Stakeholder Relationships 
   in the New Economy

   WORLD PUBLIC RELATIONS FORUM
           14 June 2010
        Prof Mer...
Caretaker
Darwinian or biblical
Superior being
Taken care?
Transient in universal context
Not owners of planet earth



  ...
Inheritance
The trouble with our times
Your children and their children
Individual the driver
Of all entities
Ecological o...
London




         Corporate Legal Advisers
Not in a Vacuum
18th and 19th centuries
Mid‐20th century
Last decades of 20th century
Integral to society – link
Greatest ...
Parallel Crises
Financial crisis, spilling over into the 
economy
Climate change crisis
Ecosystem/natural resources crisis...
Yesterday’s Economic Model
Yesterday’s economic model was based 
on the false assumptions :
 that there were limitless res...
Planet Inn
100 years ago
1 billion people
1945 – just under 2 billion
2010 – 6.5 billion
2050 – 9.5 billion
No vacancies

...
100 Years
Take, Make and Waste
Natural capital at no cost
As a result, natural resources depleted, 
water polluted and gre...
Inseparable
Good governance
Strategy
Sustainability
Governance, strategy and sustainability have 
become inseparable
Coca ...
Measuring Company’s 
                Economic Value
                                    20 % ?



                        ...
Integrated Reporting




                       Corporate Legal Advisers
The New Economy
Business as unusual
Making more with less
Procter & Gamble
Coca Cola
Google
Governance, strategy and susta...
Five Essential Capital Aspects
Financial capital
Human capital
Natural capital
Social capital
Manufactured/technology capi...
The Governance Regime
Mid 19th century
Limited liability company – incapacitated
Wealthy families – shareholders and 
dire...
The Inclusive Approach
Purpose
Value drivers – culture
Stakeholder groupings
Interests and expectations
Take account of
Gu...
Principles of the Inclusive 
          Approach
Responsibly and responsively
Accountability – account to, but of
Fairness ...
Corporate Reputation – Brand
Intangible assets
Stakeholders’ aggregate perceptions
Equal overall assessment of company
Res...
Legitimate Interests and 
         Expectations
A reasonable and informed bystander
Valid and justifiable
Legal basis
Mora...
Who are Stakeholders?
Group that can affect operations
Group affected by operations
By contract
By tort (delict)
By statut...
Board’s Duty
Identify the stakeholder groupings
Their interests and expectations
Relevant to company’s long‐term goals
Del...
Governance Framework
                                       International
                                          Nation...
Licensors to Operate
                                  Law/Regulation
      Political Opinion                             ...
The Moat
Stakeholders




The Company




               Corporate Legal Advisers
The Gap
Company performance
Company reporting
Stakeholder interests and expectations
Stakeholder perceptions




         ...
Actions
What company does
How it makes its money
What and how it communicates
Bridges actual and perceived gaps




      ...
The CRO
Corporate reputation officer
Communicates with stakeholders
Informs management
Employee or independent
Strategic c...
Reporting
Electronic communication
Website, blogging, etc
Stakeholder associations
Advertising
Press releases



         ...
Caveats
Information in public domain
Not in public domain
Price sensitive information
Do not make stakeholder an insider

...
Content
Substance over form
Transparent
Effective communication
Understandable language
Positives and the negatives



   ...
Annual Report
The company’s stakeholder policy
Identify stakeholder groupings
Information highlights
Stakeholders’ views, ...
Alternative Dispute Resolution 
            (ADR)
Disputes with stakeholders
Building relationships
Dispute can destroy re...
Integrated Report
Holistic and integrated representation
Of the company’s performance
Financially, socially and environmen...
What Can Business Do?
Change mindset with changed identity
Business as unusual
Produce more with less
Integrated reports, ...
How Report Performance?
Financial information alone?
Not sufficient for informed assessments
How has the company positivel...
CSR




      Corporate Legal Advisers
A Journey
Step by step
An ascending path
There is no end
Personal achievement
The Age of Stupid 2010



                  ...
Thank You



Prof Mervyn E King SC
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Mervyn King´s presentation on WPRF

  1. 1. Stakeholder Relationships  in the New Economy WORLD PUBLIC RELATIONS FORUM 14 June 2010 Prof Mervyn E King SC
  2. 2. Caretaker Darwinian or biblical Superior being Taken care? Transient in universal context Not owners of planet earth Corporate Legal Advisers
  3. 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. 4. London Corporate Legal Advisers
  5. 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. 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. 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. 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. 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. 10. Inseparable Good governance Strategy Sustainability Governance, strategy and sustainability have  become inseparable Coca Cola Corporate Legal Advisers
  11. 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. 12. Integrated Reporting Corporate Legal Advisers
  13. 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. 14. Five Essential Capital Aspects Financial capital Human capital Natural capital Social capital Manufactured/technology capital Critical interdependencies Corporate Legal Advisers
  15. 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. 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. 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. 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. 19. Legitimate Interests and  Expectations A reasonable and informed bystander Valid and justifiable Legal basis Moral or ethical basis Corporate Legal Advisers
  20. 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. 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. 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. 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. 24. The Moat Stakeholders The Company Corporate Legal Advisers
  25. 25. The Gap Company performance Company reporting Stakeholder interests and expectations Stakeholder perceptions Corporate Legal Advisers
  26. 26. Actions What company does How it makes its money What and how it communicates Bridges actual and perceived gaps Corporate Legal Advisers
  27. 27. The CRO Corporate reputation officer Communicates with stakeholders Informs management Employee or independent Strategic communication Corporate Legal Advisers
  28. 28. Reporting Electronic communication Website, blogging, etc Stakeholder associations Advertising Press releases Corporate Legal Advisers
  29. 29. Caveats Information in public domain Not in public domain Price sensitive information Do not make stakeholder an insider Corporate Legal Advisers
  30. 30. Content Substance over form Transparent Effective communication Understandable language Positives and the negatives Corporate Legal Advisers
  31. 31. Annual Report The company’s stakeholder policy Identify stakeholder groupings Information highlights Stakeholders’ views, events, issues or  trends Corporate Legal Advisers
  32. 32. Alternative Dispute Resolution  (ADR) Disputes with stakeholders Building relationships Dispute can destroy relationship Alternative dispute resolution clause Corporate Legal Advisers
  33. 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. 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. 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. 36. CSR Corporate Legal Advisers
  37. 37. A Journey Step by step An ascending path There is no end Personal achievement The Age of Stupid 2010 Corporate Legal Advisers
  38. 38. Thank You Prof Mervyn E King SC

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