By Daniel Litvin – This article was originally published by Ethical Corporation magazine
Why is it that large companies are so often outmanoeuvred in public debates by NGOs and other critics? Whether the issue is the social impacts of oil and mining firms, the price of drugs supplied by pharmaceuticals companies, the alleged exploitation of workers in the third-world supply chains of retailers or the spread of obesity in the west currently being blamed on food companies, the multinationals concerned are invariably on the defensive in the face of activists.
Big companies may not ultimately change their behaviour in the way their critics want, of course. But, judged in terms of the battle for media coverage and popular opinion, they are regularly outwitted by NGOs and activists. In this sense, the corporate giants often appear like elephants backed into a corner by a crowd of clever mice.
So why is this? An obvious – but not entirely complete – answer is that the NGOs, unlike companies, are usually in the right, or at least are perceived by most people to occupy morally higher ground than big business. This means that their arguments cannot be combated with any amount of corporate rebuttal or spin. Certainly, the behaviour of some companies genuinely deserves heavy criticism. It is true also that other companies, even if they are in the right, cannot overcome underlying public distrust of the corporate sector, however eloquent their communications.
This explanation, however, does not capture the whole truth: companies and indeed entire industrial sectors, I would argue, are actually often leaving the door open to critics. They are failing to think strategically about how debates on issues that shape their business will evolve in the future and are failing to develop clear intellectual leadership in public on these concerns in advance. This is precisely what creates the space for NGOs and activists to capture such issues as their own.
Outmanoeuvring the activists
It may help to set this idea in context before going on to give some examples. It is not, for example, just another recommendation that companies should undertake more ‘stakeholder dialogue’ and partnerships with NGOs. Such links between the corporate and NGO sector are certainly positive, more constructive than the mutual head-butting that previously characterised relations between the two sides. But they can distract attention within companies from the longer-term task of spotting issues that might provide opportunities for future campaigns, and dealing with these issue before they erupt as public controversies.
From the narrow perspective of protecting the corporate reputation, formalised dialogue can also provide a forum for additional scrutiny and criticism rather than dampening opposition. Witness, for example, the mixed experience with NGO engagement of development agencies like the World Bank, or of the big British oil and mining firms.
Nor is it being suggested here that companies should revert to a directly combative approach to NGOs (that, apart from anything else, is likely to backfire in PR terms – remember the fall-out from McDonald’s suing of two of its UK critics in the 1990s). The idea is rather that companies should attempt to outmanoeuvre potential critics by taking a view of where the corporate reputation may be exposed in the future.
Partly, of course, this means strengthening internal control systems to weed out any dubious or unethical practices within the company before these are spotted publicly. While many firms claim they are already doing this, such self policing is often made difficult by internal politics as well as by the broad-brush nature of most companies’ internal reporting systems on reputational issues.
But also important is a more far-sighted approach externally: developing at an early stage intellectual leadership in public on issues that in the future may present NGOs with opportunities for critical campaigns. While not an easy task, this can be done, for example, by commissioning research from credible institutions, by developing corporate positions and speeches for CEOs that demonstrate advanced internal thinking, and also by presenting such materials in interesting, innovative ways so that they generate positive headlines.
Such a strategy will not prevent all criticism (for example, industry-commissioned research will always be perceived to be somewhat tainted; and not all future issues will be possible to predict). The reason why it may succeed, however, springs from a point often little recognised in the corporate world: that the behaviour of campaigning NGOs and activist groups can to a degree be shaped. This can be done by identifying and occupying in advance the ‘issue space’ into which they otherwise might move.
Like companies themselves, major NGOs (such as Greenpeace, Oxfam or Friends of the Earth) have to allocate scarce financial resources between competing investment opportunities. Among a vast range of potential issues, firms and industry sectors about which they might chose to campaign, they will focus on those that – apart from appearing to them most in need of reform given their ideological worldview – offer them a significant chance of victory, or at least headlines in their favour, and in relation to which their own public credibility is unlikely to come into question.
As for those NGOs or activist groups that have established themselves to campaign on more specific issues (rather than, say, a general desire to protect the environment, as with the likes of Greenpeace), such groups inevitably will be less susceptible to having their focus of attention shifted. But they too will tend to emerge or cluster around issues where the legitimacy of their own arguments will appear unassailable. To this extent, all NGOs and activists are risk averse. They will hesitate to challenge firms on issues where credible thinking and research has already taken place, and hence that might raise doubts in public about their own claim to the moral high ground.
So what are the examples? There are any number of issues that would appear now to be ripe for stronger intellectual leadership from the corporate world – or on which leadership in the past might have worked in the companies’ favour. To cite just a handful:
1. The ‘resources curse’ and the extractives sector. The theory that oil and mineral extraction perpetuates poverty and corruption in developing countries has long been discussed in academic circles, but more recently has started to become popularised by NGOs – such as Christian Aid and Oxfam – and also in the western media. Whatever its truth (and it is debatable), the theory’s growing popularity presents a long-term threat to the extractives sector. It provides an ideal intellectual platform for future NGO campaigns against oil and mining firms on any of a range of local issues in which they are embroiled in developing countries. It also sets the tone for a range of international and governmental initiatives that may result in tougher regulation of the sector.
Yet oil and mining firms have mostly adopted a defensive posture on this issue in public debates, often just citing examples of countries that have developed successfully partly as a result of resource extraction – e.g. Australia, Botswana and Canada. An opportunity here appears clear: by commissioning research from world-leading academic institutions examining why exactly such countries have avoided the resources curse – or a similar line of inquiry – and by communicating this research in interesting, media-friendly ways, extractives firms could start to occupy the ‘issue space’, thus deterring the NGOs – at least from taking easy swipes.
(The University of Dundee has admittedly begun to do some interesting work along these lines, though it remains to be seen whether its research will significantly penetrate public debates.)
2. AIDS drugs pricing and the pharmaceuticals sector. Much of the public debate regarding the AIDS crisis in Africa since the late 1990s has focused on criticism of big pharma firms over the costs of their drugs, or over their defence of patent rules in trade agreements. While these criticisms may have had some merit, it is clear that any real solution to the AIDS crisis lies only partly in lowering the cost of drugs. Just as important, if not more so, is improving the dire state of public health systems in African countries, which are often failing to deliver even low-cost drugs to patients in ways that benefit them and or to encourage sufficient HIV prevention.
To an extent, the public debate has recently begun to move more onto this broader issue. In theory, however, an opportunity existed for big pharma firms to have shifted the focus of the criticism away from them in this way at a much earlier stage. Some action on their part in terms of lowering the cost of AIDS drugs was no doubt needed and justified. But the terms of the debate might have been shifted more quickly by a concerted industry-led research effort at the start into ways to improve African public health systems, together with a more prominent set of CR programmes to demonstrate big pharma’s on-the-ground commitment in this respect, all presented in ways that might engage western audiences. As it was, the industry allowed the NGOs and activists to define the ‘issue space’ and has been on the back foot in public opinion terms for much of the time since.
3. The obesity debate and the food industry. This issue is an at earlier stage of development, only just erupting into full-blown controversy in the US and UK. But the large food companies ought in theory to have been able to predict that the debate would turn against them in this way, however unfair they may perceive the criticism against them to be. Rising obesity rates in the west and the huge public health bill for obesity-related illnesses, together with the inevitable search for big companies to blame, has made this a predictably alluring issue for activists (and litigators).
And the best way now for the companies actually to stem the public tide against them? Probably by trying to steal a lead on their critics: developing credible, headline-grabbing research and position on ways to overcome the obesity epidemic that turns the spotlight on the role of governments as well as companies, for example, while at the same time reviewing their own product-line and marketing from a health perspective. While some companies are adopting parts of such a strategy, many appear still to be locked in a heads-down, defensive mode.
4. The backlash against ‘offshore’ and the IT industry. This is an even more recent public debate – and hence arguably more susceptible to pre-emptive action from the companies involved. The issue here is the growing political backlash in the west from unions and other activists against the exodus of service jobs (such as in call centres or IT development) to low-cost countries such as India.
My colleague Paul Morrison has analysed this issue in detail in a recent Ethical Corporation article.
A final question: if such pre-emptive strategies are self-evidently sensible, why are they not more widely adopted by companies? Admittedly a number of firms – such as BT and BP – have taken a forward-looking or progressive stance on certain issues. It is true, too, that companies do sometimes spot, and remedy, issues before they hit the headlines. Nonetheless the strategy of many large firms seems to be to keep their heads down, hoping that a sustainability report and some CR programmes will be sufficient to prevent NGOs and activists from attacking them, and only responding as and when they do.
A possible explanation for this is that a pre-emptive approach fits uneasily with traditions and existing structures in many large, established companies. Within firms it is still usually the communications or public affairs function that is expected to be able to manage such issues on its own, with the possible addition of some CR expertise. The unreasonable expectation from other departments is that the standard, reactive PR tactics of denial and rebuttal should be sufficient to fend off attacks while the rest of the firm can continue with business as usual.
For as long as elephantine corporations continue to make such short-sighted assumptions, the mice will continue to have their day.