Brand Vulnerability Index

Brand Vulnerability Index (BVI) BVI Measuring and tracking exposure to NGO campaigns E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Why NGOs target brands • Highly visible in the marketplace – points of emotional relevance and connection to broad base of activists and consumers • Brand value is a significant and growing component of capitalisation for many of the world’s largest corporations – often greatly exceeding the value of physical assets (“bricks and mortar”) • Share-value often heavily dependent on the value of the brand(s) – but brand value is volatile and easily impacted by campaigning Greenpeace’s KitKat campaign • The more successful the brand, the higher • Viral launched 17 March across several the risk of challenges on environmental, social media platforms social and human rights issues • By mid-May around 1.5 million viewings on YouTube, over 200,000 emails sent to • For most NGOs, “brand” encompasses the Nestlé, hundreds of phone calls, thousands full supply chain and product stewardship – of Facebook comments brands could be held accountable for the • 17 May, Nestlé partners with The Forest actions of small, remote ‘rogue’ suppliers. • Trust to become “zero deforestation” by 2015 E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Lifecycle of an NGO-driven issue – access to essential medicines Source: The 21st Century NGO: In the Market for Change E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Key questions to ask of your brand Could brand be targeted? Is it more or less exposed than its competitors? How can we prevent or block Your On what an attack? brand issues is it vulnerable? What are the warning signs? Is it likely to be singled out? BVI E V I D E N C E - B A S E D C O M M U N I C AT I O N S

BVI components NGO perceptions of brand vulnerability Brand exposure NGO pressure to issues on brand issues Mitigation activities BVI E V I D E N C E - B A S E D C O M M U N I C AT I O N S

How NGOs perceive brands “Bad boy” “Elephant” “Giraffe” “Cool” Brands with “Exposed” brands brands brands brands vulnerable brands consumers Associated Perceived, Having shown Perceived to Customer base Brands in historically through their leadership on be sensitive sensitive to trouble that with NGO market CSR issues, because their claims of NGOs seek to criticism or dominance, to they have young, hip hazard or exploit for alleged be able to created customer base exploitation, their own corporate unilaterally expectations are typical eg. children, purposes misbehaviour change for more NGO the sick practices of supporters their sector E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Calculating BVIs Step 1: Brand risk analysis Risk factor Measurement Active risk How much the brand is already being targeted by NGOs, relative to its competitors. Historical risk How much the brand has been targeted by NGOs, relative to its competitors, within last 2-5 years. Sector risk If brand operates in a sector or industry already targeted by NGOs. Policy risk Exposure to NGO attack for operational, legacy or policy reasons, comparative to competitors. Proximity risk Whether a direct competitor is already under NGO attack which could plausibly shift to the brand in question because of similar policy or market exposure. Positioning risk Whether positioning attracts NGOs to make an example of it. Cultural & If brand is associated with countries and/or governments that political risk attract NGO criticism in certain countries or ethnic groups. E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Calculating BVIs Step 2: NGO issues analysis NGO force Collective weight of NGOs active on issue, weighted for size & influence Current NGO pressure Level of current NGO campaigning and trend (rising/falling) Step 3: Brand ‘Insurance’ Mitigation activities Effectiveness of measures to reduce/offset risk (eg., certification) Step 4: Calculate BVI BVI = Σ {brand risks} x {NGO force } x {current NGO pressure} across all issues {mitigation} E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Three BVI products • Simple Comparative Rating Scorecard for up to five competitor brands in a single sector, based on NGO factors and ‘desktop’ assessment of the effectiveness of mitigation activities • ° 360° Brand Diagnosis In-depth diagnosis of the embedded risks along the entire value chain of a brand, from sourcing to ingredients to manufacturing, distribution, marketing and end-of-product-life stewardship issues • Geographic Risk Scoping An assessment of relative risks country by country, based on SIGWatch’s Issues Satellite E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Simple Comparative Rating – 5 leading food & beverage brands • The sample shown here provides an 1,000 assessment of the BVI for five leading 900 BVI Europe brands in the food & beverage sector, 800 BVI North America by region 700 BVI Latin America 600 BVI Asia Pacific 500 400 300 200 100 0 A B C D E E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Top 10 food issues by current NGO pressure 600 Ag biotech crops Fisheries and sustainability 500 Palm oil and rainforests 400 Agriculture contribution to climate change Pesticide residues in food 300 Aquaculture environmental impact 200 BPA Food additives and colorings 100 0 Europe North America Latin America Asia Pacific E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Simple Comparative Rating – 5 leading consumer tech brands • The sample shown here provides an 25.0 assessment of the BVI for five leading BVI Europe 20.0 BVI North America brands in the consumer technology sector, BVI Latin America by region 15.0 BVI Asia-Pacific 10.0 5.0 0.0 V W X Y Z E V I D E N C E - B A S E D C O M M U N I C AT I O N S

BVI for ‘High Intensity’ sectors 4000 3500 Europe North America 3000 Latin America 2500 Asia Pacific 2000 1500 1000 500 0 Note: calculation of NGO force (the array of NGOs active on an issue) is taken over the previous 24 months, calculation of NGO pressure (current campaigning) is taken over the previous 12 months Continuous adversarial NGO campaigning Many major NGOs active across multiple issues * regional BVIs include international as well as local campaigns E V I D E N C E - B A S E D C O M M U N I C AT I O N S

BVI for ‘Moderate Intensity’ sectors 900 800 Europe North America 700 Latin America 600 Asia Pacific 500 400 300 200 100 0 Toiletries Electronics and Plastics Detergents & Retailing Fashion Automotive Paper Nanotech digital media cleaning products Note: calculation of NGO force (the array of NGOs active on an issue) is taken over the previous 24 months, calculation of NGO pressure (current campaigning) is taken over the previous 12 months Intermittent adversarial NGO campaigning Fewer discrete issues than High Intensity sectors * regional BVIs include international as well as local campaigns E V I D E N C E - B A S E D C O M M U N I C AT I O N S

BVI for ‘Low Intensity’ sectors 300 Europe 250 North America Latin America 200 Asia Pacific 150 100 50 0 Aviation Toys Bottled Water Alcohol Tobacco Note: calculation of NGO force (the array of NGOs active on an issue) is taken over the previous 24 months, calculation of NGO pressure (current campaigning) is taken over the previous 12 months Typically driven by small specialist NGOs Campaigning sometimes limited to a few countries (but could spread) Campaigns often non-public (eg. regulatory lobbying) * regional BVIs include international as well as local campaigns E V I D E N C E - B A S E D C O M M U N I C AT I O N S

BVI for generic chocolate brands, analysed by leading issues GMOs in animal feed 3.5 3.0 2.5 Artificial Palm oil 2.0 colourings All ages chocolate (EU) 1.5 All ages chocolate (U.S.A.) 1.0 Children's chocolate (EU) 0.5 Children's chocolate (U.S.A.) 0.0 Dairy Child labour welfare Marketing to Fair-trade children E V I D E N C E - B A S E D C O M M U N I C AT I O N S

360° Brand Diagnosis • Recognising that NGOs could potentially hold brands accountable for any perceived failure in their full value chain, one application of the BVI is a 360° brand diagnosis • This examines all of the related issues that exist in the brand ‘ecosystem’ including: – Sourcing of raw ingredients (countries, practices, labour relations, governance) – Manufacturing processes and inputs (working conditions, compounds and ingredients, energy intensity, treatment of bi-products and waste) – Marketing and distribution (advertising claims, vulnerable consumers) – End-use and disposal (packaging waste, toxics, recycling etc) E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Potential risks exist along the full value chain Raw Product & Transport & Manufact- R&D and Sales & End-use & material service distribution uring marketing retail disposal supply suppliers Geopolitical • Accusations of sourcing from • Dealing with non-democratic countries in conflict countries Environment & ecology • Endangered species • Waste • Emissions • Recycling • Sustainable farming • Pollution • Pollution • Toxic storage Human rights & labour rights • Child/forced labour • Unintended product • Sweat shops usage • Working conditions • Discrimination Animal rights • “Ecological” vs “industrial” food • Animal testing Unethical business • Smuggling • Illegal immigrants • Counterfeiting practices • Bribery Source: Bain & Company: Value Chain Accountability – from James Allen presentation to World Economic Forum, Annual Meeting 2004 E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Geographic issues scoping • Issues vary considerably by country, even within the same region. • Adapting SIGWatch’s Issues Satellite, the BVI drills down into each market to identify differences in the NGO and issues landscape, providing insight into local nuances and risks that may not be fully apparent in the regional assessment. • Outside Western Europe and North America it is commonly smaller local NGOs, unique to each nation, which initially target brands locally. Over time these are likely to be identified and co-opted by the big international NGOs (BINGOs) as they extend their campaigns globally. E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Geographic scoping using Issues Satellite E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Industry issues – food & beverage Top Issues • Second most targeted sector after energy World Europe North America services. Ag biotech crops in general 1 ↑ 1 ↑ 1 ↓ Palm oil and rainforests 2 ↗ 3 ↑ 9 ↗ Fairtrade 3 ↑ 2 ↑ 45 • Dominant issue is agricultural biotech and Agriculture contribution to climate change 4 ↗ 4 ↗ 18 ↗ GMOs in food 5 ↗ 8 ↑ 35 ↓ GM foods – substantial campaigning GMOs in animal feed 6 ― 5 ― 26 resources being applied in every region. Pesticide residues in food 7 ↗ 13 ― 25 ↓ Food and salt content 8 ― 6 ↗ 14 ↓ Food and nutritional labelling 9 ↑ 7 ↑ 28 ↗ Organic farming and food promotion 10 ↑ 9 ↑ 6 ↑ • Palm oil second most active issue – Food marketing to children 11 ― 10 ― 13 ↑ squeezing the issue at both ends of the BPA 12 ― 16 ↑ 2 ↓ Ag biotech and chemical use 13 ↗ 21 ↘ 3 ― supply chain. Obesity in general 14 ↘ 17 ↗ 5 ↓ Food and saturated fat 15 ↓ 11 ↓ 15 ― Cocoa farming and child labour 16 ↗ 20 ↑ 9 ↗ • While campaigning on health and nutrition Retailer power over suppliers 17 ↘ 11 ↓ issues has stabilised over the last year, Child obesity 18 ↓ 19 ↓ 21 ↓ Food and added sugar 19 ↗ 15 ― 19 ↗ ethical issues such as fair trade and child Vegetarianism 20 ― 25 ↑ 20 ↓ labour continue to rise up the NGO agenda. Alcohol and health 21 ↘ 14 ↘ GMO contamination of food eg. GM pollen 22 ― 18 ↘ 45 Water use in food processing 23 27 17 Antibiotics and drugs in animal feed 24 ↘ 22 ↓ 15 ↗ Bottled water - environmental/social impact 25 ↗ 37 ↓ 4 ↗ Food industry and supply chain responsibility 25 24 35 E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Industry issues – fashion, textiles and luxury goods • NGOs targeting the fashion sector tend to World Europe North Top Issues America be small specialist operations (but highly Fashion - supply chain standards 1 ↓ 1 ↓ 1 ― effective). Cattle ranching displacing rainforest 2 ↓ 2 ↓ 2 ↓ Fur production 3 ↗ 3 ↗ 4 Fur retailing 4 ↗ 4 ↗ 3 ― Textiles and sustainable production 5 ↗ 5 • Fashion and luxury brands remain Plastics in fashion - toxics 6 ↓ 7 ↓ vulnerable across a range of issues that Organic cotton 7 ↓ 6 ↓ resonate with consumers, eg Mining and conflict diamonds 8 ↓ 8 ↓ 6 ↓ Dimethyl fumarate (DMF) 9 9 Leather 9 ― 10 Exotic animal skins 11 12 – Workplace abuses in developing Throwaway fashion 12 ↓ 11 ↓ countries Jewellery and ethical precious metal sourcing 13 ↓ 13 ↓ 5 ↓ – Forced child labour in Uzbek cotton – Standards for organic textiles – Animal rights – Sourcing of stones and metals for jewellery. E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Industry issues – energy services • Energy services dominate the global NGO World Europe North Top Issues America agenda due to climate change. National/international carbon emissions reduction 1 ↘ 1 ― 2 ↘ Oilsands and oilshale 2 ― 3 ↗ 1 ↘ Coal burning and climate change 3 ↘ 4 ― 4 ↓ • Almost the entire weight of the NGO Nuclear energy - safety 4 ― 2 ― 23 ↑ community is concentrated on climate Hydro / large dams 5 ↓ 8 ― 19 ↓ change, energy brands and their commercial Oil and gas drilling offshore 6 ↗ 11 ↗ 7 ↗ Oil and gas pipelines 7 ↓ 21 ― 5 ↓ customers, suppliers and users – and Biofuels - environment impact 8 ↑ 5 ↑ 32 ↓ financiers. Automotive carbon emissions and fuel efficiency 9 ↑ 6 ↑ 31 ― Nuclear energy - economics 10 ↗ 7 ― 25 ↑ Carbon trading, cap and trade 11 ↑ 10 ↑ 13 ― • Activists continue to pursue Canadian oil Oil and gas drilling - impact on indigenous people 12 ↓ 31 ↗ 18 ↓ sands, coal and now offshore oil as proxy Public investment in renewable energy 13 ― 13 ↘ 17 ↗ issues. Coal burning and air pollution 14 ↗ 44 ↗ 8 ― Mountaintop removal coal mining 15 ↘ 3 ↘ Oil and gas drilling - impact on wildlife 16 ↘ 16 ↗ 11 ↓ • Also focusing on alternatives to fossil fuels Arctic - protection from exploitation 17 ↓ 30 ↑ 6 ↓ Nuclear waste storage 18 ↑ 9 ↑ 73 that they find unacceptable, such as biofuels Oil and gas drilling - carbon emissions 19 ↑ 23 12 ― and nuclear energy. Oil and gas drilling - pollution 20 ― 41 ↑ 15 ↘ Nuclear energy and climate change 21 ↗ 14 ↑ 49 ― E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Industry issues – personal care & household chemicals • Widespread use of palm oil has exposed this World Europe North Top Issues America sector to level of campaigning not seen since Palm oil 1 ↗ 1 ↑ 5 ↗ first wave of activism over animal testing. Nanosilver (biocide) 2 ↓ 3 ↓ 2 ↓ Cosmetics ingredients, eg. parabens, phthalates 3 ↓ 4 ↓ 1 ↓ • Nanotech is proving problematic for Standards in organic cosmetics 4 ↓ 2 ↓ 8 ↑ cosmetic brands – caught between groups Nanotech in sunscreens, cosmetics 5 ↗ 6 ↑ 7 ↓ pushing for an outright ban, and those Triclosan 6 ↘ 3 ↘ demanding full disclosure. Animal testing 7 6 6 Formaldehyde from preservatives 8 ↓ 4 ↓ Sunscreen safety 9 ↓ 10 ↓ 8 ↓ Cleaning products – safety 10 ↘ 11 ― • Brands also risk being undermined by rivals Eutrophication from detergents 11 5 using negative claims (eg., “does not contain Endocrine disrupters 12 ↑ 11 ― 13 preservatives”) seeking competitive Forest footprint 13 9 advantage. Cosmetics’ marketing claims 14 ↓ 11 ↓ Cyanide in jewellery cleaners 15 ↓ Safety of play cosmetics 16 ↓ 13 ↓ 14 ↓ Green marketing 17 ― 13 Child labour and cosmetics ingredients 18 ↓ Chemicals in organic toiletries 18 12 E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Industry issues – electronics & consumer technology • Dominant issue is the recovery and safe Top Issues World Europe North America Electronic waste handling and take-back 1 7 1 recycling of redundant electroic equipment ↑ ↑ ↑ Electronics - supply chain standards 2 ― 1 ↘ 12 – significant pressure to establish global Chemicals in electronics 3 ↘ 2 ― 2 ↓ recovery programs. Electrosmog, wifi, electrosensitivity, and cellulars 4 ↗ 3 ↗ 9 ― IT and climate change 4 ↑ 5 ↑ 4 IP rights and digital media 6 ↑ 4 ↑ 6 ↑ Brominated Flame Retardants 7 ↓ 6 ↓ 2 ↓ • Mobile phone manufacturers/operators Digital privacy rights 8 ↓ 8 ↗ 5 ↓ continue to face pressure over alleged Electronics manufacture - workplace chemicals 9 7 Incandescent light bulbs 10 ↑ 8 ↓ health risks of high frequency EM Electronics - customer service standards 11 ↗ 8 ↑ radiation. CFL light bulbs and mercury 12 ↘ 10 ↓ Child protection and the internet 13 ― 11 ↓ 10 Internet services marketing 14 ― 13 ↗ 12 ↓ Electronic waste through technological change 15 12 • Digital copyright and digital privacy rights Coltran sourcing for mobile phones 16 ↗ 17 ― 12 are both significant rising issues. Light pollution and health 16 ↗ 13 ↗ Mobile phone services - consumer protection 16 13 Laser printers, copiers - air pollution hazards 19 16 Nanotech in electronics 20 17 E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Industry issues – pharmaceuticals and healthcare • Global driver issues are access to medicine and Top Issues World Europe North America animals in biomedical research. Access to medicine and pricing 1 ― 1 ↘ 2 ↗ Animal testing and medical research 2 ― 2 ↓ 1 ↑ Animal research and primates 3 ↗ 4 ↘ 3 ↗ Antibiotics and drugs in animal feed 4 ↘ 6 ↓ 7 ↗ • Access to medicine campaign is growing beyond Healthcare lobbying 5 ↓ 27 ↓ 4 ↓ its core group of third world poverty and Pharma research ethics 6 10 Drug safety 7 ↗ 18 8 ↓ development NGOs – increasingly a key issue Healthcare insurance access 8 ↓ 20 ↓ 6 ― for consumer NGOs and specialist groups such Counterfeit medicines 9 ↓ 7 ↓ 9 ↓ Biopiracy 10 5 as retirees. Pharma’s relationship with healthcare professionals 11 ↓ 7 ↓ 14 ↓ Patient safety 12 ↓ 28 ↓ 10 ↓ Dietary supplements and safety 13 ↓ 12 ↓ 10 ↓ • Animal campaigners currently focusing on Pharma marketing honesty 14 16 primate use, starting with apes – much of the Pharma marketing direct to patients 15 ↓ 14 ↓ 14 ↓ Over-prescribing 16 ↘ 11 ↘ 19 campaigning is directed at contract research Veterinary drugs - effect on wildlife 17 organisations and (increasingly) the use of labs Animal testing - use of wild animals 18 23 in Asia and other ‘foreign’ locations. E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Industry issues – tourism, aviation and transport • Intense pressure on transport and tourism as major Top Issues World Europe North America discretionary consumers of fossil fuels. Automotive carbon emissions and fuel efficiency 1 ↑ 1 ↑ 2 ― Tourist development impact 2 ↗ 2 ↑ 10 Aviation carbon emissions 3 ↓ 3 ↓ 9 • In North America and Europe, primary target is Shipping – pollution 4 ↑ 5 ― 1 ↑ automotive fuel efficiency – scrutiny on marketing Automotive pollution 5 ― 6 ― 4 ↓ Shipping carbon emissions 6 ↓ 8 ↓ 7 ↓ claims and challenges to advertising in Europe. Aviation - airport development 7 ↘ 4 ↘ Impact of climate change on ski resorts 8 7 Discharge of untreated sewage from • Aviation and airport operator brands held to cruise ships 9 ↓ 9 ↓ 6 ↓ Ship breaking 10 ↓ 13 ↓ 3 ↓ account for climate impacts – not restricted to Zoos and marine parks 11 ↓ 14 ― 5 ↓ budget brands. Sex tourism 12 10 8 Environmental impact of mega events 13 ↓ 11 ↓ Aviation - transport of animals 14 12 • ‘Name and shame’ campaigns against shipping and cruise line brands are commencing. E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Industry issues – financial services • NGOs have discovered the power of Top Issues World Europe North America targeting financial institutions to exert Investment in carbon industries 1 ― 1 ― 1 ― pressure on clients and investments. Investment in oil sands 2 ↗ 2 ― 2 ↗ Investment in large dams 3 ↗ 3 ↑ 7 ↓ Carbon trading, cap and trade 4 ↑ 6 ↑ 3 ― Investment in arms industry 5 ↓ 4 ↓ • Environmental groups most active over Socially responsible investing (SRI) 6 ↓ 5 ↓ 17 climate change and its proxy issues, oil Investment in controversial countries 7 ― 9 ― 14 sands and coal mining. Investment and CSR 8 ↑ 8 ↑ 10 ↓ Investment in old-growth logging 9 ↗ 10 ― 9 Tax havens 10 ↓ 7 ↓ 17 • Singling out financial services brands with a Regulation of financial institutions 11 ― 12 ↓ 5 ↑ World bank, IMF and other MLAs 12 ↑ 15 17 ↓ strong consumer market presence, which Investing in nuclear energy 13 ↓ 13 ↓ 26 ↓ they perceive as sensitive to corporate Financial Transactions (‘Robin Hood’) Tax 14 11 12 embarrassment and ethical criticism. Credit card and other lending abuses 15 ↘ 27 5 ― Investment in low carbon energy 16 4 Investment in power projects 17 ↓ 14 ↓ Healthcare insurance 18 ↓ 24 ↓ 8 ― Financial institutions and customer service 19 17 17 Investment in polluting industries 20 16 E V I D E N C E - B A S E D C O M M U N I C AT I O N S

Further information / contact: Burson-Marsteller EMEA: About Burson-Marsteller Burson-Marsteller (www.burson-marsteller.com), established in 1953, Bill Royce is a leading global public relations and communications firm. It provides clients with strategic thinking and program execution across Bill.Royce@bm.com a full range of public relations, public affairs, advertising and web- related services. The firm’s seamless worldwide network consists of 70 offices and 60 affiliate offices, together operating in 85 countries Burson-Marsteller North America: across six continents. Burson-Marsteller is a part of Young & Rubicam Brands, a subsidiary of WPP (NASDAQ: WPPGY), one of Eric Biel the world’s leading communications services networks. Eric.Biel@bm.com About SIGWatch SIGWatch (www.sigwatch.com) specialises in tracking and Burson-Marsteller Latin America: understanding NGOs to help business manage global NGO risk. Many of the world’s leading multinationals are its clients. Founded in Ramiro Prudencio 1997 and headquartered in Freiburg, Germany, SIGWatch’s latest and most sophisticated range of online and bespoke services was Ramiro.Prudencio@bm.com launched in July 2008. SIGWatch enables businesses to calibrate both direct threats – such as NGOs attacking its brands – and issue threats – when NGOs raise Burson-Marsteller Asia-Pacific: the temperature of an issue or introducing new issues that increase businesses’ operating costs. Sahala Sianipar We provide three basic services: real-time information about NGO campaigns and intentions, insight into NGO strategies to help Sahala.Sianipar@bm.com manage issues and predict emerging problems, and counselling and training to better understand NGO psychology and motivation, and to develop productive relationships with NGOs. E V I D E N C E - B A S E D C O M M U N I C AT I O N S

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Brand Vulnerability Index

by Burson-Marsteller on Jun 15, 2010

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Brand Vulnerability Index — Presentation Transcript