.
Materiality & Conclusions
On stakeholder engagements call and on public panels, I have heard both Swartz and
Holzman say something to the effect of: ―We are a boot company. A hiking boot company. The
environment is important to us.‖ The company has defined the material issues it is accountable
for through its pillars, set targets to measure it‘s accomplishments, and metrics to determine its
impacts. Timberland has also creates a huge number of deliberate channels for communication
and constantly and dynamically engages transparently. They receive awards for reporting
innovatively and effectively. Even when criticized by hostile stakeholders as has happened
32
through Voices of Challenge, the communication resonates with their commitments. Though
clearly driven from internal motivation, the company reacts.
As they make an effort to push the CSR conversation to consumers and employees —
new stakeholder groups who are not demanding the conversation, it will be interesting to see
what models of communication work. Currently, a two-way symmetrical model works for the
organization, but if the external party is an active public but not around the issues brought to the
table by the corporation – will it work?
Brown-Forman9
History & Structure & Philosophy
Brown-Forman, the parent company of alcohol brands like Jack Daniels®, Chambord®,
Southern Comfort®, and Sonoma-Cutrer® Wines, defines its CR mission as ―Corporate
Responsibility at Brown-Forman means putting our values into action throughout our business
and in our relationships with suppliers, distributors, customers, employees, consumers, and our
shareholders. We must listen to feedback on issues of shared concern and importance. We are
determined to promote social and environmental responsibility, transparency, and dialogue.‖
They say their purpose is to ―to enrich the experience of life, in our own way, by responsibly
building beverage alcohol brands that thrive and endure for generations‖ through five strategic
initiatives that focus on bringing trust, integrity, respect, teamwork, and excellence to their
interactions with exceptional people – as employees, responsibility in ―all we do,‖ superb
resource allocation, making sales, and consumer franchises.10
9 Interview: Rob Kaplan, April 20, 2010. Phone interview.
10 http://www.brown-forman.com/responsibility/priorities/mission.aspx
33
This corporate strategic language is translated into action by the CR department is made
of up three people: the Director of Corporate Responsibility, a manager of communication to
stakeholders, including reports, internal communications, research, and a brand communications
manager who translates Brown-Forman‘s CR concepts to brands, ultimately to communicate
with consumers through them. The department reports to the department of Corporate Affairs,
who also manage Government Affairs, Philanthropy, Internal and External Communications –
including PR and Employee Engagement. That office reports to the Vice Chairman of Strategy
and Human Resources.
Rob Kaplan, Senior Corporate Responsibility Analyst at Brown-Forman says the
department feels confident that the top of the company supports it. The strategic model of the
company, known as ―the Brown Forman arrow‖ articulates ―being responsible in everything
Figure 4, Chart from Brown-Forman11
we do‖ as a key piece of the company‘s vision of its success.
11
http://www.brown-forman.com/responsibility/priorities/mission.aspx
34
At Brown-Forman, definitions regarding responsibility are cut and dry. ―We rarely use
Corporate Citizenship, unless we are talking about our citizenship in the local Louisville
community, including local philanthropy,‖ explains Kaplan. When defining their ―responsibility,
the company includes environmental issues, alcohol responsibility, and community – including
philanthropy in Louisville and relationships with the global employee base, as the key elements.
They also consider these the most material issues to Brown-Forman.
Why these issues? First, Brown-Forman is a publicly traded company, the founding
family, though, still holds the majority share. ―The Brown family has a long-standing
commitment to environmental issues‖ explains Kaplan, ―and obviously, any corporation impacts
the environment.‖ The company also spends a significant amount of time talking a lot about
―what a responsible alcohol company should look like,‖ says Kaplan. They are founders of
industry groups focused on responsible drinking and continue to be involved in industry groups
like Distilled Spirits Council of the United States (DISCUS) and International Center on Alcohol
Policies (ICAP).12
Says Kaplan, the standard has been to be involved in industry-level dialog
about responsibility, but now Brown-Forman is looking to exceed that standard.‖
Stakeholder Engagement & Communication
Brown-Forman officially defines its stakeholders around a wheel that includes
communities where they have facilities, employees – both current and future, the Brown-Forman
Family and other investors, the media, customers – who in the case of Brown-Forman, operating
in the three-tier alcohol distribution system, focuses on the retailers and distributors who deal
with their brands, other companies, legislators or regulators, civil society, and an outer layer that
12
http://www.ourthinkingaboutdrinking.com/marketing-access-issues.aspx?id=258
35
exists beyond these specific spokes of the wheel, defined as ―consumers that flow through all
groups, but are not a direct stakeholder group.‖
To communicate with and engage stakeholders, they operate under the ―first rule of
communication,‖ according to Kaplan: ―customizing to the audience.‖ He explains that someone
in the company deals directly with each of the stakeholder groups and is involved in designing
the communication for the specific group. While the CR department drives messaging on
―green‖ and alcohol responsibility message consistency, Kaplan explains that the communication
and messages are not overly controlled, but than an effort is made to keep them consistent.
Notably, he says that Brown-Forman ―is not getting a lot of either media or investment requests
for [CR-related] information.‖
Brown-Forman reports on a biannual schedule with online data updates in between. The
reports are third-party audited. To date, they have produced two full reports. The company
started full reporting upon GRI indicators when the current head of CR was brought to the
company. At the time, the Brown family focused much of their CR efforts on environmental
issues. As the CR department has matured, it has expanded to include the company‘s long-
standing commitment to responsible depiction of their product to evolve into proactive
engagement of the issue of responsible consumption of the product and other alcohol-related
issues, as ―they are our most natural match,‖ says Kaplan, and thus the most ―material issues‖ for
the company.
The company uses the internet as a tool in their reporting and engagement. Their
biannual report is customizable through internet selections, so readers can choose the issues most
relevant or important to them, and reduce the inundation of information that reports can
sometimes mean. They also have built feedback channels to glean responses to the reports
36
themselves, including using email and other surveys to engage certain groups. The most
interactive attempt to use the internet, though is a site that has proven to be a challenge to the
company.
Ourthinkingaboutdrinking.com is an engagement platform Brown-Forman designed to
articulate their position, goals, and issues around drinking. The public site addresses issues
including youth and alcohol, drinking and driving, alcohol and health, overconsumption, and
marketing and access. There are posted opinions, standards, and company positions. Emails are
posted to receive feedback, and a comment board that visitors can add to. Kaplan explains that
―getting people on there has been hard.‖ The company has ―started conversation to drive
‗consensus; definition of what responsibility on alcohol is going to mean‖ he explains, so even
internally it has presented a challenge. The site was conceived as a means to force Brown-
Forman into conversations with scientists, academics, regulators, etc. and find stakeholders to
whom the issues matter with an open-source approach. It has not yet taken off and the company
is strategizing to increase the online conversation and engagement. They will start with a face-
to-face summit to bring folks together and force the conversation, as right now ―we are trying to
have a conversation without another side to it,‖ says Kaplan.
The need to force the conversation comes from two difficult points. One, the issue of
alcohol responsibility brings challenges that aren‘t present with environmental issues because the
stakeholder groups, and specifically activist groups, that are the most active publics on the issues
are much more extreme than with ―green‖ interest groups, says Kaplan, and thus the
conversation becomes very specific to the one or two issues they champion in relationship to
alcohol, and not about the bigger conversation at the same time. Two, surveys and poll
information Brown-Forman has collected from their stakeholder groups all find that key
37
stakeholders perceive Brown-Forman doing well on responsibility issues. ―This makes it
difficult to figure out what we need to improve without forcing it upon ourselves,‖ says Kaplan.
Employee CR engagement is a very active and innovative space for the Brown Forman
CR department. Focused primarily on the alcohol responsibility issue, Brown-Forman aspires to
have ―every employee be an alcohol responsibility champion on both 1) being responsible and 2)
advocating responsibility as designated drivers and/or on the job promoting alcohol.‖ Kaplan
explains this is ‗difficult because employees can‘t be ‗responsible in everything‘ without an
understanding of the Brown-Forman perspective on the issues.‖ So, education has been the first
focus. The CR department invented the ―World‘s First Responsible Drinking Game‖ -- a trivia
game with scenarios and teams; use it to get employees to spend an hour talking about
responsibility. The game is being rolled out in phase one, being played literally in groups of
employees in different manufacturing and business offices in different regions. Because Brown-
Forman is a global company, though, it is being developed into an electronic experience that
every single employee will be required to play to expand the employee involvement and
flexibility of the program‘s use. Right now, the company is not really engaging program-
reflective conversation about this beyond surveys. However, the plan is for the next phase to
include more response and data collecting mechanisms. The goal of this initiative is to
―encourage and empower the employees to change their behavior and other‘s behavior.‖
Modeled after the WalMart PSP (personal sustainability plan), is called the PRP
(personal responsibility plan). Kaplan notes that there has been an active philosophical
discussion about the boundary between consumer and employee responsibility and the
responsibility of the company itself in driving that. He says, ―while people will of course make
38
their own decisions, we cannot ignore our influence over those decisions as an alcohol company
and still call ourselves responsible.‖
Materiality & Conclusions
Brown-Forman is actively trying to address and build their responsibility through two points.
They are building upon a legacy of marketing responsibly. The company has a long-standing
commitment and self-regulates internally above and beyond standard legal compliance
requirements for marketing for alcohol companies. For example, the company never produces
advertisements or other materials that link the consumption of their product to success –
monetary, status, sexual, etc. They also do not market their products in outlets that can reach
children. Kaplan notes, though, that this legacy has been stated in the negative, i.e. ―this is what
you cannot do.‖
The company is working to balance that legacy conceived through a negative idea of
what not to do with a more positive approach of marketing responsibility. This approach
addresses their hope for fundamental behavioral change. The idea: How do you market the idea
that consumers behave responsibly is a good idea? Kaplan says they have asked, ―is this forcing
the issue into the marketplace?‖. He says they have spent a lot of time thinking about and
understanding consumer insights. They have refrained from doing own research because there is
a large existing body that speaks to the issue already, but they have used it to inform and that
they are now working with partners like the AdCouncil to address and really shift both corporate
behavior and general behavior from the ―please drink responsibly.‖
Clearly, the company is innovating in their practice and trying to find ways to
communicate their strategic innovation, with end goal of improving behavior. They are trying to
employ two-way communication that is symmetrical, but are not finding publics to engage with
39
as they have hoped, and are thus restricted to engage narrowly focused publics. So, they are left
writing their own scripts to create space for the sough communication in the plans they use going
forward. Brown-Forman is an example of where fundamentally engaging beyond the issues
raised by publics may speak immediately to issues of responsibility most intrinsic to the
company‘s business. It will be interesting to watch this conversation evolve, or become directed
communication driven by the company. Unlike Timberland, the company is not publicly seen as
skirting an issue by activists, but as Kaplan says, the process is halted by the lack of external
impetus.
Hess Corporation13
History & Structure & Philosophy
At Hess, a family-run and publicly held oil company, Sustainability Reporting and
conceptualizing have been part of the company for years. The company website hosts archived
reports dating back to 2000. Says Paula Luff, Director of Corporate Social Responsibility for the
company, ―CR includes the broader citizenship in the way that we interact with stakeholders.
Sustainability is really integrated with the way we operate and we see it as a competitive
advantage. We‘re not big so we feel that if we can make an economic impact and social impact
in a country, that is a competitive advantage as a company of our size.‖
Why do they call their practice ―Sustainability‖? Says Luff, ―we just did it. It captures
what we are doing as a group more effectively than CSR. CSR means that you did something
wrong so you are assuming the responsibility. It‘s narrow, weak, reactive. Sustainability is a
broader concept and a more proactive descriptor that takes the long view of what you‘re doing.‖
13
Interview: Paula Luff on April 22, 2010. Phone Interview.
40
The company drives sustainability focused on three general categories: energy and carbon,
environment, and social issues, through both business strategy and philanthropy.
The company reports based on GRI standards annually and has all their reports audited
and verified by third parties. Beyond audits, the majority of the work is done by Luff, in-house.
Right now, she runs the entire department by herself, though she has strong collaboration
relationships with both the corporate communication department and significant support from
CEO John Hess. Soon, she says, the department will grow.
Stakeholder Engagement
The company is very involved in industry groups including International Petroleum
Industry Environmental Conservation Association (IPIECA), the Retail Energy Supply
Association, the National Petrochemical and Refiners Association, the Corporate Council on
Africa, and others. They contribute intellectual capital (best practice, guidelines, etc.) to social
responsibility, environmental, and other industry conversations. Luff herself works with BSR
around Human Rights issues and is very active on the UNGC Human Rights working group.
The relationships are helpful for providing feedback and review of their strategies, refining
language and raising interesting points. She describes the relationships as ―extremely helpful
third party engagement.‖
When building programs in communities where they operate, including education
programs, the company focuses on building something that will have lasting value for the
community past the time bracket where Hess is there. In cases where there are third parties who
know the political, social, or other climate well and know details of how to build the kind of
program sought, Hess may partner with them, though they will remain very active and engaged
41
in the strategy and execution. Part of being authentic and credible in recognizing where the
specialties of an oil company are exceeded by other groups, like with AED in Equatorial Guinea,
where they built a program.
The primary stakeholder audiences are host country governments, host communities, and
business stakeholders. Others include government, regulatory bodies, consumers, community
members where they practice, the opinion-leader elite – including votes and educated groups,
employees, non-governmental organizations, and others. Since the primary audiences are very
focused, the company does not do a lot of media around sustainability. Other key stakeholders
include consumers. The company does not interface on their more strategic business elements of
the sustainability strategy at the point-of-sale, but they do voice long-term philanthropic
commitments to March of Dimes and St. Jude Hospital. The conversation on sustainability and
energy Hess focuses towards their institutional marketing stakeholders. Regarding their
international philanthropy, Luff says they don‘t really look outside the company, but do engage
deeply with stakeholders in the country and say ―You tell us where we add value; you tell us
where things are possible.‖ She says, ―We focus on capacity building and sustainability of
programs to keep it going, which is a lot of work as compared to check writing.‖
Regarding reporting to stakeholders, the company is dedicated to being relatively
transparent, ―especially for an oil company.‖ Says Luff, ―We believe those transparencies are
the right way to go about it. We have nothing to hide. Senior management understands that
expectations have shifted and companies are expected to be transparent, not proprietary or
competitive disclosure, but transparent.‖
Though 13,000 employees are stakeholders, the focus on employees from the strategy
perspective emphasizes safety. The company has an excellent safety record, especially for an
42
extraction company. The Corporate Communication office runs the communications about these
issues, though they are reported in the annual sustainability report. Luff comments that even in
countries where Hess builds programs to serve the communities the employees are not
necessarily part of the conversation to construct those projects. Instead, they speak with civil
society leaders, government and key stakeholders in the country — leaders, civil society, etc. —
are the first entry point, What are your priorities where we might add value? Then technical
partner, understand feasibility, and then craft program. Stakeholder engagement even at
community level pretty intensive throughout. By the time a program launches, have had
community and employee support; not generally asked about
Materiality & Conclusions
Hess reports and communicates transparently and has deep commitment to building
strong and sustainable initiatives. With their strength holding fast, the role of communication
comes into a new light. If key stakeholders are engaged on specific issues and through specific
channels, with partnerships and advisory relationships on very particular industry or even human
rights-related concepts, the requirement for more ubiquitous communication comes into
question. The power dynamic appears imperial as set forth here.
*****
43
MS&LWorldwide14
The widening landscape of Corporate Responsibility consulting includes a myriad of
specialties. Traditional PR firms, though, are taking a leading role in many ways.
MS&LWorldwide was named the best PR firm for CR by CRO magazine15
and Scott Beaudoin,
leader of their practice, is widely regarded in the field for his leadership and vision. I spoke with
him and explored some of the MS&LWorldwide CR practice to better understand what drives it.
Beaudoin explains that many companies are awakening to the need to articulate and
incorporate CR into their business strategies, but do not know how to start the process. The role
of a company like MS&LWorldwide is to educate the company about CR, how they are already
practicing, and where the opportunities lie, because Beaudoin says, ―We understand how this is
part of how they communicate, act, and we help the companies identify what CR is to them and
where they fall in the greater business — and societal —landscape on these issues.‖ His
description of how and why MS&LWorldwide practices CR consulting mirrors the theoretical
arguments for why communication theory informs CR strategy and understanding.
Fundamentally understanding stakeholder relationships, how to create real ones, and how to
prioritize them is a specialty of a firm like MS&L, and this knowledge is a cornerstone of
building a CR strategy and articulating the CR practices of a company, explains Beaudoin.
The ―business case‖ — demonstrated financial value — of CR is inherently part of what
MS&L must do, as well, says Beaudoin. He parallels this process with the same issues face by
other PR consultants: ―unless you can show the businesses value there is friction‖ from the
companies, he says. So, they look at employee engagement and retention, stock success, and
14
Interview: Scott Beaudoin, April 23, 2010. Phone interview. 15
http://www.environmentalleader.com/2008/02/28/msl-tops-list-of-csr-pr-firms/
44
other indicators that lead directly to a monetary ROI. He also says that the MS&LWorldwide
proprietary ―Influencer Marketing‖ model that engages social activism is a key tool in
differentiating their practice. He says the model facilitates engaging the right influencers,
driving desired reputational and financial outcomes. This marketing style influence notably
underscores the impetus for CR as a marketplace advantage and a way to make more money,
rather than an altruistic one.
Notably, though the MS&L practice echoes strategic vision that serves organizations
along a spectrum between developing full business strategies to systemically incorporate CR and
taking smaller steps towards CR, MS&L itself is still in the process of internalizing their own
best practices. For example, this year they will produce their first sustainability report and
release information about their own CR practices. Beaudoin and his colleagues explain that
MS&L employees are engaged on the topic and that social and environmental awareness is in
their ―ethos and DNA.‖ Of course, this action has more impact than perhaps reporting on it does,
but the communication of these practices, and the chance for them to be audited and/or reviewed
by the public seem like an important step in truly driving internal credibility on the issues. I
have found that this is a trend for consultancies: understanding the issues and advising others on
them but not fully integrating them into their own practice.
WalMart16
Two stand-out sustainability initiatives at WalMart in the context of these other programs
are the initiatives to (1) require all laundry detergents to be sold in concentrate, eliminating
materials, transport costs, and shelf space required for them, and (2) the PSP – the Personal
16
Interview: Matt Kistler,
45
Sustainability Project which engaged employees to live more sustainable lifestyles and be more
sustainable – regarding their environmental impacts, their health, and more. These projects
demonstrate both the (1) implementation of sustainability by the company, forcing the consumer
to a new standard through product alteration, and (2) a successful employee engagement plan.
WalMart‘s decision to push these initiatives served to open them up to new markets, but
was not inherently driven by that opportunity. As the number one retailer in the United States,
the decision to change a supply chain has major effects on all points along that chain. The
company‘s decision to take this initiative is, necessarily on one level, a recognition of
responsibility and one on the level that Mervyn King cited when recognizing the central role of
the corporation in every element of society at this point (King, 2010).
The corporation‘s decision to drive sustainability into all elements of the business has
become almost a thing of legend in the conversation on CR. This makes people like Matt
Kistler, WalMart, Director of Sustainability, into celebrities. The depth and breadth of the
program though, and his repeated recognition that "Whenever authenticity is missing from a
campaign, it fails" offers hope that this program will… sustain. But, his more flippant answer to
why community and sustainability are part of every part of the corporate website offers room for
more cynicism. He says of the dedication of corporate website to sustainability and community-
related issues, ―Its not really that complicated; we just are doing it [sustainability] so we did it
[communication about it].‖
46
Chapter 5: Conclusions
Discussion of Trends
There are palpable trends in CR that I have seen in both broader industry conversations
on CR and the focused research for this paper. The entire concept of what a corporation is and
how it is legally driven is being addressed from different angles, many of which are drawing
directly from a new focus and emphasis on CR. Yale School of Management is pushing for
shifts in the construction of corporate boards to place more responsibility on the board members
and away from the CEO of any given company. Benefit Corporation incorporation options,
driven in the vein set forth by B-Corporation and other advocates for a legal standard for a
shifted fiduciary duty driven by the stakeholder model is being legislated in regions across the
United States. And, a dynamic debate between stakeholders who question the very essence of
corporatism vs. business is resonating through books like Life, Inc. by Douglas Rushkoff and the
writings of authors like Noreena Hertz in the CR conversation arena. Conferences, online
communities, and other tools are bringing together voices from inside corporations, their largest
critics, and results are happening. Boards are receiving new responsibilities, protections are put
into place for those who audit reports to not be held liable for their contents and facilitate
thorough review, carbon emissions are being cut, and more.
The dominion and influence over business decisions, though, is inherently rooted in the
actions and inactions organizations and companies are making. Looking at reporting and the
trends around it offers interesting perspectives on how to act responsibly versus how to
communicate about CR. Does reporting dull CR by focusing resources and energy away from
the strategizing, does it serve as marketing material that is not necessarily useful or does it
enhance practice by building credibility, highlighting holes and opportunity for improvement of
47
CR practice and business strategy as interdependent issues? Trends are pushing towards
reporting as a key element in driving strategy, demonstrating value to a wide collection of key
stakeholders, and pushing the sustainability and CR conversation into the mainstream as integral
to business practices. Efforts to mirror the Danish and South African reporting requirements are
underway in the United States and the European Union, and auditors and consultants that
develop tools to both produce reports and create comparable metrics are being established at a
speedy rate. These efforts are in part shadowed by the fact that key stakeholders including
investors and the media have not demonstrated interest in these issues as patently as non-profits
and the businesses themselves have.
The integration of reporting into business strategy is only one of the integration trends
emerging, however. Cradle-to-cradle products that have traced the elements in a product from
design to marketplace are on the rise. Nike is developing a shoe that is completely
biodegradable. Timberland‘s EatherKeeper line of shoes is being expanded. These companies,
however, are facing challenges in the tension between consumer interest and the CR vision for
the business.
One of the most palpable issues for businesses committed to CR right now hinges on
consumer and employee engagement regarding sustainability and responsibility. The research
above shows this issue at Brown-Forman and Timberland. The Body Shop has also expressed
this to be one of their main challenges. Creative approaches to educate, engage, and essentially
create an active posture for these two groups of stakeholders are being used. ―How do we
communicate about this more effectively with these groups‖ seems to be the fundamental
question. My findings, however, are concerning in that the tone seems to follow traditional
marketing lane-markers. That is to say, the desire to motivate a new relationship or engagement
48
with a stakeholder group – consumers or employees or any other – is parallel to the basic
marketing goal of simply getting a consumer to buy a product. Taking this parallel tone in
today‘s environment, amongst the online conversation and tools for criticism, highlights this
marketing perspective as over simplification. So, corporations are positioned to drive the
product development, the responsibility practice, etc. without the input of consumers as a driving
force, but rather from their own altruism or risk-averse interests to avoid legal and monetary
threats posed by external bodies? Theoretically.
Timberland, as one example, is pushing for standardized labeling to drive the
conversation, and reporting in one sense, at the point of sale. Without comparable standards for
labels, though, this is impossible. So, thus emerges the less new but very powerful industry
collaboration trend that companies like Timberland and Hess use to hold companies within a
given industry accountable to each other, share best practices, and also create differentiation
opportunities.
Necessarily, the trends in communication, whether they be at the point of sale, in
integrated reports, in employee engagement, or other points, rely on a lexicon that communicates
consistent meaning and allows for comparability. The lexicon for sustainability and CR
seemingly takes issue with the concept of PR. This emerges in both the theoretical texts and in
the leading new books on what CR and Sustainability strategy in business look like. This is an
oversight of what PR is — building relationships and managing them to serve an organization,
not greenwashing. I submit that the best way to address the shortcomings of different company‘s
superficial attempts at sustainability strategy should be criticized for those shortcomings, not for
―being PR.‖ The drive for credibility and authenticity that is driving the most ―advanced‖
49
sustainability and CR strategies is necessarily anchored in relationships, respect and
communication across them, and this is served by good PR.
Going Forward.
CR practice, value, and meaning are being explored through a myriad of research right now.
Having done this set of research, predominantly exploring business‘ perspectives on CR and how
to communicate it to meet and drive goals, two topics stand out as possible contributions for
those interested in doing further research on the topic. The first is in-depth research regarding
transparency, how that is conceived of and understood by organizations, and analyzing any rifts
between the projected valuation of transparency and the reality of practice. This research would
necessitate strong theoretical exploration and articulation of what transparency is. As this is a
core concept of conversations across sectors about accountability, improved practice, and
innovation, this would be both valuable and most likely exciting.
The second category of research would involve looking more closely at CR from
―stakeholder‖ perspectives. That is to say, instead of rooting research on CR through
organizations at the center of a stakeholder wheel, start from a category of stakeholders or a
spectrum of stakeholders and analyze trends, needs, and issues that are grounding CR practice
through their actions, assertions, and goals. This research would enhance the understanding of
what the stakeholder model is in the contemporary context and also be valuable to all players in
the CR sphere to solicit best practices for affecting change, finding resolution, and addressing
issues.
Going forward, also, it is worth noting key issues to pay attention to, and to finally underline,
again, the essence of why CR is important and what it may mean for a new and better reality.
50
Key issues include developing language and comparable metrics to aid expansive lists of
stakeholders: products, suppliers, investors, consumers, and employees leading that list.
Materiality in this context will need deeper defining – either in relation to other ―material‖ issues
that affect the stock price of a company or the value of that company by some other measure.
The algorithms for these measurements are being developed by many players, and the coming
year will undoubtedly shine light on which of those works and is best attuned to rounding out
both the tools for measurement and the conceptualization of what good business means.
Notably, the businesses interviewed for this paper all claim that the CR departments were
maintained through the hardest economic moments for their companies, and that they did not
undergo any more budget restraints than any other department. In the dire straits that many
companies faced, this reality is testament to the fact that CR is not going away.
CR communication highlights long-term trends and ideals focused on stakeholder
relationships, understanding them, engaging them, and managing them appropriately. Doing so
serves the business and the stakeholders. What is possible with this engagement is only limited
by the viewfinder we place around what is inherently part of business. By including
responsibility in it, by engaging for earnest relationships we have a chance at realizing what is at
the core of better business – humanity. As Freeman recently stated, in awe of the ability for the
conversation on stakeholders to drift from its core purpose: ―We need to build deeply human
relationships with stakeholders‖ (Freeman, 2010).
51
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