Responsible Business Leaders’ Recommendations for the Area ofMARKET

Topic: Communicating Corporate Social Responsibility

What Is the Role of Communication in Responsible Business ?A harmony between companies’ actions and their stakeholders’ expectations is becoming the highest priority for companies in today’s world. Increasingly more companies are becoming aware of the risks and opportunities that responsible entrepreneurship entails for companies’ reputation. According to a Meaningful Brands®1 survey conducted by Havas, if 74 % of all brands disappeared for good, most consumers would not notice. As a result, companies that focus on improving society and making their customers’ lives easier, healthier, and more sustainable are getting to the forefront. Crucial are meaningful activities which make companies more trustworthy and their key stakeholders more involved. According to the Havas survey, meaningful brands see their marketing KPIs perform 100 % better overall compared with less meaningful brands. In addition, these brands outperform the stock market by 133 %. In order to be able to adequately appreciate companies’ sustainable activities, stakeholders first need to learn about them. However, appropriate communication is often a missing and critical link in responsible business practice. Where is the problem ?

Thomas Kolster, a world-renowned expert on responsible advertising, points out that many companies do not often realize that marketing and corporate social responsibility are two rather different areas. As he says, “While the world of marketing is about emotions, sustainability and CSR rely on complexity and rationality. Despite this, these two worlds can be effectively linked together.” According to Thomas, advertisements today are often aimed only at supporting consumption. In order to be able to communicate meaningfully and to good purpose, companies cannot be afraid to be ground breakers in their area of business. Companies must learn to empathize with their target group – with their needs and expectations.

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“Companies should be transparent, honest, and especially authentic in how they com-municate. These are the three most important aspects. Brands need not be perfect becau-se they are as diverse as people. And just like people, they make mistakes. However, if they honestly admit their faults or shortcomings and want to make them good, they have a chance to retain the trust of their customers and partners.”

Thomas Kolster A speaker, an international sustainable

communication expert, the author of the bestseller Goodvertising (Thames & Hudson),

and the founder of the WhereGoodGrows agency

So, what should companies do to discover the real worth of advertising and overcome public distrust ? Together with leaders in responsible business, we would like to share with you several useful pieces of advice and tips:

1. Nice Words Are Not Enough. Be Authentic and Show Your Stakeholders “the Hidden Part of the Iceberg”

Most people hate advertising, and inappropriate marketing communication is to blame. Advertisements have become oppressive, and people no longer trust them. VIA Social, a company which specializes in web design and social network management, analyzed 5 million social network posts on advertising over the last year. 2 million people shared negative views of this type of communication. “Nice words” in advertisements are no longer interesting; it is what is behind advertisements that matters – the so called hidden part of the iceberg. It is therefore vital that you show the real story which is behind your communication mix. As Thomas Kolster says, “If you would like to make brand X different from brand Y, you must be not only honest but also authentic. Sustainability offers to companies a big casket of stories which might set a responsible business apart from others. Stories which may point out your strengths but also help you responsibly admit your weaknesses.”

An Inspiring Example from BLFBeer producer Heineken launched an interesting global cam-paign. Using its communication channels, the company did not encourage young people to drink more beer, but paradoxically, it encouraged them to moderate their alcohol consumption and drink responsibly. Why ? The commercial “Moderate Drinkers Wan-ted” is a response to the results of a survey conducted among 5,000 people of 21 to 35 years of age in five countries by analysts of the British consultancy company Canvas8. According to the re-sults of this survey, millennials drink moderately while having fun in a night club because they want to remain in control. 75 % of these consumers claim that if they go out at night, they mostly limit their alcohol consumption. Due to the popularity and impact

of social media, people of this age group lay emphasis on being in control of their image. The commercial, which is part of a larger campaign “Enjoy Heineken® responsibly”, the company’s global response to the negative consequences of excessive alcohol consumption, is available here: http://bit.ly/2cd66MS.

An Inspiring Example from AbroadAn illustrative example of authentic communication is the advertising campaign “Don’t Buy This Jacket” by Patagonia, a manufacturer of outdoor clothing. During regular Black Friday sales the company, unlike competitors, did not try to attract the attention of as many customers as possible. In fact, it did the direct opposite. On a Black Friday it published a full-page advertise-ment in the New York Times and sent an e-mail to 750,000 subscribers poin-ting to negative factors associated with the production of their best-selling jacket (R2). For example, the e-mail said that the production of one jacket requires 135 litres of water, which equals the daily water consumption of 45 people. Why did the company do this ? The campaign aimed to draw custo-mers’ attention to excessive consumption and often useless buying on Black Fridays and appeal to them to buy only products they really need. Parado-xically, this controversial advertising has brought more customers to Patagonia company and thus also higher profits. For years the company has been trying to point out that although it does business responsibly, its products also have a negative environmental impact. The company wants its customers to be aware of this. It also motivates them to think about whether the original product cannot be repaired, reused, or redesigned before they buy a new one.

2. Don’t Be Too Loud !According to a study entitled Maximizing Business Returns to Corporate Social Responsibility (CSR): The Role of CSR Communication,2 communication is supposed not only to raise stakeholders’ awa-reness of a company’s social responsibility but especially to minimize their distrust. Despite the fact that many customers and partners want to know about companies’ good deeds, the quality of products they want to buy, or the strategies of companies they want to invest in, they can become suspicious if companies’ communication about their corporate social responsibility efforts is too aggressi-ve. Therefore, don’t be too loud. In general, stakeholders perceive companies’ activities in two ways – as external, when companies use massive PR only to increase their earnings and make their activities look more beautiful, and as internal, when companies use communication to express real concern and, by means of their products, services, or internal processes, they look for solutions to current social issues. It is therefore important to lay particular emphasis on the internal component of communication and find topics your target groups can identify with.

3. Be Knowledgeable about the Issue You CommunicateMany think that sustainability does not pay off because people will not change their ways, and CSR is nothing but a nice addition to business. However, this is not true. Topics like safety, health, unemployment, corruption, city expansions, climate change, demographic curve, economic crisis, energetic sustainability, or digitization are becoming increasingly more pressing, and societies are expected to respond to them. Yet, do not forget that being able to help requires good knowledge of the problem and its impact on society. As Thomas Kolster says, “Brands can be forces for good.” However, for this to happen, it will not suffice for companies to start using recyclable packages for their products. They must seek new inspiring ideas and become the setters of pioneering sustainable trends. This means they will not only be part of a problem but contribute to its solution.

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Beware GreenwashingGreenwashing means that organizations spend more mo-ney and time on promoting and advertising their environ-mental (“green”) interests than on real activities and solu-tions reducing impact on environment. A classic example might be hotel chains which encourage their guests to use towels or sleep in the same bedsheets for several days. The-se measures save only a very small amount of water and energy, and hotels should seek environmental solutions with greater impact, for example, when it comes to lighting, kitchens, or their car fleets.*

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70 % of people think that the key role of brands is to come up with solutions to the biggest problems in our society, such as unemployment or climate change. ~ Meaningul Brands® survey

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43.1

28.8 25.8

19.1 18.6 13.9 13.2

Source: A Polis Slovakia survey conducted on a sample of 1,463 respondents from the general Slovak public (12 – 18 July 2015) http://bit.ly/2c5W9Ob

What does the public think is the biggest problem that Slovakia faces today ?

Health care

Unemployment

Low salarie

s

Corruptio

n

High prices

Roma population

Bad conditions f

or

young familie

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4. Transparency Brings in Customers. Be Always OpenMany stakeholders still think that advertising is only eye candy hiding real problems faced by companies. This statement can be rebutted if you do not pretend to be doing good but start to do business really responsibly. Information spreads quickly, and the business world is becoming more and more transparent and interlinked.

An Inspiring Example from BLFAlso Kaufland Slovenská republika tries to motivate its customers to consume res-ponsibly and be environmentally friendly. In 2016 Kaufland was the first supermarket chain to bring to the market a leaflet which introduced products made with respect to people and environment. The eight-page leaflet, which is unique of its kind in Slovakia, promotes products supporting responsible fishing or forestry. The advertising leaflet is printed on Der Blaue Engel-certified paper, which has been produced in an environ-mentally friendly way. It proves that Kaufland’s core business includes a philosophy of responsible choice of goods with an emphasis on sustainability. In addition, Kaufland gave its customers vouchers to encourage them to buy sustainable products. The lea-flet is available here: http://bit.ly/2c6nNt7.Vložte do košíka aj

kúsok zodpovednosti. S Kaufl andom.Pretože spolu dosiahneme viac.

Leták je vytlačený na papier nesúci certi kát Der Blaue Engel, ktorým

sa označujú výrobky vyrobené s ohľadom na životné prostredie.

Ponuka platí od štvrtka 14.4.2016 do stredy 20.4.2016 alebo do vypredania zásob. Ceny v tomto letáku sú uvedené v EUR. Našu ponuku nájdete aj na www.kaufland.sk Označenie „akcia“ alebo „mimoriadna ponuka“ bez súčasného uvedenia výšky zľavy a predchádzajúcej ceny tovaru neznamená cenovú akciu osobitnej cenovej výhody, ale predaj tovaru, ktorý nie je bežne celoročne v našej ponuke.

An Inspiring Example from BLFAnother global issue, namely inclusion of di-sadvantaged groups, is being actively pointed out by Slovak Telekom. Through its endowment fund administered by Pontis Foundation, the company provides long-term support to the community of The Deaf in Slovakia. It seeks to overcome barriers in communication with the hearing world through a wide range of projects, such as Online Interpreter, free courses of the Slovak sign language, or the Mobile Teacher programme, a project of field early intervention desig-ned for families with children with a hearing impairment. The company also presents its long-term experience and profound knowledge of the issue in its communication campaigns. An example might be the campaign “Learn a sign to understand each other”, in which known personalities want to demonstrate that the sign language is interesting, and although the deaf use their hands to talk and eyes to listen, they are full members of our society. The inspiring video with a strong human appeal is available here: http://bit.ly/2cc982f.

An Inspiring Example from AbroadEvery year over 300 million tonnes of fruit and vegetables end up at landfills around the world. 57 % of these products are discarded only because their shape is not perfect or symmetrical. French supermarket chain Intermarché decided to bring an end to this senseless waste of food. Its massive global campaign “Inglorious Fruits and Vegetables” aims to prove that food which is unattractive to the eye is edible and tasty. Besides the fact that it started selling this fruit and vegetables at a 30 % discount, the supermarket chain succeeded in changing people’s view of these imperfect products. A proof of the success is the fact that the campaign was seen by 21 million people in its first month, the number of visitors to fruit and vegetables departments in Intermarché supermarkets rose by 60 %, and five biggest competitors started selling the “embarrassing potatoes” or “ugly carrots” too. The commercial is avai-lable here: http://bit.ly/2bSQQnS.

Examples from BLFCSR reports in accordance with the Global Reporting Initiative Guidelines are regularly published by Slovak companies Heineken Slovensko, Slovak Telekom, and Všeobecná úverová banka.

Corporate Responsibility Report of VUB Bank

for 2015: http://bit.ly/2cMdduH

Sustainability Report 2015 Heineken Slovensko: http://bit.ly/2d6C798

Corporate Social Responsibility Report of Slovak Telekom for 2014: http://bit.ly/2cD561E

SustainabilityReport 2015 – HEINEKEN SlovenskoBrewing a Better World

Corporate Responsibility Report for 2015

Bank of

CSR activities were reported only by 48 % of the biggest Slovak companies in 2015. In that year corporate responsibility was globally reported by 73 % of companies, which represents a 2 % increase compared to 2013. ~ KPMG Survey of Corporate Responsibility Reporting 2015*

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Therefore, remember to follow principles such as self-reflection, criticalness, authenticity, and corporate social responsibility.

One of the effective communication channels you can use to inform consumers or your company’s partners about your sustainable activities is a regular report on corporate social responsibility. Using a simple and comprehensible language and nice visual material, it will help you inform all stakeholders (i.e., employees, customers, suppliers, non-profit organizations, etc.) about your efforts, projects, and the results you have achieved in areas that you care for.

Moreover, in 2015 the National Council of the Slovak Republic adopted an amendment to Act No. 431 / 2002 on accounting, as amended (hereinafter only “Accounting Act”) which obliges companies to publish information on corporate social responsibility and diversity policies in their annual reports. According to the amendment, this obligation applies to public interest companies whose average number of employees exceeds 500. More information can be found in our recommendations on Corporate Responsibility Report.

Inspiring Examples from AbroadAn example of visually simple communication with great internal value is the campaign of UNICEF which fights child labour in companies’ supply chains. According to an International Labour Organization survey, 168 million children and young people of 5 to 17 years work worldwide.* The organization pointed this out in 2002 by launching a simple but fitting campaign JEANS, prepared by the advertising agency Springer & Jacoby.

Another way of attracting customers’ attention and teaching them about a glo-bal issue was used by The Guardian in cooperation with Ben & Jerry’s. By means of a humorous multi-media series of stories about climate change entitled “Too hot to handle”, the portal seeks to stir up discussion about climate change. The viral content created by popular comedians from College Humour makes the difficult topic more accessible and shareable. The content is not only fun, but it also educates people and motivates them to take their own initiative against consequences of climate change. For example, the video “Save America’s Dumps” seeks to point to excessive production of waste in American households. Further information is available here: http://bit.ly/2c6MMvR.

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69 % of consumers will most probably recommend a brand to their friends if their experience with its products and its communication is simple. ~ Global Brand Simplicity Index 2015 by Siegel+Gale*

* http://bit.ly/2c9wjXD

5. Make Your Communication Visually Simple“People don’t want to buy responsible products, anyway.” Companies hear this statement quite often. How can it be rebutted ? It will suffice if you learn to communicate appropriately and effectively. Use concise, interesting, and inspiring language. Do not use many words because shortenings are catchier and easier to remember. Turn complex descriptions into simple visualizations.

People are willing to pay for experience that is accessible and attractive. Therefore, do you best to make your advertisements / communication truthful, trustworthy, motivating, enlightening, and inspiring. Do not forget about emotions and an innovative “fresh” approach.

6. Profit Must Remain the Primary Goal of Your BusinessSustainability requires a company’s financial prosperity. It has been proven that sustainable brands are doing twice as well as others, and their financial efficiency is better. The public and many entrepreneurs, however, still doubt that a sustainable business can make profit. Several of them keep asking, “What does a company’s social responsibility have in common with its profitability ?”

A 2015 study Project ROI3, which was conducted by Babson and IO Sustainability, for example, revealed that CSR activities increase companies’ profits by 20 %. An example of how sustainability can be turned into a profitable business are Green Giants. They include companies like IKEA, Tesla, Chipotle, Unilever, Toyota, Nike, Natura, Whole Foods, or GE’s Ecomagination. These companies earn billions of dollars in revenues from products or services which are based on sustainability and social innovations. Just as a matter of interest, a $1,000 investment into these companies from 2010 was worth $3,251 in 2015; a similar investment in their competitors’ portfolios had a value of only $1,932 in 2015.4 Green Giants consider sustainability a value, which is integrated into all structures of business, including organizational structure, management structure, costs, or marketing

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communication. Besides higher revenues and profits, sustainable activities also result in an increase in customers’ loyalty, long-term investment prospects for investors, and higher attractiveness for employees. Therefore, do not forget that sustainability is not only about how to save money, but it can also be about how to earn it. A sustainable strategy, together with excellent revenues, is also a great PR for companies and can be inspiring for other smaller or larger companies.

7. Do Not Forget about Internal Stakeholders. Use an “Inside-Out“ Approach

Many experts on CSR communication prefer an “inside-out” approach to raising stakeholders’ awareness of companies’ sustainable and ethical activities. According to a study conducted in Denmark The ‘Catch 22’ of communicating CSR,5 this approach has two basic implications. First, before they start to communicate about their responsible activities to external stakeholders, companies should ensure the engagement and commitment of their own employees. Second, as has also been mentioned in a Reputation Institute survey, companies should externally communicate only about those CSR topics that their employees can identity with. Both activities require the active involvement of internal stakeholders in responsible activities and the reinforcement of their commitment to companies’ values and CSR policies. The internal commitment to responsible activities within an organization is thus a prerequisite for responsible communication.

Why is that ? If your employees do not think that the company in which they work is socially responsible, your company becomes untrustworthy when you try to describe it as ethical and responsible to other (external) stakeholders. This is the reason why the CSR strategy and its communication should, in the first place, always come from within your company.

How can a company gain its employees’ trust ? It should suffice if it starts dealing with simple problems such as better working environment, benefits for parents, or waste separation in offices. CSR activities are not about saving the whole world, as most people think. They are especially about small steps. Only after employees reach an acceptable level of commitment to corporate responsibility values, it is suitable to involve them in local community or environmental projects and later in global issues. The inside-out approach requires employees to be companies’ most important stakeholders and carriers of CSR ideas. It is they who build ownership of your

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When it comes to trust in information that companies declare, most people more and more rely on “a person like them” and companies’ employees, who are, in their view, more trustworthy than companies’ CEOs or government officials. Also on social networks or websites, respondents trust their family and friends much more (78 %) than CEOs (49 %). ~ Edelman Trust Study 2016*

* http://bit.ly/2clqqL3

An Inspiring Example from AbroadAn illustrative example of a successful company focused on sustainable ac-tivities is the fast food chain Chipotle. Besides the freshness of food, the company also promotes a responsible approach to environment and use of more ethical ingredients. Despite the fact that the more humane and responsible ingredients that Chipotle uses are much more expensive, the company’s revenues in 2014 were four times as high as those of its com-petitor, the American icon Burger King. The company also actively informs about its responsible activities, which is attested to, for example, by its crea-tive campaign “Back to the Start”, which fights against the industrialization of

the food industry and inhumane living conditions for animals. The commercial, which has received more than 9 million views on YouTube, is available here: http://bit.ly/2c7JVVX.

corporate values this way and are able to spread and promote them effectively. The reason is that they work in a company with a good reputation. Neither must you forget about the active involvement of your company’s top management in improving the engagement of your employees.

An Inspiring Example from AbroadAn illustrative example of a company which first develops its CSR strategy in-ternally is the British retailing giant Marks & Spencer. In 2007 the company launched a project “Plan A” which follows not only its ethical and environmen-tal goals but also its whole philosophy. The campaign still runs today as “Plan A 2020” and includes 100 commitments which the company, in cooperation with its employees, customers, or suppliers, made to fight climate change, reduce waste, support the use of sustainable materials, or promote ethical trade – and thus become the world’s most sustainable retail chain. The project’s success is a result of the internal organizational commitment to it. Plan A is embodied, for example, in each shop’s business plan or each employee’s job responsibilities. Its omnipresence within the company makes it highly visible and trustworthy. Achieving the commitments in this project, for example, affects the amount of bonuses paid to branch managers. All results are independently audited and published in the company’s report entitled How We Do Business. Further informa-tion is available here: http://bit.ly/2cgnm3E.

The public wants to see a shift in CEOs’ and management’s focus from short-term goals and lobbing for jobs (49 %) to long-term positive influence on society (57 %). They want leaders to be more visible in discussions about income inequality and public policies (80 %). ~ Edelman Trust Study 2016*

* http://bit.ly/2clqqL3

“Inside-out” approach

Source: The ‘Catch 22’ of communicating CSR

A safe, attractive, and trustworthy

environment for your employees

Local community and people directly

affected by your company

National social and environmental

questions

Global issues related to your company, industry,

or sector

Integration and expansion of CSR agenda – based on

strengthening the commitment and engagement of your

employees

Your employees identify with your company’s values and CSR

policies – they promote your responsible activities themselves

8. Independent Supervision Ensures Greater CredibilityAccording to a study What Board Members Should Know About Communicating CSR,6 there is a compromise between the control and trustworthiness of companies’ communication: The less communication is controlled by a company, the greater stakeholders’ trust. How is it possible ? Target groups tend to have more confidence in renowned external and independent experts. In stakeholders’ opinion, internal marketing expects focus more on a company’s own interests and promote only the activities that cast better light on it. As Thomas Kolster says, “We live in a period when companies no longer own their brands. Brands are made by what people tell each other about them.” If you want to gain customers or hook investors, have your activities externally supervised.

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Who is Thomas Kolster ? Thomas is a prominent international expert on CSR communication. He is the author of the book Goodvertising (Thames & Hudson), which offers the most complex view so far of communication as a force for good. As the director and creative manager of The Goodvertising Agency, he helps companies and agencies understand this new fact. Last year Thomas fo-unded the world’s first platform for exchange of experience in the area of sustainable initiatives entitled WhereGoodGrows, which the Marketing Week portal described as a project “worth following”. Thomas is also an experienced speaker, who often appears in events such as Sustainable Brands. He also regularly writes for The Guardian and has published several publications. He regularly serves as a juror at international awards such as D&AD, Creative Circle Award, EthicMark Award, and Creative Conscious Award. The Huffington Post recently described him as “an inspiring leader”. He is currently a member of the executive boards of two non-profit organizations. In cooperation with Denmark’s biggest economic daily, he orga-nized the first Sustainable Bottom Line conference this year.

Benefits of CSR Communication in a Nutshell TRANSPARENCY Open communication leads to higher awareness of a company’s responsible activities and greater confidence

in a company’s CSR policies.

INDEPENDENT SUPERVISION OF RESPONSIBLE ACTIVITIES Communication enables a public comparison of companies, which is like an audit; it points to weaknesses in a

company’s CSR strategy or a mismatch between a company’s actions and its stakeholders’ expectations.

ACTIVE INVOLVEMENT AND GREATER LOYALTY OF PARTNERS Active communication strengthens the position of a company’s key partners and ensures their greater

involvement in a company’s decision – or policy-making.

INTER-SECTORAL COOPERATION Communication makes space for partnerships between companies, government, or non-profit organizations.*

ATTRACTING NEW TALENTS AND INVESTORS Effective and honest communication about a company’s CSR activities enhances its reputation and is one of

the most important tools for attracting professionals into a company or approaching investors.

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A thank you for invaluable tips and opinions goes to the representatives of: Heineken Slovensko, Kaufland Slovenská republika, Slovak Telekom, and Všeobecná úverová banka.

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