CSR, Reputation and Change: What Stakeholders Expect of Australian Business Edelman Australia Stakeholder Study November 22nd 2006

CSR, Reputation and Change:What Stakeholders Expect of Australian

Business

Edelman Australia Stakeholder Study

November 22nd 2006

Our Environment

Center Stage

Capital Flows:Economic and Political

Nationalism: Alive and Well

Macro…

Rise of Real Consumerism

“Birth” of CSR

Chatter Below the Surface

Micro…

Implications

Governments and NGOs: Allies, Adversaries, or Both?

Relationship Capital:A Premium

Well-Defined Expectations: Rational and Not

For Business…

The Asia Pacific Edelman Study:2006 Results

Edelman’s Asia Pacific Stakeholder Research

Research Objectives- to examine and understand:

• Trust in Australian institutions and information sources

• The drivers of stakeholder opinions of corporations in Australia

• The drivers of responsible corporate behavior / Corporate Social Responsibility in Australia

Edelman’s Asia Pacific Stakeholder Research

• Fourth Annual Regional Study

• Quantitative studies by stakeholder group and for Australia, China, India, Japan & Korea

• Conducted by Harris Interactive

• 1,050 x 40 minute face to face interviews across the region-- 140 in Australia

• Qualitative studies for Hong Kong, Indonesia, Malaysia, Singapore and Taiwan

Seven stakeholder groups:

• Government officials

• NGOs/ Trade Associations

• Institutional investors

• Media

• Senior business executives

• Employees

• Up-scale consumers

The State of Trust

Base: Regional: 1050, Australia: 140

Trust in Institutions (Australia)

24 23 22

9

18

35

146

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

GovernmentNGOs

BusinessMedia

Australia 06

Australia 05

How much do you trust each of the following institutions to do what is right?

(Percentage equals top three box score for each institution)

Base: 700

Trust in Institutions (Regional)

67

2419 18

24 23 22

9

30

16 15

33

12

2219

32 32

4450

19

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

GovernmentNGOs

BusinessMedia

China Australia Korea Japan India



Base: N=140

Trust in Institutions by Stakeholder (Australia)



10

3020

010

20 2025

2025

0

40

1520

10

3025

30

15

3530

20

510

25 25

5

20

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Business

GovernmentNGOs

Media

Govt Media Consumers NGO Snr Exec Employees Investors

2005 Comparison

•NGO trust in business up from 10% in ’05 to 40% in ’06

•NGO trust in NGOs down from 55% in ’05 to 20% in ’06

•Snr Exec trust in media triples from 5% in ’05 to 15% in ‘06

Trust in Business (Australia)

1811 8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

European MNC

US MNC

Asian MNC

Australia

How much do you trust each to do what is right?



Trust in Business (Regional)

5953

27

18

118

26

912 12

4

4651

2932

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

European MNC

US MNC

Asian MNC

China Australia Korea Japan India

How much do you trust each to do what is right?


Base: 700

3526

23

0%

20%

40%

60%

80%

100%

Technology Financial /Bankingservices

Pharmaceutical

Base: n=140

Trust in Business Sectors (Australia)

Which do you trust more?


Institutions - Points to Ponder

• Trust in business rebounding … at expense of NGOs or as a “natural” balancing between the channels?

• NGOs “tipping their hat” to business

• Business respect for media on the rise

… however skepticism still rules

Sources and Channels:

Media Trust (Australia)

What type of the following media do you turn to first for trustworthy information/news?

49

29

12 10

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Newspaper Web-based media Radio Television

Australia


How trustworthy and believable do you feel certain communication vehicles are when passing information along about a corporation?

Trusted Communication Sources (Australia)

(Percentage equals top three box score for each channel)

Base: Australia 05 / 06: 140

4642

2925

17 1613 13 13 11 10 9 8 6

3

0%

10%

20%

30%

40%

50%

60%

Analyst Report

Association Magazin

e

Featured Speaker

Corp's Website

Daily Newspaper

Trade Press

Direct M

ail

Word of Mouth

Radio

Regional Newspaper

Internet (non corp)

Local TV

Regional TV

Attending Corp Event

Blogger Website

Australia 2006Australia 2005

NA

2005 Comparison

•Trust in Trade Press and Word of Mouth increased by 13% and 10% respectively since 2005

•Trust in non-corporation internet cut in half over the year

•Trust in the Daily Newspaper grew by 25% since 2005

Channel Usage Likelihood (Australia)

(Percentage equals top three box score for each channel)

How likely are you to use each communication vehicle to get information about a corporation?

Base: Australia 05 / 06: 140

3835

26

34

18 20

13 1410 12

1613

8 105

0%

10%

20%

30%

40%

50%

60%

Analyst Report

Association M

agazine

Featured Speaker

Corp's Website

Daily Newspaper

Trade Press

Direct M

ail

Word of Mouth

Radio

Regional Newspaper

Internet (non corp)

Local TV

Regional TV

Attending Corp Event

Blogger Website

Australia 2006Australia 2005

NA

2005 Comparison

•Australians much less likely to use Trade Press, down from 31% to 20% in 2006

•Also less likely to use the Radio to gather information about a corporation, down 30% since 2005

Sources and Channels: Points to Ponder

• Low trust in media, in general, means corporates must create and manage channels

• For a CSR strategy to truly resonate with stakeholders it must work within those channels seen as most trustworthy

• Newspapers remain entrenched within the traditional media channels

• Web-based media continues to increase in both profile and importance

Opinion Drivers in Asia Pacific

Stand Out Characteristics of a corporation in Australia Aus 06 Aus 05

High profit/Profitable 27% 18%

Employee development/Employee benefits 27% 7%

Management/Leadership 22% 9%

Ethical/Integrity 18% 14%

Corporate image/Reputation 16% 21%

Corporate citizenship/Socially responsible 16% 9%

Brand/Product quality 14% 19%

Innovation 14% 4%

Active promotion/Advertising 11% 19%

Professionalism 8% 1%

Customer focused 6% 12%

Company size/Operation size 6% 8%

What is the first thing you notice that makes companies stand out from the rest?

Standout Characteristics (Australia)

“You have $100 to gather information on a corporation. Allocate this on how you would spend it for the information. You must spend all $100.”

Base: Australia 05/06: 140, Regional 06: 1050

Rating Characteristics (Australia)

23.3

18.8

16 15.7 15.5

10.7

0

5

10

15

20

25

30

FinancialPerformance

Quality ofProduct or

Service

How it dealswith Customers

ManagementTeam

How it dealswith Employees

Attention toCSR

Australia 06

Australia 05

Characteristics of ‘Good and

Responsible’ Corporations

Characteristics of a Responsible Corporation in Australia Aus 06 Aus 05

Stand behind its products/services when something goes wrong 92% 89%

Provides senior leadership that can be trusted 91% 87%

Communicates frequently and openly with employees 80% 71%

Operate in an open an transparent fashion 76% 79%

Works hard at building relationship with core shareholders 75% 63%

Offers top quality products/services 73% 76%

Makes products that really impress other people 41% 22%

Concerned about/active in doing something about community welfare 37% 34%

How important are the following characteristics for good and responsible corporations?

Good and Responsible (Australia)

Are Companies Measuring Up?

Somewhat well73%

Not very well15%

Very well11%

Not at all1%

How would you rate the way Australian companies are engaging and communicating with people like you?

Base: n=140

The Impact On How Business Engage (Australia)

What degree do you believe different types of corporations live up to that characteristics? (Percentage equals top three box score for each characteristic)

Responsible Corporation (Australia)

Base: n=140

92

91

80

31

15

21

40

26

23

49

22

22

48

19

14

0% 20% 40% 60% 80% 100%

Stand behind itsproducts/services

when something goeswrong

Provide seniorleadership that can be

trusted

Communicatesfrequently and openly

with employees

Expectation US/ Eur Corp Australian Corp Japanese Corp Healthcare Corp


Base: n=140


76

75

73

17

45

47

29

40

33

12

43

68

13

36

44

0% 20% 40% 60% 80% 100%

Operates in an openand transparent

fashion

Works hard at buildingrelationship with core

stakeholders

Offer top qualityproducts/services



Base: n=140

41

37

43

23

23

27

69

19

37

17

0% 20% 40% 60% 80% 100%

Makes products thatreally impress others

Concernedabout/active in doing

something aboutcommunity welfare



Responsible Behavior: Points to Ponder

• “Leadership” and “employees practices” must feature in stakeholder engagement

• Business has a clear “performance gap” (perceived?) to close

• Three areas driving reputation, each of which is arguably integral to strategic CSR

Management Practice

Product/ Service Quality

Societal Alignment

• An understanding gap, even among stakeholders, re true CSR in modern society

So, what does this mean?

Corporate Reputation Corporate Reputation ManagementManagement

Admired/ Successful Corporation

Delivering Quality Products & Services

Meeting Stakeholder Needs

& Expectations

For Reputation…

Driving Business Outcomes

For Communication…

OLD MODEL

MASS AUDIENCE

EXPERTS

Customers

Media

Investors NGOsGovernment

Employees

Business Trade Bodies

NEW MODEL

Pyramid of Authority vs. Sphere of Cross Influence

For Strategy …

Expectations of organisations by Australian stakeholders are clear:

• Traditional community relations doesn’t cut it as a reputation characteristic….on its own and without focus

• True CSR – where organisations usefully engage in broader society by using their core competencies and consequently build strong relationships – is gaining in importance and is increasingly expected among those stakeholders

• In good times, profit and absence of scandal, is still a marker of a strong partner

Once this is a ‘given’, other factors come into play – management practice, employee development, and increasingly environmental practices

Strategic Partnerships• Commitment to CSR • Investment in long term reputation• Integrated into all business functions, goals• Strategic alliances, joint ventures, of importance to both parties, jointly managed• Multi-faceted, social vision• Substantive contribution by each partner• Focus on learning vs knowing the answers• Broader targets – societal outcomes

Business Community Partnerships• More strategic giving linked to business outcomes/interests• Corporate looking for operating, HR, or marketing benefits• Includes activities such as eg. Events, Cause Related Marketing, Employee

Deduction & matching schemes, volunteering, Gift In Kind, sponsorship• Often isolated activities rather than integrated

Profit only• No company relationship with community on any level• Company focused only on short term shareholder profits• May be individual community engagement

Philanthropic Relationships• Passive/reactive relationship• Largely financial or product contributions to a cause• Increasingly tied to specific outcomes• May take different forms: eg One-off or recurring donations

A CSR Evolution versus Revolution …

Fear & suspicion of the other sector and what they want Manage expectations - be realistic Different organisational cultures and languages Ability to define goals Avoidance of tokenism Do not let creative opportunities slip Look seriously at proper funding Potential ethical dilemma (tainted money, mission creep)

Philanthropic

• Charity and philanthropy

• Low value congruence

• Expectations and investment low

Transactional

• Specific value transactions

• Compatibility around specific values

• Outcomes aligned strategically

Integrative

• Mutual mission relationship

• Shared culture

• Equity-based relationship

Integration - Corporate Partnerships matter to CEOs yet this is rarely translated into hierarchical structures

Establish proper systems as a part of the business Clear responsibilities Decision making mechanism Reporting mechanism Measure

Keeping the strategic dimension in mind while dealing with everyday operational challenges

Considerations

Where to Start …

Behaviour Patterns

Cha

ract

eris

tics

A Simple Framework…

Disciplined Reputation and Relationship Management

Expert and Insightful Source and Channel Management

Ultimately For Business…

For further information:Kylea Tink 02 9241 [email protected]

Documents

CSR, Reputation and Change: What Stakeholders Expect of Australian Business Edelman Australia Stakeholder Study November 22nd 2006