CO3 is a management consultancy specialising in CSR and an element of what we do is to advise on client CSR reporting and related communications. We work with a number of listed multinational companies whose activities are conducted all over the world. We also work with one of the UK’s best known social enterprises.

We have given this area quite a lot of thought since we were founded. The problem with applying an “ethical” selection process is that there are subjective and wide interpretations concerning what is an “ethical” activity and what is “unethical”. Factors which affect this include individual political beliefs and individual faith issues. Consequently we think that it would be unfair and unworkable to apply this sort of criteria when assessing our client relationships.

Our position is that we will not assist a client in conducting an illegal activity. We will also work with our clients with the aim of ensuring that they are more open and transparent about the areas of their activities that we advise upon. Indeed, if we failed to do this we would be offering a rather poor service! There are plenty of examples of organisations that have attempted to “spin” their CSR credentials with the inevitable value-destroying results.

Feedback to our approach is most welcome and can be applied using the comment facility below.

The new Corporate Governance Code, published by the FRC and applicable to UK listed companies for reporting periods commencing on or after 29 June 2010, indicates that best practice now requires FTSE350 companies to arrange for all of their Directors to be re-elected every year (subject to the usual “comply or explain” stipulation).

The appearance of this requirement was accompanied by the usual complaints about red tape and burdensome regulation of the sort that accompanied the Combined Code’s requirements about the separation of Chairman and Chief Executive duties a few years ago. However things went a stage further last week when the heads of three prominent institutional fund managers (Hermes, Railpen and USS), all of whom are associated with encouraging companies to adopt corporate governance best practice, wrote to the Financial Times.

“We agree with the reservations expressed by the chairman of FTSE companies in the Iddas Report, The Chairman’s Perspective, on the new requirement that all directors of FTSE350 companies will be subject to annual re-election” they said. This report described the new stipulation as “crazy”. They argued that the existing mechanisms were satisfactory and that the new requirement “will engender a short-term culture with the risk of effective boards being distracted by short-term voting outcomes.” The letter also pointed out that they believed that the requirement “would appear to run counter to the objectives of the Stewardship Code for Institutional Investors, published on 2 July, which aims to facilitate more effective engagement.”

Whilst we think a bit of healthy debate is generally a good thing, perhaps it might have been a better idea for interested investors and regulators to decide on an agreed approach. At the moment it isn’t clear whether the consensus within this world favours one option or the other. We think we, and the 350 companies affected, should be told!

A good example appeared in the business section of London’s evening newspaper (the Evening Standard) yesterday.  The article starts off with the rather interesting suggestion that the most “damning indictment” of BP’s handing of its affairs in the Gulf of Mexico is that the audience at a CSR conference thought a blog on the subject was funny.

A supporting statement to this standpoint pointed out that “the Gulf of Mexico (incident) was always going to be a serious crisis for BP”. I think we might have worked that one out don’t you?

One of the fundamental mistakes that most journalists make when discussing this subject is that they think the communications, reporting, transparency and PR aspects of what they see as CSR are the most important. In doing so they betray the fact that they haven’t the first idea concerning what CSR is about.

BP’s current problem was not caused by its decision to rebrand a few years ago. Nor was it caused by its poor public relations surrounding the recent and ongoing incident as the piece seems to imply. BP’s current problem is that it has been associated with an accident that has significant environmental and health and safety implications.  A number of people lost their lives. It is being widely suggested that the episode could and should have been preventable. It is likely to cost the company billions and may threaten its opportunity to conduct its business independently in the future.

A responsible oil and gas business ensures that the likelihood of such an incident occurring is extremely remote. How good the organisation is at branding and PR, if this isn’t addressed properly, frankly is of no relevance whatsoever.

The “big idea” behind the OFR was to encourage companies, within their annual reports, to be more transparent about financial and non-financial matters which are material to shareholder value. Many business representatives argued that it was too prescriptive and, because companies were nervous about possible litigation, would encourage bland statements and a conservative approach. This argument eventually won the ear of the government and the OFR was unceremoniously ditched in favour of the much less specific Business Review. Since then the idea has drifted off the radar of most people – until now.

CO3 encourages our clients to be more transparent. However we really do wonder whether this sudden rebirth is really going to achieve anything particularly in view of the history of the matter. We believe the government and regulatory bodies should concentrate on achieving uniform international reporting standards and imaginative use of technology (the internet anyone?) to communicate this sort of information. The OFR may well only be adding another, rather unwelcome, local complication to the annual reporting exercise in the UK.

The home page of the main company website has largely been taken over by information about the episode. The company is also supplying information to the American authorities who have set up a website for the same purpose. BP is also extensively applying social media.

BP is using pictures, videos and bulletins concerning the progress that is being made to stem the flow of oil.  The online information prominently showcases contact details, media statements made by company executives, company responses to government statements, suggestions for volunteers and records the efforts being made to limit the environmental damage associated with the incident.

The reputational harm that BP has incurred following the accident has obvious ramifications for the long-term management of the business. The company is, however, making a considerable effort to ensure that this is not made worse through poor communications.

It is a lesson that the banking sector in particular seems not to have heeded. We are watching the situation “over the pond” between the seemingly all powerful Goldman Sachs and the American authorities and courts with some interest. Meanwhile the UK high street banks are facing stiff new competition from a variety of new market entrants (such as Tesco, Virgin Money and Metro). They are all looking to capitalise on the public’s mood towards the existing services by offering a fresh approach. Other problems include the threat of more regulation and taxes. These have been encouraged by increasingly noisy campaigns from a number of NGOs and growing support in the media.

The banking sector has a basis on which to build an ICMM type approach. Initiatives such as the Equator Principles have demonstrated that such an exercise might well be possible. May we take this opportunity to suggest a bit of bedtime reading for banking employees who are interested in tackling these issues. We think that you will find the ICMM website information thought provoking and rather useful!

Over the weekend the UK’s main opposition Conservative Party launched a website which attempted to apply Facebook and Twitter to highlight the governing Labour Party’s close relationship with the trade union movement. “Cash Gordon”, a play on the name of the current UK Prime Minister, was in fact the result of the purchase of an off the shelf product which has also apparently been used to campaign against health care reform in the USA.

It doesn’t seem to have been tested very well. British Twitter users discovered this morning that a tweet containing a hash tag with the site’s name could be posted to its front page without moderation. Lots of high jinx ensued as the site’s popularity, Twitter rating and colourful language content soared – much to the evident amusement of the British media. Nearly all of the tweets showcased on the site lampooned it very effectively. The Conservative Party, its leading figures and policies were also subjected to some very public “satire by tweet”.

It got worse. At around lunchtime the happy tweeters discovered that, by inserting Java script into their tweets, it was possible to divert people logging onto the site to…well…whatever they fancied really. So for a while logging onto “Cash Gordon” sent web surfers in the direction of a number of sites with pornographic content, the website of the Labour Party, a video of Rick Astley singing on YouTube or displayed a pop up window containing the word “knickers”. It was at this point that the Conservative Party decided that enough was enough and the URL was re-directed to a page on its own website.

This episode seem to have been the result of a major planning lapse and a failure to realise that at least half of the audience reached by the website did not welcome what it was trying to say at all. Cue the backlash and, in the process, the UK discovered tweet bombing.

Google’s activities were, until recently, generally seen to be A Good Thing. It has rightly been applauded for its often astounding levels of creativity and innovation. Its open source initiatives, which have been responsible for breaking the stranglehold over worldwide computing that was previously held by its (now) arch rival, were incredibly important.

Recently the company has started to be confronted with the sort of challenges that face any person or organisation that has this sort of success. Now what was A Good Thing is being intensively examined by all and sundry in case it has become too powerful, monopolistic and a threat to individual privacy and personal freedom. The first signs of this in the UK probably surfaced last year when the sudden appearance of Streetview provoked a media frenzy. Could Google put a picture of you changing your underwear in your home on the internet for all to see? The world wanted to be told.

This week the company has had to deal with some interesting matters. They include copyright issues concerning the world’s library of books and the imprisonment of three of its executives in Italy. The company appears to be the impending subject of a European anti-trust investigation. And a good part of the world wants to know what it is going to do about censorship in China. This is rather a large set of issues for a company with a relatively small number of people working for it.

What happens next, and how the company chooses to deal with it, is going to be interesting. Google, to date, doesn’t appear to be fond of talking about Google. Now might be the time to change that. What is Google here for? What is important to Google concerning the way Google does its business? Where does Google want to go? If Google doesn’t clearly explain this and other important aspects of its business approach, then the outside world may decide all on its own. It would be a huge shame if Google’s innovation and creativity is stifled or snuffed out as a result.

Partly because CSR reporting is not burdened (yet) with the mass of accountancy inspired and regulatory rules which have conspired to make published accounts hard to understand, there is an internationally accepted framework which is applied for the purpose and used around the world. The Global Reporting Initiative (GRI) has led the way in this area for a number of years. Over time its approach has developed to include, for example, the development of industry specific metrics through collaboration with the relevant industry bodies. One such example is the mining sector supplement which was designed in conjunction with the International Council on Mining and Metals (ICMM). ICMM is tasked with developing a sustainable development framework for the industry.

Companies still find the process of reporting their CSR performance difficult particularly if they are new to this area. Frankly, I think the world could do without another set of tools and mechanisms which are supposed to assist companies with doing this. There is a perfectly good and established process in place already. Surely the corporate world would be best served by developing GRI than producing another set of guidelines.

Many listed companies have, to date, been rather wary of entering the world of social media. We’ve observed on numerous occasions how this caution has often made some organisations rather vulnerable to online activity of this sort. It was interesting, therefore,to come across Centrica’s application of Facebook, Twitter and YouTube together with other forms of internet technology within the Centrica Views section of its corporate website. This type of communications activity has to be conducted with some thought. Getting it wrong may, for instance, open up organisations to the sort of online comedy (or worse) that has been a feature of British politics this week. We think Centrica have demonstrated how to get it right.