Corporate accountability in the post-truth era

1st June 2017

In the early days of corporate communications, a company made money and our job was to tell the world about the value of that company, to attract investors and drive growth.

It was a “Mad Men” model of corporate storytelling, where the only metric was monetary.

Of course, products were and are important, and the leading products attracted brand loyalty and accreted brand equity, further driving value. Both Andy Warhol and Roland Barthes were quick to pinpoint the serialism of brands as one of the defining totems of the consumer age.

Then things became a little more challenging for corporates, with the rise of investigative journalism and NGOs. For the first time, businesses had to espouse values and behaviours that weren’t just about the money.

Values were first articulated in the ever-so-Eighties “mission statement”, a sort of attaché case of corporate purpose. Then along came corporate social responsibility, environmental reporting, and a new breed of charismatic leader who could see the opportunity of corporate brand difference. And being nice – or doing no evil – became the lingua franca for the vanguard of new tech businesses.

But that was not the end of the story. The transparency and scrutiny bred by the internet and social media meant companies had to address the big picture of how their business was done.

With a collective consciousness heightened by successive financial calamities, legislators created new frameworks for corporate governance, financial reporting, tax transparency and anti-corruption standards.

Brands could no longer obscure their supply chains. Trade had to be fair and ethical. Consumers became activists.

This has brought us to the era of the corporate brand: mindful and responsible of its impact on the world, its relationships with consumers and stakeholders. And that is on top of delivering to an investor community, with its quarterly reporting cycles and activist shareholders.

After a half-century of evolution in the way in which companies express themselves, the extreme mutability of reputation has become palpable.

So what sort of approach should corporates be taking now, in this post-truth era? For me, companies have accountabilities in seven areas: financial; fiscal; corporate behaviour; environmental; supply chain; consumers; and community and society.

First, financially, we have seen important changes to how the reporting of financial performance is conducted, driven by the Enron collapse and the introduction of the Sarbanes Oxley rules in 2002. Companies must be honest about their balance sheets. Investors must be told promptly when circumstances change. No-one should benefit from access to inside information.

The financial reporting climate has changed irrevocably, even to the extent that some argue that the quarterly reporting treadmill hampers the ability of public companies to maintain a strategic view of their future direction.

Secondly, fiscally: despite this now-established transparency, we still see a wide range of variation in conduct in terms of the tax affairs of companies, with many companies using aggressive tax management strategies to limit their contribution. So even if the reporting environment for public companies is strict, there are still concerns over the ways in which private companies and others can use tax-efficient vehicles to limit their contributions to the stretched tax coffers of governments who are struggling to fund public services.

The third responsibility is corporate behaviour. The Foreign and Corrupt Practices Act in the US and similar legislation in other countries around the world has put into focus the need for global companies to put their conduct under the microscope.

Corporate behaviour also extends to the treatment of the workforce, not least the recognition of labour rights, the right to work safely, and the right to a living wage.

Fourth, we have for some time see moves to secure the “greening” of business, as the realisation has dawned that, both in terms of carbon emissions, and in terms of the consumption of resources and habitats, unbridled business would spell disaster for the planet.

Many companies have their own initiatives in this regard, while others are responding to national and pan-national legislation and regulatory initiatives, for example, the Paris Agreement.

The fifth area of responsibility is in the supply chain. One issue that has been brought to the fore in recent years is the need for an equitable distribution of returns along the supply chain. In the food industry, this is true whether we are talking about cocoa, tea or coffee sourced from the developing world, or milk, wheat or beef sourced from our home countries.

Fair trade has become a near-universal term, and in some cases a minimum standard with which many seek to comply. Ultimately, it has been seen that supplier relationships which do not treat the supplier fairly are unsustainable for all parties.

The sixth responsibility is the treatment of consumers. The politics of consumerism emerged in developed societies in the 1970s, as those with spending power began to expect fair treatment by those to whom they gave their custom.

Fair treatment for consumers is now a norm in the West. In the fast-growing economies of the Far East and Latin America, the burgeoning middle class is also beginning to make its voice heard.

Finally, businesses are now required to be accountable to the communities in which they are located and to society at large. This goes way beyond simply being good neighbours.

This is about a new and refined understanding of the role of a company in society. What does it give back? What is its purpose? How does it reinforce and strengthen the community? What value and values does it bring to the citizens of its host territory?

Not all of these seven behaviours have the force of law. But it seems to me that a modern, successful global company will seek to integrate these seven accountabilities – financial, fiscal, behavioural, environmental, supply chain, consumer and community – into a single strategy that informs all aspects of their operations.

This is more than what used to be known as corporate social responsibility (CSR), important though that staging post has proved to be. In fact, it’s striking that the promotion of policies in this area is now seen as part of the solution to our current woes.

The European Commission has observed: “Helping to mitigate the social effects of the current economic crisis, including job losses, is part of the social responsibility of enterprises. CSR offers a set of values on which to build a more cohesive society and on which to base the transition to a sustainable economic system”.

This isn’t quite post-capitalist thinking, but it is a sign of the growing inclination to see the new CSR as an element of the path ahead for developed economies, where business regulation has in the eyes of some been too lax.

We can see this too in the emergence of internationally recognised principles and guidelines such as the OECD Guidelines for Multinational Enterprises, the ten principles of the United Nations Global Compact, the ISO 26000 Guidance Standard on Social Responsibility, the ILO Tri-partite Declaration on Principles Concerning Multinational Enterprises and Social Policy, and the UN Guiding Principles on Business and Human Rights.

This mouthful of conventions is a clear sign of the rising tide of expectation regarding the conduct of businesses in the wider societal sphere. But the real difference will be made when expectations about corporate responsibilities are made fully part of company law worldwide.

These seven accountabilities create a tough framework for corporate brand communications and its practitioners in the post-truth era. The bar is set high, and we and our clients are under 24/7 digital scrutiny, but in the end, it’s still about telling great corporate stories.

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