Trust, transparency & sustainability
Paul Dobson, Partner – Sustainability, Strategic & Reputation Risk18 October 2019
ACRS Marketing Business Breakfast
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Let’s talk about trust
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Australian Institute of Company Directors - KPMG Trust Survey 2018
What Directors’ think…
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‘Three megatrends causing a ‘tipping point’ for sustainability’
‘Pervasive lack of trust’
‘Stakeholder expectations for
businesses to act on social issues’
‘Climate change’
John Edelman
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• Sustainability Governance
• Climate Change Position Statements
• Ethical Sourcing• Code of Conduct
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Stakeholders are giving us clues on what builds trust and to how to build more sustainable and trustworthy businesses
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The Deloitte Global Millennial Survey 2019
Biggest gap in expectations
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https://www.australianmining.com.au/news/bhp-changes-business-approach-to-drive-social-value/
https://www.nytimes.com/2018/01/15/business/dealbook/blackrock-laurence-fink-letter.html
ASX Corporate Governance Principles & Recommendations 4th Edition –February 2019
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NYU Stern: Sustainable Share Index: Research on IRI Purchasing Data (2013–2018) March 2019
This says consumers want sustainable products- But are they?- How do they know?
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Frameworks can really help
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Organisation
Corporate level
Operations level
Product level
Stakeholders
Investors; Community;Employees; Customers
Customers; Employees; Community; Investors
Customers; Community; Employees;
Investors
Social licence and trust are built at different levels across organisations and across different stakeholder groups
Stakeholder360®
Approach
GRI, Integrated Reporting,
TCFD
Product standards:
FSC, Carbon Neutral etc
Frameworks & standards
Stakeholder engagement
ISO Standards WHS;EMS;
Carbon Neutral
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Conceptual model of the social licence to operate.
Source: Boutilier & Thompson 2011
Social licence:• A measure of socio-political sentiment based
on judgements about the legitimacy or otherwise of an organisation
• Stakeholders grant social licence to operate based on their knowledge and experience with the company
Social licence and trust can be measured:
Using our Stakeholder 360® methodology we can measure social licence and provide detailed insight into an organisation’s socio-political risks, uncover the drivers of an organisation’s social & environmental performance and reputation and build high quality stakeholder relationships and provide insights to enhance trust
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Stakeholder 360® and Social Licence measurement example
SLO measures compared over periods
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But consumers don’t read corporate reports so what do we do?
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Consumers, through their everyday purchasing decisions, hold much of the value. To unlock the value, consumers will have to act on their values and change behaviours in habitual areas such as shopping. This requires consumers to truly care and see societal impact initiatives as the key driver of choice.
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The win-win-win
Bring stakeholders along on the journey, so they are part of the solution.
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https://www.unilever.com/news/press-releases/2019/unilevers-purpose-led-brands-outperform.html
Let the brand and product do the talking
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Make the most of the moments along the path to purchase (and post-purchase validation)
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Strong integration with stakeholder groups when things go wrong builds trust
Arnott’s was faced with a grave challenge in 1997, when extortionists threatened to poison their biscuits. The company was required to remove all products from the shelves for a number of days resulting in a cost of at least $10 million. Although a little outdated, their response demonstrates that the commitment to principles and flexible thinking, sets the survivors apart from those who collapse under pressure and can be used as a unique and timely model for future businesses.
The company integrated their stakeholders into the decision-making process and ensured that their “core values and principles shaped the response, which allowed the team to develop a shared understanding of the company’s values and to proceed confidently with their tasks” in a chaotic, turbulent setting.
They set up a hotline number to ensure they were tracking the community response and keeping people informed. The outcome: their reputation was strengthened during the crisis due to the inclusion of stakeholders as much as possible. They also gained interest and support from the public. Managing Director, Chris Roberts, stated that 98% of consumers believed that once Arnott’s announced it was safe to go back, their consumers would feel comfortable doing so.
22© 2019 Deloitte Touche Tohmatsu Trust, transparency & sustainability
Key take-aways:
• Transparency and a focus on sustainability builds trust –stakeholders are telling you!
• Be authentic & consistent from corporate level through to products
• Use frameworks, standards and certifications to support transparency
• Make it real for consumers so it’s a win-win-win for consumers, business and society
23© 2019 Deloitte Touche Tohmatsu Trust, transparency & sustainability
Thank you
Paul DobsonPartner Strategic & Reputation Risk - SustainabilityDeloitteEmail: [email protected]: 0414 618 454
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