The impact of sustainability and integrated reporting on Public Relations Lessons Learnt Reana Rossouw Next Generation Consultants
From Annual Report to SustainabilityReport to an Integrated Report………..
“To make our economy sustainable we have to relearneverything we have learnt from the past.That means making more from less and ensuring thatgovernance, strategy and sustainability are inseparable.Integrated Reporting builds on the practice of FinancialReporting, and Environmental, Social and Governance-or ESG/Sustainability – Reporting, and equips companiesto strategically manage their operations, brand andreputation to stakeholders and be better prepared tomanage any risk that may compromise the long-termsustainability of the business”Professor Mervyn King, Chairman of the GRI
An integrated report …. The core concepts revolve around an “inclusive” approach and “integrated” reporting to provide a holistic and forward looking picture of the reporting organisation to the multitude of stakeholders who are impacted by and who in turn impact the reporting organisation.
Key considerations:• Integrated reporting…. – Is the evolution of sustainability reporting from a “nice to have” to a “need to have” basis – Is communicating the business strategy and processes which exist or are to be implemented to manage both financial and sustainability issues – Is a journey and progressively needs to cover the multiple needs of the different user types – Requires the development of a framework to ensure all reporting requirements are being met.Source: KPMG – Integrated Reporting – Understanding the requirements - 2011
Reporting Progress Sustainability Report Integrated Report Annual Report • Financial • Lots of issues • Core elements Results • Lots of that • Compliance stakeholders contribute to Statutory • Stakeholder core value Information based creation • Shareholders • Most material based to value creation for stakeholders • Stakeholder basedSource: Next Generation Consultants – www.nextgeneration.co.za
What this means….• This change requires not only new skills and competencies but also a new mind shift about fundamentally different communication strategies• This new era of Corporate Reporting focuses on enabling stakeholders to make informed assessments as opposed to companies telling their (one-sided) story• It requires integrated strategic communication strategies that considers, allows and encourages stakeholders to influence business strategy
New era ofcommunications • Principles of Reporting – Materiality – Inclusiveness – Completeness – Balance – Comparability – Accuracy – Timeliness – Clarity – Reliability – Transparency – Accountability
Here, There, Everywhere• Issues management is a traditional role and responsibility of the public relations function – Issues management, broadly defined, is the practice of identifying potential problems and working to deflect or defuse them in order to minimize their impact on an organisation or business• Sustainability deals with these material issues – in particular – how a company is or plans to deal with it.• The sustainability and integrated report is the communication aspect – i.e. ‘telling the story’ to stakeholders.• Until now PR focused on specific ‘stakeholder groups’ i.e. investors, shareholders, media, etc.• So – what is the NEW story about stakeholders?
Providing the link • Additional requirements of practitioners are – to take the lead in stakeholder engagement, to document the engagement process, (i.e. outcome and commitment to these issues raised by stakeholders), to contribute to the reporting process, and ensure the most material issues are managed – all of these provide an additional layer of complexity.
The era of stakeholder engagement1980’s – The Awareness Era 1990’s – The Attentive Era 2000’s – The Engagement EraEnvironmental Environmental and Social Increasingly complex environmental, social, economic environmentLocal Global GlobalHigh Impact – High Visibility Less visible industries Multi stakeholder partnershipsIndustriesDeteriorating public opinion, Increasing awareness of threats Growing issue linkages,mistrust of business to resources, complexity across the value interconnectedness of chain as well as product chain environmental, social, economic (cradle to grave) issuesNGO, Activist pressure to Calls for corporate responsibility Growing anti-globalisationreduce environmental impacts on environment, social issues movementNegative media Rise of NGO influence powered Increasing influence of global by electronic communications multi stakeholder organisationsIncreasing community tensions Recognition of value creation from engagement for a company and its stakeholdersConsumer boycottsDifficulties, delays inpermissionsThreats to licence to operate
Stakeholder Groups by Relationship Business Government Civil Society• Deepening and adding • Moving beyond a • Moving beyond value to traditional or compliance framework confrontation to long-standing into a variety of dialogue and cooperative relationships participatory and partnership models• Managers, employees models, including new • Local community and labour unions forms of public-private stakeholders• Shareholders, investors, partnerships and multi- • NGO’s financiers, reinsurers stakeholder policy • Research institutions, dialogue aimed at• Customers, clients, academics, media securing a policy consumers • Global community framework that is• Suppliers, contractors supportive of responsible stakeholders• Industry and trade competitiveness • Vulnerable/voiceless/ associations • Industry based / indigenous/future groups• Competitors regulatory bodies – mining, telecoms, finance
Increasing sophistication in approaches to engagementCommunications via one-way channels designed tospread information• TRUST USConsultation and dialogue via interactive channels• SHOW USPartnerships that create value and are focused onfinding solutions• INVOLVE US, HEAR US
Case Studies• Engagement and dialogue is more about listening – Shell – Fracking in the Karoo• Expect to take time to learn a new vocabulary – even if you are using the same words, they have a different meaning – BHBP – Environmental/Emissions/Pollution vs. Health Issues• Accept that there might not be agreement on all issues – BP – Don’t expect to set the agenda• Be aware of perceptions that may not align with internal thinking – some you may be able to change, whilst some you might have to learn to live with – Mines – people have short and/or long memories – relocation, wages, hostels, asbestos, water, nationalisation• You may need independent, external, specialist skills to facilitate the process – Walmart – local knowledge, skill and cultural insight• The rules of engagement need to be agreed• Comment and commitment needs to filter through the organisation• It takes time and resources and it raises expectations• Stakeholders are not homogenous groups• Getting the right stakeholders to the table is neither simple nor easy• It requires reviewing internal priorities, processes and systems
Lessons Learnt (1)• Unlearn PR & Embrace the Specific• Be afraid – be very afraid – if you see phrases like – “industry leading,” “best in class,” and “visionary” – “We’ve been the most responsible (insert industry) company since (insert name of scion) /(launched this great company in) [insert date]. And this year we’ve done some fantastic things to improve our performance. Not that we’re suggesting that in previous years our performance needed improving, because we were already great … ”.
Lessons Learnt (2)• Learn to say ‘’Sorry – we made a mistake”• Practice starting sentences with “Unfortunately, …” and “We didn’t reach our goal this year because … ”.• Use language along the lines of “Despite these accomplishments, we know we have a long way to go.”
Lessons Learnt (3)• Is it real or aspirational?• When you talk about future performance, be it a specific goal or (dangerously) an implied goal, be very clear about what’s aspirational and what’s a hard goal for which you’re willing to be held accountable.• It doesn’t hurt to qualify this by laying out the potential factors that might make the goal difficult to achieve. Sweeping predictions may bite you where it hurts.
Lessons Learnt (4)• It matters – all of it! – You have an important job. More than any other document, your Sustainability / Integrated Report has the potential to earn at least the grudging respect of your critics. – At the end of the day, sustainable business practices and transparent communications represent opportunity more than risk.
Thank You Questions Please note:This presentation is part of a larger body of research and knowledge. For more information: www.nextgeneration.co.za 19