The bankers and tax-dodgers may get the headlines, but the Occupy movement is also taking aim at the corporate PR and lobbying industry. It has an astonishingly bad reputation: anti-democratic, unaccountable fixers for the special interest of the 1%, sitting at the nexus of big business, government and finance. Here’s some of the critical voices:

• “PR agencies gloss over, tone down and greenwash some of our more controversial industries” – Andy Rowell of the excellent Spinwatch website.
• “Some PR companies on the one hand work for an environmental organisation and on the other hand are getting paid by some agent of the military-industrial complex.” – Mike Townsley of Greenpeace International talking to Ethical Corporation.
• “Sometimes PR companies try to defend the indefensible, and often they are unable to hold up the opinion that their clients want.” – Alex Wilks of Avaaz.org
• “The “invisible men” who control our political debates and public opinion, twisting reality and protecting the powerful from scrutiny”. – Center for Media and Democracy’s PR Watch website. They go on to say: “[PR is a] multi-billion dollar propaganda-for-hire industry [that] concocts and spins the news, organizes phony grassroots front groups, spies on citizens, and conspires with lobbyists and politicians to thwart democracy.”

It’s hardly surprising – the industry has a long, shameful record of using dubious methods to promote clients’ interests: fake science, spin, smears, abuse of political access. Here are some examples:

BURSON-MARSTELLER was busted in May last year for trying to plant bogus anti-Google stories on behalf of Facebook. It’s response was also less than honourable: blame the client. John Vidal’s account of the company is extraordinary:

The world’s biggest PR company was employed by the Nigerian government to discredit reports of genocide during the Biafran war, the Argentinian junta after the disappearance of 35,000 civilians, and the Indonesian government after the massacres in East Timor. It also worked to improve the image of the late Romanian president Nicolae Ceausescu and the Saudi royal family.

Its corporate clients have included the Three Mile Island nuclear plant, which suffered a partial meltdown in 1979, Union Carbide after the Bhopal gas leak killed up to 15,000 people in India, BP after the sinking of the Torrey Canyon oil tanker in 1967 and the British government after BSE emerged.

In the past few years it has acted for big tobacco companies and the European biotechnology industry to challenge the green lobby and counter Greenpeace arguments on GM food.

APCO is imfamous for running the Phillip Morris funded Advancement of Sound Science Coalition, set up to discredit links between tobacco and cancer. In 2010, the “Push Michael Moore Off a Cliff” smear campaign was exposed by a whistle-blower:

We felt that this movie would have such an impact that it would really pave the way for legislation to be passed that could be very detrimental to the insurance industry. So it was very important for the insurers to attack this movie as fiercely as possible,” Wendell Potter said. “We developed a very, very sophisticated communications campaign to make sure that people saw him [Moore] as a Marxist, as a socialist, and that he was going to be destroying the American Dream.

BELL-POTTINGER was secretly recorded by the Bureau of Investigative Journalism boasting about its access to the heart of the government, and how it uses the “dark arts” to bury bad coverage and influence public opinion. It also flaunted its prowess at cleaning up Google results and “sorting” Wikipedia entries. It’s excruciating to watch, but here’s the film:

Wikipedia founder Jimmy Wales said,

I am astonished at the ethical blindness of Bell Pottinger’s reaction. That their strongest true response is they didn’t break the law tells a lot about their view of the world, I’m afraid.

“Ethical blindness” would seem a kind way to describe some of these misadventures. The industry clearly has an ethical issue. This blog is about “the power of communications to bring about positive social change” – that doesn’t seem to be on the agenda for most PR houses. Yet they have an extraordinary opportunity: in many cases, they are the conduit between public sentiment and the powerful elites. That’s got to be an interesting place to be.

Not sure why I’ve never done predictions before, I had fun doing these – see what you think:

BANKERS’ pay will be an even bigger battleground in 2012. Top investors will follow the lead of ABI and demand a full review of pay, and total transparency. Obama will continue toughen his tone – tapping the anger against Wall Street and linking banks with Republicans. Bankers may resort to legal action to protect the bonuses they feel entitled to.

SUPPLY CHAINS will continue to grow longer and more complex, increasing the risk in the system – to operations, and reputations. A KPMG report says supply chains now present “an unprecedented level of risk” – a large part of which is social and environmental impact, and reputation consequences. Supply chain may be the number one issue for corporates this year.

SHAREHOLDERS are increasingly aware that social and environmental factors may present real material risks to the business – and will be demanding more evidence that these risks are being managed. A report from Ernst & Young found that investors find their company’s social and environmental policies correlated with its risk management strategy — and ultimately its financial performance.

EMPLOYEES will be evermore likely to “whistleblow” improper practice: transparency is no longer a choice, it’s a reality. As Julian Assange told Forbes, “Wikileaks means it’s easier to run a good business and harder to run a bad business, and all CEOs should be encouraged by this.”

More CONSUMERS will tend to prefer companies to show some kind of contribution to society. More and more brands will jump on this – from activities like Tide’s Loads of Hope disaster relief or Trident’s Smiles Across America, to sophisticated philanthropic strategies like Nike’s Girl Effect.

The WAR FOR TALENT will be a major driver of improved corporate behaviour. Campaign groups like Amnesty International have long understood that graduate recruitment is a “choke point” for big corporates – and this is only likely to intensify. People want to have some pride in who they work for: increasingly, poor corporate behaviour will reduce a company’s ability to attract and retain talent.

CORRUPTION and bribery overseas will be met with zero tolerance: “the way things are done over there” will no longer be an excuse. Expect a few high-profile slip-ups as multinationals figure out how to comply with the new UK Bribery Act and the tougher US Foreign Corrupt Practices Act.

WORKERS in the global supply chain will become increasingly aware of their rights. Initiatives like Labor Voices – a social network where workers in supply chains can rate and review their employers – will empower people to expose unacceptable working conditions.

INVESTORS will show a growing appetite for non-financial information about companies. According to an HBR paper: some investors regard the fact that a company has thorough ESG reporting as an indication of how investable it is. Goldman Sachs says ESG disclosure quality can be a proxy for management quality.

Image from GenArt.

This year, I’ve had conversations on with ten major corporations about business and society – mainly FTSE-100 companies, and mainly at CEO or Chairman level. All really interesting.

They’re all keenly aware of the hostile, anti-corporate sentiment surrounding them. As one client put, “my teenage kids think we’re the bad guys”.

So it’s been interesting to read Screw Business As Usual – not an Occupy manifesto, but the new Branson book. I doubt that Branson’s kids think he’s one of the bad guys; he’s still the anti-establishment rock-star CEO.

It’s a good read. Raconteur-ish, but well researched. As you’d expect, there’s plenty on the power of entrepreneurial thinking, and its potential to solve the world’s problems.

More surprising is that Branson – the self-styled Goliath challenger – is a real champion for the positive impact that big corporations can have. He gives the clearest articulation of this when discussing Walmart:

[Walmart] now has 100,000 suppliers, 2.1 million employees, 200 million customer visits oer week and annual sales of $419 billion (greater than the GDP of more than 166 countries)… Just their sheer size means that when they do get something right it has incredible ripple effects. They can shift a whole industry by applying pressure in the right places… They can also create millions of opportunities when they shift their buying strategy.

It’s a good articulation of why I’m doing what I’m doing right now. There are plenty of other examples he picks up:

• GE’s commitment, through Ecomagination, to investing $1.5 billion annually into R&D on clean tech.
• Anglo-American’s pioneering work to fight HIV/AIDS in South Africa, before the ANC recognized the problem.
• Google’s work making data available to promote an open discussion on global drugs policy.
• Kimberly-Clark’s invention of the tubeless toilet-roll (trivial? 17 billion tubes go into landfill each year in the US alone. Who knew).
• SABMiller’s innovative work in Africa’s newest country – South Sudan – brewing beer from Cassava to in order to buy from local farmers.
• Unilever’s Project Shakti in India, establishing thousands of female “micro-entrepreneurs” in a distribution network across 135,000 villages.

Some of these companies are our clients – and it’s safe to say that none of them have had an easy time being the good guys. All of them have had difficult issues: tax avoidance, palm oil, privacy, safety, etc etc. But these businesses can be a positive force – and Branson’s book gives a handful of them a slap on the back. A bit of positive reinforcement, to balance the well-deserved public pressure.

Image from IndyBay

Back in 2003, I did a talk at Ogilvy called “Are We All Going To Hell?” – looking at the impacts of advertising, and suggesting we worked in an amoral industry – not morally evil, just morally AWOL.

I was reminded of this by a new report called Think Of Me As Evil by the Public Interest Research Centre and WWF-UK.

If you’re wondering about the slightly strange title of their report, it comes from a quote by Rory Sutherland, ex-president of the Institute of Practitioners in Advertising, and a former colleague of mine at Ogilvy. He said:

The truth is that marketing raises enormous ethical questions every day—at least it does if you’re doing it right. If this were not the case, the only possible explanations are either that you believe marketers are too ineffectual to make any difference, or you believe that marketing activities only affect people at the level of conscious argument.

Neither of these possibilities appeals to me. I would rather be thought of as evil than useless.

The report derives its name from this quote, and opens with it. It’s a shame to feel the need to cast a villain, in what is otherwise a valuable and provocative piece of research.

We all agree on the undesirable impacts of advertising: everything from negative self-image to the debt crisis and climate change can be credibly linked to advertising in some way. It’s something that genuinely needs to be looked at. However, I have a few questions.

• First, can you really isolate advertising from broader consumer culture? Cause/effect? Isn’t the real problem our rapacious “I shop therefore I am” society – of which advertising is a symptom, as much as a cause?
• Second, are consumers really docile masses waiting to be programmed by the clever persuaders? Consumers aren’t innocents in this, there is as much “pull” as there is “push”.
• Third, are we attacking a fading force, as the advertising industry itself opines its decline? Aren’t social factors and cultural norms becoming greater determinants of behaviour, at least in the developed markets?
• Fourth, can’t advertising be used for good? Like any tool, it’s not intrinsically good or bad: what about the long-running and successful UK drink drive campaign, or work in Africa to make families feel it’s a good thing for girls to go to school?

It’s a shame to go straight into an attack-and-defend mode of dialogue. Something I’ve learnt since moving into corporate work: quickly get above “good and evil”. Don’t polarise people from the outset. Of course Georgie Monbiot will write about it, but the people who count will tune it out.

People like Rory Sutherland. He and I don’t agree on politics, for sure – but I know he’s a big advocate of the power of communications as a positive social tool, and one of the most influential industry voices. Did anyone actually speak to him before writing this? Or his industry peers? They shouldn’t be the enemy of this report, but the point of it.

Images from my other old ad agency, Mother – a Kruger inspired campaign for Selfridges (source).

It confirms the worst anti-corporate suspicions: 147 companies control the world, according to an analysis by the Swiss Federal Institute of Technology in Zurich called The network of global corporate control. They look at the share ownership structures that link 43,060 transnational companies and created a map showing that a control is concentrated in a quite small number of companies. As they say,

A large portion of control flows to a small tightly-knit core of financial institutions. This core can be seen as an economic “super-entity” that raises new important issues both for researchers and policy makers.

The New Scientist covers this story, pointing out that, in effect, less than 1 per cent of the companies are able to control 40 per cent of the entire network – mostly financial institutions like Barclays Bank, JPMorgan Chase and Goldman Sachs.

Of course this doesn’t automatically imply a shadowy global conspiracy – but it doesn’t automatically imply openness and accountability either; and it certainly does suggest a consolidation of vested interests. Basically it’s great grist for the anti-corporate movement.

It’s a theme I picked up in a workshop last week – we got this short film made to show some of the great corporate anti-heroes from Hollywood (see my earlier post, Bad Guys Inc). Here it is – made for internal consumption only, but just for fun:

The above image comes from the New Scientist article, which comes with the following legend: The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue.

Last week I arranged a breakfast for a few big corporate foundations. Unilever kindly hosted it, in their plush CEO dining room – a clear bright morning, with a panoramic view of the London skyline. We were joined by the Thomson Reuters Foundation, Virgin Unite, Nike Foundation and Burberry Foundation.

One thing’s clear: in the world of corporate foundations, this lot are a new breed. Here’s why.

More matter, less art.
Historically, corporate foundations were likely patrons of the arts – but now the energy moving away from theatres and galleries and towards the slums and inner cities. The magic word is “impact”. The arts institutions really need a new narrative to retain their corporate patrons.

More international.
The multi-nationals are becoming multi-locals, so the story goes – and the new wave of corporate foundations has a naturally international outlook. Increasingly, their partners are the international development agencies and NGOs.

More employee involvement.
Many foundations are still far removed from real business – just benefactors for the favourite charities of chairmans’ wives. The new wave is much smarter: the corporate foundation is a catalyst for employee engagement, a feeling of belonging and shared endeavor, a feeling of pride, and in some cases a platform for developing new talent.

More aligned to corporate brand and strategy.
This is about leveraging the core competencies of the business – legal advice or journalism, if you’re Thomson Reuters. In other cases, it’s about being emblematic of the corporate brand: entrepreneurialism if you’re Virgin, or creativity if you’re Burberry.

There’s an instinctive sense in the people running these foundations that to make a difference, the foundation has to really resonate with the heartbeat of the parent corporate.

It was an interesting session, and fun to organize. Everyone agreed we should do another one before the end of the year, and invite a few other kindred spirits.

Lovely image taken from Unilever’s roofgarden from here.

This week I’ve been invited by a client to DSEI, “the world’s largest defense and security exhibition” – or, to you and me, an arms fair. Or a “Death Fair”, as the campaign group Disarm DSEI calls it.

So, barely a year since my last project with Amnesty International, and what now – rubbing shoulders with generals from Indonesia and Chile? What’s going on?

I have a brief from a large defence manufacturer: articulate a narrative about their role in society, the positive contribution they make to the world. An interesting corporate citizenship task, huh? It’s easy to feel good about planning a campaign for human rights in Burma, but this is a challenge of a different nature entirely.

Plus, I have to admit I’m looking forward to the live demonstration of an unmanned UAV drone – and there’s even a chance to win one. Not quite sure what I’d do with it though.

Of course, the global defence industry sits firmly in the land of the Sindex and Vice Fund – in the popular imagination, they’re the ultimate corporate bad-guys. So, is it ever OK to work for the arms trade?

My friends have very polarized views. For me, it starts with the view that weapons have a place in the world, and so somebody has to make them. I’m glad that NATO was able to stop the ethnic cleansing in Kosovo. I’m glad that NATO intervened to stop Gadaffi’s threatened bloodbath in Benghazi. I wish somebody had stopped the slaughter in Rwanda.

But what happens when you stop to ask, who thought is was a good idea to arm these lunatics? As the Campaign Against the Arms Trade is keen to point out, we did, apparently: for example, Britain armed Lybia in the first place.

They point out that the UK Government’s 2010 Human Rights Annual Report identified 26 countries of concern. Yet, in that year, the UK approved arms export licences to 16 of these including Israel, Libya, Pakistan, Russia and Saudi Arabia.

The official logic goes like this: exports are regarded as vital to the health of the defence industrial base which is, in turn, an important adjunct of national security, foreign policy and the domestic economy. In other words, selling arms abroad achieves three objectives:

1. It effectively subsidises our own national defense capability.
2. The enemy of my enemy is my friend – so let’s keep them strong.
3. And while we’re at it, all of this means exports, taxes and jobs.

So this is the debate. It’s going to be fascinating. And if you’re Amnesty International, the real problem is that the industry is poorly regulated with illegal arms flooding the market.

And that’s my excuse to show one of the finest moments from my old agency, Mother – a few years ago now, part of Amnesty’s campaign against the illegal arms trade. How are you supposed to make such a serious subject entertaining, even funny? Here’s how:

Image from New Internationalist.

Good – and surprising – news that Socially Responsible Investment is growing faster than ever. Does this mean that good companies are good investments? I did a bit of digging around.

Good company = bad investment

• In the UK, Observer Money’s Sindex shows that the bad guys outperform the good guys: it’s beaten the saintly FTSE4Good, returning 38% over the past year, against 17% for the saints.
• In the US, the Vice Fund invests specifically in alcohol, gaming, tobacco and defence. It’s beaten the S&P 500 since its launch, returning almost 70%, against 50% for the index.

Good company = good investment

• It’s all about risk. Kevin Parker, global head of Deutsche Asset Management, recently told Reuters that investors in longer-term debt including bonds will increasingly avoid unsustainable companies. This means bad companies will see rising borrowing costs: “What this boils down to be risk in capital markets, and capital markets know how to price risk once they understand it.”
• Don’t turn, just tilt. In other words, don’t shun the bad guys entirely, just tilt away from them. That’s the conclusion of Meir Statman and Denys Glushkov of Barclays Global Investors in The Wages of Social Responsibility published in 2008: “We analyze returns during 1992-2007 of stocks rated on social responsibility by KLD and find that this tilt gave socially responsible portfolios a return advantage relative to conventional portfolios.”

Good company = no different

A couple of meta analysis show that investing in good companies is no better, but no worse either.

• A 2007 report from the UN and Mercer Global Consulting reviewed 20 academic studies and concluded that there, “does not appear to be a performance penalty from taking wider factors into account in the investment management process”
• A 2008 report from the European Centre for Corporate Engagement conducted a meta analysis of studies on SRI and financial returns and found that “even though they do not present irrefutable evidence that SRI generates higher returns than ‘normal’ investments, most studies have found that they do not result in worse performance either, while, at the same time, they might actually decrease risk exposure.”

The trouble with money

We all know that equity investors are driven by a short-term return, whilst corporates need to make long term plans. Hence the whipping that PepsiCo recently got from the Wall Street Journal – asking for more performance and less purpose. Tomorrow I’m going to see a company with no investors – Arup, a private partnership, and one of the most successful engineering firms in the world. Here’s what the founder said about his financial model:

The trouble with money is that it is a dividing force, not a uniting force, as is the quest for quality or a humanitarian outlook. If we let it divide us, we are sunk as an organisation – at least as a force for good.

Figuring out how to reconcile that high-mindedness with the realities of the capital markets – that’s got to be the hardest question…

Iconic Western brands like Jaguar and Land Rover are now owned by Tata Group of India, and the middle-class comfort-car Volvo is owned by Geely International of China. The world’s biggest telecom company is Bharti Airtel, with businesses in 19 countries. IBM’s PC business is now owned by Lenovo Group of China.

Maybe we should broaden our horizons a little, stop obsessing with the neocolonial multinationals (Unilever, Nike, PepsiCo,etc) and pay some attention to the next generation. Some of them have interesting stories. Here are my four top examples:

1. MAHINDRA

Mahindra is a vast conglomerate operating in 100 countries, working in every industry you can think of: aerospace, agriculture, automotive, defense, energy, financial services, to name a few. Mahindra is a champion of the emerging market story: “We are many companies united by a common purpose—to enable people to Rise“, is the opening sentence on its corporate website. Rise is a corporate narrative developed by my old friends at Strawberry Frog; it’s an ambitious program to mobilize the business into a kind of cultural movement. This isn’t standard corporate language. As the website puts it:

Rise is a call to action. It’s the challenger spirit that leads us to build ourselves better lives. The thirst for a brighter future is something shared by people around the world. Rise is a movement of determined people who are working towards goals of all sizes, every day.

2. BARLOWORLD

South Africa’s Barloworld makes Caterpillar and NACCO trucks, and has operations in 110 countries. Barloworld was hit hard when the already fragile South African economy was faced with the fallout from the Soweto riots. Their response, according to Article 13, was a groundbreaking Human Rights code which embedded the right to non-discrimination. This was counter to the prevailing political wind: for example, the code gives everyone the right to use the same toilets, which was at the time illegal in South Africa. I thought that deserved a gratuitous image of a monster mining truck:

3. ECOBANK

Ecobank is Africa’s largest banking multinational, operating in more African countries than any other bank – and driven by the slogan, “Taking Banking to the People”. It’s was chosen as a case study by Business In The Community, for local community involvement: a children’s hospital next to it’s Ghana HQ was in poor repair; the business permanently “adopted” the hospital. A small example, but an interesting response. Here’s the bank’s recent Rhythm of Africa TV spot:

4. MTN

MTN is the largest African mobile provider, working in 21 countries in Africa and the Middle East. It has a history of overcoming the exclusion of the poor through innovating new models – most recently, mobile banking, which it’s launching in all markets. According to NextBillion, access to banking is crucial to economic development, and MTN are confident of the consumer benefit: “It’s cheap, it’s easy, it’s unintimidating,” Jenny Hoffmann, head of MTN Banking, told NextBillion. “And if you live on a hill in (rural Africa) you don’t have to go to town to make a payment.” Here’s a launch ad from Cote d’Ivoire (source):

The media and the public are all complicit in this, I think: everybody wants a simple story of good vs. evil with a villain and a few victims. The current scandal is like NOTW journalism at its finest.

I shared some slides on “corporate archetypes” in the U.S. last week – News International certainly fits the bill as malevolent megacorp, unaccountable and out of control. This is a strong theme in culture, one we all grew up with – especially in film: corporates are often the bad guys, never the good guys. Here are some examples:

Terminator
Part corporation, part computer – Skynet sends cyborgs from the future to kill an innocent mum, Sarah Conner. Here’s Skynet’s own corporate film:

It’s A Wonderful Life
Good guy George Carlin fights to prevent the bad-guy bankers from taking over the town. When people think of Bob Diamond from Barclays, they hear echoes of Mr. Potter, in this clip:

Erin Brokovitch
True story of an unemployed single mother taking on a multi-billion dollar corporation – and winning. Here she is, kicking ass in the boardroom:

The China Syndrome
A sinister conspiracy to cover up a nuclear accident – weirdly, released just 12 days before the Three Mile Island accident. Here’s the trailer:

Avatar
The fight to save a remote civilisation from RDA, a military-corporate entity run by Parker Selfridge. He’s an interesting villain – young and ambitious in an MBA type way. Here’s a profile of him:

The Constant Gardener
A widower tries to get to the bottom of his wife’s death – a “corporate murder” at the hands of a pharmaceuticals company. Here’s the trailer:

Total Recall
Arnie plays a hard-grafting construction worker who ends up in a battle with Rekall,Inc – a corporation with the technology to implant fake memories. Here’s their commercial,

So – big evil corporate, that’s a deep cultural archetype. Got it. The point here is not “oh poor corporates” – far from it: corporates have done much to deserve their reputation as bad guys. But that’s not the whole story: business can be a positive force in society – and those of us who want to be part of that need to realize there is some deep cultural resistance to this idea.

And what about the evil Murdoch Empire? I’m no fan of Murdoch, but the whole Punch & Judy show is Britain at its worst: a sanctimonious media, a meek and uncritical public, a pompous and ineffective House of Commons. If Murdoch has (/had) any power, it’s because it was given to him by desperate politicians, and a bored public in search of grubby entertainment.