A few obvious musings on ethics, reputation, sustainability and change management

Turkey 'bans' Twitter: Usage skyrockets. Unwise move
I spoke at an Istanbul conference yesterday on the above topics. Organised by Turkey's leading reputation expert Salim Kadibesegil, the event brought together 150 senior executives from Turkish business.

I can't claim any expertise on Turkey, other than suggesting that it's a fascinating, intellectually curious and deeply hospitable and politically volatile (today) 'frontier market'.

(The day I arrived Twitter was banned, much to the embarrassment of everyone I met)  

Here below are some of the notes I used to frame my remarks. Salim kindly gave me a steer in advance. 

He asked me a couple of really important questions which are below, above my doubtless inadequate responses, which are more or less in note form. 

Given my previous post was all about delusion I can't suggest my ramblings are of much use, but judge for yourself.

Q: Why are ethics counted as major ingredient of corporate reputation?

A: Because ethics are the bedrock of behaviour. 

Ethics govern reputation, that's not always immediately obvious but over time becomes clear.

Ethics are how you behave when no-one is watching.

Ethics are how you behave, values are what you stand up for, together they are the basis of genuine and long lasting company culture. 

But lots of companies are nervous talking about ethics in public, partly because they are subjective and expectations change over time. 

This nervousness also comes from the fact that any claims of bad service or mistakes become confused with ethics. 

Bad customer service is linked to poor ethics but the two are not always as linked as people think. 

Companies and people make mistakes, that doesn't mean they are unethical. But try telling that story on Twitter if you are a brand. That's why you need credible allies to help tell your story and stand up for you. 

Q: How do investors judge the ethical behaviour of companies?

A: They are often confused: traditionally share prices have bounced back quickly and boycott losses are small.

But now internet related technologies are creating reputation footprints all over corners of the web and mini campaigns against companies are ever present and sometimes damaging to prospects. 

Shell executives tell me mainstream investors now ask about reputational and operational risk management at the company: this is one important reason why the company stopped Arctic drilling activities recently. 

Investors are increasingly aware of how much License to Operate matters for companies in their operations in factories or at mining, oil and gas or port or industrial sites. 

A bad community relationship can shut down assets, sometimes at a very serious cost to shareholders.

The Yanacocha gold mine in Peru run by Newmont, is a good example. 

So is Rosia Montana in Romania where Gabriel Resources have been trying to get national approval for a gold and silver mine for 15 years. 

Palm oil companies, timber and oil, gas, mining and heavy industry companies now face serious financial risks from community unrest and campaign groups, and also from regulation.

Investors are increasingly aware of the tools and frameworks companies can use to manage these risks, (CDP, Ruggie, IFC & FPIC, Equator Principles etc)

Q: Do consumers care about the  ethical behaviour of companies?

A: Yes but they don't and won't pay extra for ethics: why should they? 

Consumers care but they don't want to deal with the complexity of 400 ecolabels, none of which cover full impacts. 

Consumers want to trust brands, not just products. Look at what Unilever's approach today (trust their brand, along with the product) 

Q: Where do sustainability, ethics and corporate reputation correlate?

A: Ethics are the bedrock, the framework.

Sustainability is the change management trigger, risk radar and opportunity catalyst.

Corporate reputation and its improvement is one of the long term rewards.
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