Mervyn King´s presentation on WPRF

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Mervyn King´s presentation on World PR Forum.

Mervyn King´s presentation on World PR Forum.

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  • 1. Stakeholder Relationships  in the New Economy WORLD PUBLIC RELATIONS FORUM 14 June 2010 Prof Mervyn E King SC
  • 2. Caretaker Darwinian or biblical Superior being Taken care? Transient in universal context Not owners of planet earth Corporate Legal Advisers
  • 3. Inheritance The trouble with our times Your children and their children Individual the driver Of all entities Ecological overshoot More in urban areas IT and shareholder revolutions Corporate Legal Advisers
  • 4. London Corporate Legal Advisers
  • 5. Not in a Vacuum 18th and 19th centuries Mid‐20th century Last decades of 20th century Integral to society – link Greatest pools of human and monetary capital The 100 largest economies Changed its identity Corporate Legal Advisers
  • 6. Parallel Crises Financial crisis, spilling over into the  economy Climate change crisis Ecosystem/natural resources crisis – two  thirds of our most important ecosystems – like tropical forests, farm land, fresh water  and marine resources –used beyond  nature’s capacity to regenerate them Corporate Legal Advisers
  • 7. Yesterday’s Economic Model Yesterday’s economic model was based  on the false assumptions : that there were limitless resources in nature  and  that nature had an infinite capacity to  absorb waste Corporate Legal Advisers
  • 8. Planet Inn 100 years ago 1 billion people 1945 – just under 2 billion 2010 – 6.5 billion 2050 – 9.5 billion No vacancies Corporate Legal Advisers
  • 9. 100 Years Take, Make and Waste Natural capital at no cost As a result, natural resources depleted,  water polluted and greenhouse gasses  (GHG) into open sewer in the sky Business cannot be conducted as usual Corporate Legal Advisers
  • 10. Inseparable Good governance Strategy Sustainability Governance, strategy and sustainability have  become inseparable Coca Cola Corporate Legal Advisers
  • 11. Measuring Company’s  Economic Value 20 % ? 67% market value   Brand value   $ 105,586 mil $ 70,453 mil  (Interbrand) 13% source: SAM Book value  $ 13,560 mil Corporate Legal Advisers
  • 12. Integrated Reporting Corporate Legal Advisers
  • 13. The New Economy Business as unusual Making more with less Procter & Gamble Coca Cola Google Governance, strategy and sustainability  are inseparable! Corporate Legal Advisers
  • 14. Five Essential Capital Aspects Financial capital Human capital Natural capital Social capital Manufactured/technology capital Critical interdependencies Corporate Legal Advisers
  • 15. The Governance Regime Mid 19th century Limited liability company – incapacitated Wealthy families – shareholders and  directors Primacy of shareholders Growth of companies – “agency problem” Stakeholder – inclusive approach Corporate Legal Advisers
  • 16. The Inclusive Approach Purpose Value drivers – culture Stakeholder groupings Interests and expectations Take account of Guided by best interests of company Corporate Legal Advisers
  • 17. Principles of the Inclusive  Approach Responsibly and responsively Accountability – account to, but of Fairness – the right thing to do Transparency – withering effect Intellectual honesty Corporate Legal Advisers
  • 18. Corporate Reputation – Brand Intangible assets Stakeholders’ aggregate perceptions Equal overall assessment of company Results in formation of the reputation Measurement : performance compared with interests and expectations Corporate Legal Advisers
  • 19. Legitimate Interests and  Expectations A reasonable and informed bystander Valid and justifiable Legal basis Moral or ethical basis Corporate Legal Advisers
  • 20. Who are Stakeholders? Group that can affect operations Group affected by operations By contract By tort (delict) By statute By codes Corporate Legal Advisers
  • 21. Board’s Duty Identify the stakeholder groupings Their interests and expectations Relevant to company’s long‐term goals Delegate to management to  communicate Board agenda item:  The Relationships Corporate Legal Advisers
  • 22. Governance Framework International National Local External External Stakeholders Stakeholders Consultants & Government Consultants & Internal Stakeholders Internal Stakeholders Government Advisors Advisors Stock Stock Money M MoneyM Lenders of Lenders of Board Board EE Employees Employees Trade Trade Exchange Unions Unions Exchange AA Directors Share Directors Shareholders Media Media CC Business Business Management Management CC holders Corporate Corporate Partners Partners Governance Governance Environ‐ Customers Guidelines Guidelines Environ‐ Customers mentalists mentalists SS Suppliers Suppliers Auditors TradeTrade Auditors Associations Associations Federations/codes Local Local Communities Communities industry norms Corporate Legal Advisers
  • 23. Licensors to Operate Law/Regulation Political Opinion Industry and  Market Standards Public Opinion/  Industry  Confidence Company Reputation Media Pressure Groups Individual attitudes:  Customers,  Suppliers, Consumers, Employees,  Investors and Community Corporate Legal Advisers
  • 24. The Moat Stakeholders The Company Corporate Legal Advisers
  • 25. The Gap Company performance Company reporting Stakeholder interests and expectations Stakeholder perceptions Corporate Legal Advisers
  • 26. Actions What company does How it makes its money What and how it communicates Bridges actual and perceived gaps Corporate Legal Advisers
  • 27. The CRO Corporate reputation officer Communicates with stakeholders Informs management Employee or independent Strategic communication Corporate Legal Advisers
  • 28. Reporting Electronic communication Website, blogging, etc Stakeholder associations Advertising Press releases Corporate Legal Advisers
  • 29. Caveats Information in public domain Not in public domain Price sensitive information Do not make stakeholder an insider Corporate Legal Advisers
  • 30. Content Substance over form Transparent Effective communication Understandable language Positives and the negatives Corporate Legal Advisers
  • 31. Annual Report The company’s stakeholder policy Identify stakeholder groupings Information highlights Stakeholders’ views, events, issues or  trends Corporate Legal Advisers
  • 32. Alternative Dispute Resolution  (ADR) Disputes with stakeholders Building relationships Dispute can destroy relationship Alternative dispute resolution clause Corporate Legal Advisers
  • 33. Integrated Report Holistic and integrated representation Of the company’s performance Financially, socially and environmentally Disclosure of stakeholder policy Stakeholder groupings and relationship Corporate Legal Advisers
  • 34. What Can Business Do? Change mindset with changed identity Business as unusual Produce more with less Integrated reports, including stakeholder  relationships Informed assessment of sustainability of company Good, hardnosed business, inclusive approach Fulfilling our duty to those who come after us Incapacitated good corporate citizen Right thing – essential thing Corporate Legal Advisers
  • 35. How Report Performance? Financial information alone? Not sufficient for informed assessments How has the company positively and negatively impacted  on a community economically, socially and environmentally  through its operations during the year under review and  related to its stakeholders? How is the company going to improve the positive aspects  and eradicate or ameliorate the negative aspects in the  financial year ahead and improve its stakeholder  relationships? Clear and understandable language Corporate reporting not what it used to be Corporate Legal Advisers
  • 36. CSR Corporate Legal Advisers
  • 37. A Journey Step by step An ascending path There is no end Personal achievement The Age of Stupid 2010 Corporate Legal Advisers
  • 38. Thank You Prof Mervyn E King SC