Companies are increasingly scrutinized by external stakeholders who hold them accountable for their actions. Politicians, regulators, investors, clients and consumers have more access to information and are increasingly calling for more transparency. So, what are the drivers of this trend and how can companies use communication to navigate this increasingly fraught environment?
#1: Increased reporting: In the last decade, we have seen a large increase in reporting, both in-house and externally. A whole new industry of reporting services and certificates has emerged. Today, it is not sufficient anymore for a company to claim to act ethically and/or sustainability; they need to prove it to the world. For companies, it leads to a considerable increase in administration procedure and more paperwork.
#2: Democratisation through digitalisation: Digitalisation and social media have increased the power and the reach of any stakeholders. Consequently, the uncertainty for companies is higher than ever; there is no way to know who, where and how opinions, critical or complementary will be raised. Just a decade ago, companies were expecting those to come from journalists and they could work directly with them to give their side of the story. Today, a teenager in his bedroom has the power to raise their voice and get visibility through social media, and therefore impact a company’s reputation. Additionally, social media has significantly decreased the cost of any campaign or actions, democratising access to any information. Information, true or false, can travel around the world in a matter of minutes. On the positive side, used efficiently the same tools can actually help a company big or small to gain visibility, and spread their message.
#3: The ubiquity of corporate social responsibility: Corporate social responsibility (CSR) was once seen as a differentiator. Now, it has become not only a part of any company’s mission and vision, but also of its marketing strategy. CSR is now at the core of most, if not all, business strategy. But, it is important to note that companies need to live up to the standards set for themselves. Indeed, false claims will be identified by someone and could irreversibly damage a company’s reputation.
# 4: Normative international expectations: The European Union, Member States, and international organisations are increasingly adding new regulatory schemes that affect companies. Generating revenue, creating jobs and paying tax are no longer enough; companies and their management must comply with an increasing amount of regulations, norms, and standards. The new European Green Deal is the best example of these international measures, which come directly from society’s expectation and are being materialised through new laws. These new requirements not only push companies to reinvent themselves but also to act and communicate differently.
In conclusion, societal change increases companies’ exposure and adds risk for both their reputation and revenue. In this light, compliance goes beyond compliance with the law; companies need to comply with society’s expectations, norms and demands if they want to continue their operation.
So what can be done?
A natural instinct might be to hire new employees to analyse, monitor and assess all the demands. However, compliance with societal norms goes beyond the usual monitoring and reporting activities. Companies should spend time working on how they are perceived by their stakeholders, address any concerns that exist and work to build trust.
Given companies no longer have control over the flow of information, they must manage their perception and reputation by listening to the demands and by communicating with their stakeholders.
Remember, the art of communication starts with leading the discussion; so now is the time to start the dialogue.
BOLDT is a senior-led consultancy focused on delivering business strategy, communications and stakeholder engagement. BOLDT has offices in Amsterdam, Berlin, Brussels, Cologne, Dusseldorf, Oslo and Zurich. BOLDT has a network of international partners which enables us to give clients support across Europe and around the world. Please visit BOLDTPartners.com to learn more.