When the wind of reputation blows in favour: Vestas and a new model of humanistic capitalism.
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When the wind of reputation blows in favour: Vestas and a new model of humanistic capitalism.

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Does the need to manage reputation in companies play a part in bringing about change in the economic and social model prevailing up to that moment? Should the Chief Communications Officer (CCO) be the ...

Does the need to manage reputation in companies play a part in bringing about change in the economic and social model prevailing up to that moment? Should the Chief Communications Officer (CCO) be the one responsible for ensuring the long-term vision in the face of companies’ short-termism, as well as for changing their relationship with the world?
Vestas is a firm that is over a century old, with mainly Danish capital and fully listed on the stock market. The firm began trading as a manufacturer of aluminium windows, but then started making farming equipment, and finally, in the 1970s –in response to the oil crisis– it began exploring wind energy as a cleaner and safer energy supply source.
This document has been prepared by Corporate Excellence – Centre for Reputation Leadership. It has cited, from among other sources, the speech by Morten Albaek, Senior Vice President for Group Marketing & Customer Insight at Vestas, delivered at 15th International Conference “Navigating the Reputation Economy” organised by Reputation Institute in New Orleans on 18, 19 and 20 May 2011.

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When the wind of reputation blows in favour: Vestas and a new model of humanistic capitalism. When the wind of reputation blows in favour: Vestas and a new model of humanistic capitalism. Document Transcript

  • Cases Strategy Documents C13/2013 Public Affairs When the wind of reputation blows in favour: Vestas and a new model of humanistic capitalism Does the need to manage reputation in companies play a part in bringing about change in the economic and social model prevailing up to that moment? Should the Chief Communications Officer (CCO) be the one responsible for ensuring the long-term vision in the face of companies’ short-termism, as well as for changing their relationship with the world? Vestas is a firm that is over a century old, with mainly Danish capital and fully listed on the stock market. The firm began trading as a manufacturer of aluminium windows, but then started making farming equipment, and finally, in the 1970s –in response to the oil crisis– it began exploring wind energy as a cleaner and safer energy supply source. The firm is undoubtedly operating in one of the world’s cleanest sectors, but it does not simply belong to it -it is its global leader. Wind is its raw material, and the change in the current model of fossil fuels –or black ones, as Vestas refers to them– will open the door to a cleaner energy mix, in which wind power will play a more important role. This has prompted the firm’s tagline: Wind. It means the World to Us. According to Morten Albaek, Senior Vice President for Group Marketing & Customer Insight at Vestas, wind power is the most competitive, not in terms of the sum of the earth’s energies that humans know how to harness, but rather of the sum of all renewable energies. Not only that, it is also the quickest to install and the one that emits the least amount of greenhouse gases; in other words, it is the most sustainable of all of them. Why, therefore, is it not sufficiently known by consumers or positively viewed by people in the way solar energy is within the field of renewables, in terms of its contribution to the environment, or nuclear power within the field of traditional energy, given its contribution to the overall amount of power supplied? This document has been prepared by Corporate Excellence – Centre for Reputation Leadership. It has cited, from among other sources, the speech by Morten Albaek, Senior Vice President for Group Marketing & Customer Insight at Vestas, delivered at 15th International Conference “Navigating the Reputation Economy” organised by Reputation Institute in New Orleans on 18, 19 and 20 May 2011.
  • When the wind of reputation blows in favour: Vestas and a new model of humanistic capitalism Empowering “citisumers” or “consumizens” Transparency is, perhaps, one of the main values behind a good reputation, but in the renewable energy sector it is a crucial factor. Transparency ensures real information is known instantly and all the necessary facts are made available for a proper and more conscious decision. This is the target Vestas set itself in 2009, according to its Senior Vice President for Group Marketing & Customer Insight, when it committed to the development of an ambitious plan that involves giving power and autonomy to those deemed to be the new “citisumers” or “consumizens” –types of consumers who conduct themselves in the full awareness of being active citizens. ‘Transparency ensures real information is known and all the necessary facts are made available for a proper and more conscious decision’ With the help of consumers themselves, as well as of other companies that share the same view as Vestas on this matter, the Danish firm has launched a large number of initiatives –both within the actual energy sector and outside it– designed to improve communication and increase the visibility of the energy basically used to manufacture a product. In 2010, a global survey was released on wind and consumers regarding climate change, with over 31,000 responses from 26 countries. In 2011, during the World Economic Forum held in Davos (Switzerland), presentation was made of the first label for companies using wind power (WindMade) with the catchphrase “Choose Wind. Power Change.” and supported by the World Energy Council, WWF, Lego, the UN Global Compact, PwC and Bloomberg. In addition, the Global Corporate Renewable Energy Index (CREX) was introduced and an agreement reached to hold a Global Wind Day. The survey clearly reflected the concern over climate change, with the negative consequences of global warming for human activity and the economy as a whole being considered serious in 84% of cases, especially in those countries posting the highest growth in recent years, such as China or India. Likewise, and with regard to this serious problem, 84% of the responses rated the responsibility of people and of humanity as a whole as a cause for concern, with emerging countries once again at the forefront. Yet the issue those polled in this survey referred to the most, and which they most approved of, involved the positive role renewable energy sources may have when tackling and resolving this situation. Concerning the results of the initiative designed to introduce a recognisable seal for those products made thanks to wind energy –similar to the one created in its day for ecological, organic or natural products–, Albaek explains that Vestas championed a technical committee charged with supervising the creation of that standard. This committee has managed to convince the world’s main global brands to take part in the project and contribute their ideas before the end of the process for designing the label in question. In fact, according to the aforementioned survey, 79% of those interviewed affirmed they purchased products at an above-average price if they were manufactured with wind energy or if it was used during the production process. As in the previous questions, countries such as India or China easily exceeded the ratings provided by Germany, the United Kingdom and Canada. The United States recorded the worst rating in the research for all the issues related to climate change. Finally, within the framework of the campaign for energy transparency, the firm launched the “CaCoCos” group, which stands for Carbon Conscious Companies, an alliance of businesses committed to wind as the main energy for manufacturing in the future, and which understands that companies need not be part of the problem but rather part of the solution to the issue of climate change. An important detail for understanding the scope of this initiative is that 10% of the annual electricity consumed by the world’s 1,500 largest corporations is equal to the total amount of electricity used in Graphs 1: Priority areas by market Slightly serious USA Serious 84 % 13% 22% Canadá UK Respond Serious Germany Very serious 49% China 29 22 42 72% 21 27 30 27 49 India 63 Very serious Serious 79% 22 23 74 85% 16 12 84% 14 4 92% 17 10 90% Slightly serious Source: Morten Albaek, 15th International Conference on Corporate Reputation, Brand, Identity and Competitiveness, 2011. Cases 2
  • When the wind of reputation blows in favour: Vestas and a new model of humanistic capitalism Graphs 2: The World‘s first global consumer laber for renewable energy 1969 1978 1982 1989 1992 2002 Source: Morten Albaek, 15h International Conference on Corporate Reputation, Brand, Identity and Competitiveness, 2011. Australia, or six times the consumption of an entire city such as New York, or thirty times the power generated by the Hoover Dam on the Colorado River (United States). ‘Doing more than companies are accustomed to in environmental matters, and with society it is a visible part of the pillar the new reputation will be’ The power of transparency This series of actions has a clear goal: to change the relationship between energy utilities and their stakeholders, investors and, especially, consumers, seeking a more transparent way of interacting with them and modifying the premises underpinning their relationship with the world as a whole. Vestas considers transparency itself to be a clear accelerator of the energy change process. The creation of the CREX is, furthermore, a very useful tool when adding transparency to the global energy procurement process in the field of renewable energies, by analysing, documenting and evaluating the amount, as well as the source, of such transactions. At the heart of the strategy pursued by Vestas, transparency is a useful tool for improving and extending the investment in renewable energies and the supply chain, as well as being a mechanism for revealing the truth behind the supply and demand of clean energies and the possibilities of driving their growth. As a result of this entire strategy developed by Vestas, and in terms of the outcomes related to reputation, between 2009 and 2011 the firm recorded a consolidated increase of four points in the Global RepTrakTM. Conclusion: companies as social agents Arguably of greater interest in the Vestas case is not specifically how it was done, but rather what was done: the Danish wind energy firm has decided, in an original and almost unique case in the world so far, to leader a type of social initiative – transparency regarding energy consumers in product manufacturing – which had hitherto been the domain of NGOs. Doing more than companies are accustomed to in matters related to environmental policies, in particular, and social ones, in general, is a clear part of what we can affirm will be the spearhead for building the new reputation, or the main pillar upon which it will be based. Regarding that task, that endeavour, the CCO will have a key role to play when internally arranging the policies to be rolled into the path of the new winds of reputation that are set to blow –or indeed are already blowing. Cases 3
  • Leading by reputation ©2013, Corporate Excellence – Centre for Reputation Leadership Business foundation created by large companies to professionalize the management of intangible assets and contribute to the development of strong brands, with good reputation and able to compete in the global market. Its mission is to be the driver which leads and consolidates the professional management of reputation as a strategic resource that guides and creates value for companies throughout the world. Legal Notice This document is property of the Corporate Excellence – Centre for Reputation Leadership and has as its objective to share business knowledge about Brand, Reputation, Communication and Public Affairs Management. Corporate Excellence – Centre for Reputation Leadership is the owner of all the intellectual property rights of the images, texts, designs and any other content or elements of this product and has the necessary permission for its use, and therefore, its copy, distribution, public release or transformation is prohibited, without express authorization from the owner.