September 29, 2005

Tobias Webb considers the media's evolving role in corporate responsibility, the accountability of the mainstream media, and what else might be done to win back trust in the press

I was at a round table meeting in London recently where the head of corporate European business for one of the largest public relations firms said, that to his mind, most of the change in attitudes by business towards social responsibility in Europe had come from two sources: campaigning NGOs and the media.

I'd agree with that assessment. The "stick" has so far been much more effective than the over hyped "carrot" of the "business case", which is much touted in particular by American and UK advocates of corporate social responsibility.

Of course the European Union has played its part in this sense. It is not for nothing that GE's CEO Jeff Immelt refers to the EU as "the global regulatory superpower". Nevertheless, for GE and the environment, Mr Immelt believes the European Union has created an opportunity, as well as costs.

The media has traditionally aimed to shine a light on murky transactions and mis-behaviour since its inception.

While many might argue that originally this was with the motive of selling early forms of newspapers rather than uncovering issues for consumers, regulators and markets, the final result, to my mind, for corporate responsibility, has been distinctive.

The journalist for whom the term "muck raker" was coined wrote the biggest corporate responsibility story of the late 19th American century.

Her name was Ida Tarbell and she brought down John D Rockefeller. Her investigative work was the principal cause of the break up of the overly-dominant and market abusing Standard Oil Company into smaller parts.

Since this early pioneering work, journalism has played a vital role in holding corporations accountable for their impact and shedding light on business practices.

In more modern times, it was the 1990s work of the Cincinnati Inquirer in Ohio that led to Chiquita's change of course from corporate pariah to modern paradigm of business virtue. We should not forget that Chiquita was once known as "the Octopus" of Latin America

These are just a couple of examples, a century apart, that led to significant change, and were driven by good journalism's desire to reveal the truth as accurately as possible.

Two companies ranked highly in the new AccountAbility Index of accountable companies and often heralded as leaders in corporate responsibility ? BP and Shell ? did not arrive where they are today, in terms of transparency and social policy, on their own.

The media played an unmeasurable but catalytic role in their conversion to being better corporate citizens, and continues to do so.

I'm sure all of us today are aware of the media's supposed role when it comes to both society and corporate responsibility: that of shining light in a truthful and accurate way on important information and any attempts to suppress such information.

However, I would not argue that the media have always got things right. There have many shocking cases ? such as in Rwanda in 1994 ? where the media has been used for the worst of purposes.

In Venezuela in recent times, some sections of the press have discovered what going too far can mean in terms of both trust and sales from readers.

Change is afoot

So what about corporate social responsibility, and media coverage of it?

At a conference two years ago I heard the head of the Confederation of British Industry, the most powerful business lobby group in the UK, ask the Sunday Times business editor why his member companies did not get better coverage for the "good" work they were doing.

The editor's reply was in the traditional mould of the righteous journalist. "Why?" he said (and I am paraphrasing here), "It is not our job to pat you on the back and congratulate you on your good works. It is our job to poke you sharply and to see if you can stand up to scrutiny."

The clear implication was: if you want to see good works written up, hire a public relations firm.

I understand where the Sunday Times business editor was coming from that day. He was coming from the best traditions of Ida Tarbell, and of the female journalist (whose name escapes me) who caused the first corporate consumer boycott in the 18th century, of British sugar from the West Indies (on the grounds of slave labour working conditions).

He was talking about the media's role in providing a foil to business, an independent alternative to corporate press releases.

However, business coverage of the "positive stories" of corporate responsibility is now improving, despite his remarks.

At that same conference, the second Business in the Community Corporate Responsibility Index was launched. The previous year the press had focused exclusively on who came last, lambasting the companies that fell in the bottom section of the index as irresponsible.

The following year, similar coverage occurred, but at the same time there began to be some mainstream media appreciation of the strides some companies had made in coming near to the top of the index.

This was more than two years ago. Now, the press in the UK, for example when they write about carbon emissions, is full of mentions of how BP has cut its emissions and made money at the same time.

This is demonstrative of how the debate in the press on corporate responsibility is maturing to a degree in modern times. This is a good thing, and long may it continue.

The media should begin to recognise that those companies who move ahead of others, who take risks, should be praised for their good works as well as lambasted for their failures.

The first is a new phenomenon; the second has its roots in the original Enron bubble of the South Sea Company of 1720.

Changing attitudes

The media loves to paint issues as black and white, as simplistic.

However, increasingly, on issues such as the causes of sweatshops, poverty, revenue transparency and blood diamonds, some journalists and editors are beginning to demonstrate that they understand, and are willing to write about, the complex root causes of these challenges.

The recent more favourable global coverage of both Gap and Nike, with regard to their transparency on labour conditions in their supply chain, is demonstrative of this.

Everyone appreciates transparency.

I believe that there is an increasing understanding in some sections of the media that such tough challenges can only be tackled through partnerships between societal groups, rather than simply by more, or less, regulation.

While India is going through a newspaper boom, in developed nations sales of newspapers are sliding, and viewing figures for television news are also declining.

Ideology driven editorialising media companies are to be held partly responsible, as is the general tend of consolidation and "corporatising" of media companies.

Large organisations are regarded with suspicion as they defend their interests. The non-media corporate world has discovered this in recent years. Corporate social responsibility is their generally half hearted response. Media firms need to take up this lesson too.

This need is becoming imperative in more modern times, as media companies struggle with what to do about the internet and its impact on daily and subscription sales.

The New York Times has recently reacted with a part subscription model, while others, such as the Guardian, try to sell advertising in response.

Early movers vs laggards

So what's the current state of media responsibility in the UK's media groups? Who is doing the cutting-edge work?

Well, there is one short answer: at the moment it's the Guardian newspaper that stands head and shoulders above the others in terms of public accountability documents on CSR issues.

(I should declare an interest here, since I do sometimes write for the Guardian and have even been paid the sum of two hundred pounds by them in the last year for writing work. However, a look at their social audit reporting should confirm to any suspicious mind the truth.)

The BBC comes in some distance behind, surprisingly, and is several steps behind Sky, whose latest 2005 report I previewed just three days ago. Sky is making progress, but still fails to discuss their editorial impacts on viewers or readers.

This is particularly relevant for Sky since one of their largest shareholders, News Corporation, owns Fox News, a media organisation well known to be seriously unbalanced in its coverage of global events.

The UK has a Media CSR Forum, which has produced some interesting work in consultation with stakeholder groups.

In 2004, KPMG facilitated a dialogue in the UK with 130 interested parties on behalf of the Media CSR Forum, which is comprised of a group of 19 UK media-related companies.

Among the key findings were that the most important CSR issues for UK stakeholders are:

1. Transparent and responsible editorial policy.

2. Corporate governance.

3. Integrity of information.

4. Impartial and balanced output.

5. Investment in, and support for, staff.

Henderson Global Investors, a major UK fund manager, says there are ways in which impacts of the media can be measured, and indicators which may tell us much about their practices.

On a very simple level, for example, does the company write about the environment and do they have a dedicated environment correspondent? Are they involved in education?

One can also look at their business ethics. Are there editorial codes of conduct? How often are they breached?

Does the company report openly and publicly about known breaches of its code and actions taken thereafter?

Henderson's media analyst notes that media companies can also be benchmarked against more traditional measures.

For example, what are their standards of corporate governance and how do they manage their human capital?

Media companies are essentially people businesses, so how they treat and develop staff, and report on that, is critical.

According to a recent paper by the World Wildlife Fund and the consultancy SustainAbility, media and entertainment company transparency would include:

1) Outlining policies and safeguards for editorial independence.

2) Providing information on any political orientation.

3) Declaring sources of funding, biggest advertisers, sponsors and production subsidies.

4) Communicating information on the company's policies (editorial, code of conduct, ethics, advertising) and on the degree of compliance.

5) Ensuring that advertisements are clearly identified.

6) Instituting procedures for complaints and imposing penalties for misleading reporting; and making public any lobbying activities, direct and indirect.

On these issues, many media companies are sorely lacking, particularly in the United States. Some, like the Guardian and the New York Times, do cover some of these issues. Both of these entities have readers' editors (internal policemen) to drive accountability, but fail still fail to report on ethical lapses, and their internal consequences.

However, the majority of media companies continue to ignore the waves of demand for corporate transparency and accountability that are sweeping through much of the business world.

Whether they will be able to do so for much longer and retain their already-sliding credibility with readers is another matter. Traditional media channels in the UK are suffering from declining readership and viewing numbers.

As Andrew Marr of the BBC points out in his recent book on journalism, in the long run this is dangerous for both society and democracy.

Considering the right mix of reporting and editorial, and how they are presented, is an essential strategy for all media companies today, and in the future.

At this point, I should admit that my own small publication struggles with producing public information on our policies and practices, although we will soon be taking steps to rectify that.

In conclusion, much still remains to be done with regard to media accountability, but as the CSR movement gathers further pace, perhaps we can begin increase the pressure for better CSR performance from the corporate media.

From the media's point of view, a focus on public accountability and transparency ought to be a strategic, as well as an ethical, imperative.


Actions media and entertainment companies can take on corporate governance:

? Setting up a board-level committee with responsibility for dealing with corporate responsibility issues, including commercial and political independence.

? In parallel, setting up independent advisory groups, with participation from NGOs, audience representatives, the financial community and other stakeholder groups to reinforce such committees.

? Articulating the company's core values and putting in place systems that embed these values.

? Using external standards of corporate governance to establish best practices (eg Higgs Code of Corporate Governance in the UK).

? Declaring the interests of board members, including the nature and extent of interests in other media companies and other market sectors.

(Source: Through the Looking Glass: Corporate Responsibility in the Media and Entertainment Sector. WWF and SustainAbility, 2004.)

Useful links:

www.sustainability.com/insight/mediaspotlight-article.asp?id=139
www.kpmg.co.uk/industries/m/pubs.cfm
www.guardian.co.uk/values
www.journalism.org/resources/publications/books/elements.asp
www.stateofthemedia.org/2005/index.asp
www.mediawatch.org

Article adapted from remarks made to the Inter-American Development Bank annual conference on CSR in Santiago, Chile, on 26 September, 2005. www.csramericas.org / http://ethicalcorp.blogspot.com)