Companies that want to be successful in the long term must get comfortable with the uncomfortable. That was a key theme in FleishmanHillard’s recent Navigating Zero Gravity report. And it was reinforced throughout the Global Reporting Initiative (GRI) Reporters’ Summit North America on February 25, where sustainability-minded professionals converged on Tempe, Ariz., to get updates on the use of the GRI Standards, hear and see best practices and discuss emerging trends. Ready or not, here are my top four takeaways:

1. Investors are watching: 82% are looking at environmental, social and governance (ESG).

Investors expect your company to demonstrate its commitment to ESG. Globally, the managers of more than $22.9 trillion corporate assets now consider ESG principles in their evaluations of the companies they invest in. Blackrock, Vanguard and State Street – funds who have taken a major stand on sustainability – own 18% of the S&P 500. And, 49% of shareholder proposals are related to ESG topics.

How can you help investors get the most out of your corporate social responsibility (CSR) or sustainability report? First, be consistent and accurate in your reporting. Investors want data – a lot of it – and they want to be able to make year-over-year comparisons. To make that easy for them, consider consolidating the data in your report in one spot. Or create a separate, downloadable scorecard.

And be proactive with emerging industry trends. Investors want to see that your company looking ahead to assess and manage risks, which brings us to my next learning.

2. Stop calling ESG-related reporting, “non-financial:” Sooner or later, it affects your bottom line. 

Topics like diversity and inclusion and community engagement may not seem directly connected to your company’s profit margins, but they have the potential to negatively – and positively – impact your success. That’s why it’s critical to move toward fully integrating sustainability into your company’s business strategy.

A good place to start is by evaluating how your company handles GRI Standard 103, Management Approach. In your reporting, each of your material topics should be accompanied by a discussion of its management approach: 1) Why the topic is important to your business, 2) how your company manages it, and 3) how you evaluate progress.

Over the next few years, we expect to see more and more companies combining their annual and sustainability/CSR reports, or moving to an integrated report.

3. Your stakeholders want to know: Greater transparency puts you ahead … for now.  

Being transparent now will win you points with investors, consumers and other stakeholders. Consumer demand combined with such technologies as blockchain and AI are all playing a role in increasing the need for transparency. Consider these tips to help ensure that your report meets that need:

• Bringing in your legal team at the beginning.
• Do a gap analysis every year to see where you can improve or expand the next year’s reporting.
• Benchmark your performance against your peers and competitors. Then strive to do more.
• Go beyond general support for the United Nations Sustainable Development Goals. Identify where your company can have an impact at the indicator level (there are 169 of them), and report your progress year over year.

4. No one has time to answer hundreds of surveys: Prioritize. 

I saved the best news for last. While the first three learnings may push your companies’ comfort zone, this one should be a relief. There are hundreds of sustainability-related ratings and rankings out there (Sustainalytics, Corporate Knights, MSCI, ISS, DJSI, CDP, and on and on …). No one expects you to respond to all of them! Prioritize by asking two simple questions:

• How relevant is the survey to your company?
• How much influence does the survey have?

Worthy of note: I had the opportunity to hear from Corporate Knights during the Summit. They’re actually anti-survey, relying instead on publicly available information. They are currently revamping their methodology to emphasize what they call “clean revenue.” That means they’ll evaluate how your company makes money and whether you’re doing it in a way that contributes to making the world a better place. This concept will account for half of how Corporate Knights scores a given company.

No question, when it comes to addressing sustainability at your company, there’s a lot to soak in. At FleishmanHillard, we help you make sense of the current landscape and — no matter where you are on your journey — push your company forward.

Today like never before, talent is at a premium. U.S. unemployment rates are reaching record lows, creating one of the most competitive labor markets in memory. Employers face significant challenges attracting – and keeping – a diverse talent base as workers have more options and higher standards now than any time in recent history. Beyond affecting retention, internal culture increasingly is becoming a scrutinized facet of companies’ external brands with the potential to influence – both positively and negatively – business results and market value.

Consumer expectations never have been higher for companies to act in alignment with their own values. In the 2018 FleishmanHillard Authentic Insights study, 47 percent of consumers said they are less likely to purchase from companies believed to behave in ways that are in conflict with their brands and corporate values.¹ And with the lines between internal and external company news growing thinner by the day, how businesses treat their workers is magnified in plain view for the world to see.

Investing in engaging and aligning employees with the company’s strategic priorities and business goals is non-negotiable for the organizations that want to lead their industries and sectors. To attract and retain top talent, an exceptional employee experience must be a way of life, not just an annual holiday – especially if the organization seeks to be an employer of choice featured on the coveted top employer lists.

It all starts with ensuring employees feel valued … day in and day out:

Foster a sense of belonging

People do their best work when they feel safe to express their opinions, challenge the status quo, take creative risks and be their authentic selves. To bring out the best in your employees, be open to new ideas and perspectives, and celebrate the diverse people who bring them to you. If you don’t already have such a program, consider developing and sharing your company’s vision and philosophy for creating a diverse and inclusive work environment, and offer training to ensure your leaders, managers and employees understand not just why diversity and inclusion are important, but also how to behave in a way consistent with these values.

Actively listen and share

Employees need to know their voices matter and their feedback can impact change. Create an ongoing, authentic dialogue between employees and leaders by providing frequent feedback opportunities – from skip-level meetings to Ask Me Anything sessions to pulse surveys and beyond. Ask leaders to consistently share the feedback they receive and lay out specific plans for how they’ll address it. This active listening and vulnerability pays off by demonstrating that senior leaders care about their employees’ experience and ensuring they feel heard.

Grow your people

Few things inspire loyalty like knowing that a clear career path and opportunities for personal and professional growth exist in one’s job. Prioritize training, creating cross-functional learning opportunities and succession planning to ensure top talent can find challenging, rewarding options at every stage of their development. Additionally, publicize the ways you make it easier for employees to grow, including mentoring programs, internal reskilling efforts and benefits, such as tuition reimbursement. Finally, train managers on performance management and how to have meaningful dialogues with employees about their career goals.

In the end, if you take prioritizing your employees seriously, they’ll show you appreciation by sticking around and giving their all, and your customers might just show their appreciation by being loyal fans of your brand. Just remember the celebration of your people is a year-long event.

¹TRUE Global Intelligence. Authentic Insights Survey. 2018. https://fleishmanhillard.com/

I had the pleasure of participating on a panel on February 19^th for PRSA Chicago called ‘The Good, the Bad & the Ugly of Artificial Intelligence on PR.’ I was joined by Andrew Cross, senior vice president, public relations, Walker Sands Communications; Andrea Rosi, director of product marketing, Cision; and Marc Zionts, chief executive officer, Automated Insights.

In the corporate world, and specifically that of communications, we are uncertain about how AI will impact our lives; we may be a little worried about how it may affect corporate and personal reputations, and also how it will change our jobs. Moreover, a study conducted by TRUE Global Intelligence (the practice I lead) of 1,000 consumers in the US and UK each, respectively, found that 81 percent of respondents said communications would be the sector most disrupted by AI over the next five years. Though all this may be true, AI presents opportunities for growth and development in some of the following areas:

• While AI will replace jobs, it will likely create more, and evolve the current roles we have today. AI may write press releases, create a media list or generate a media advisory, yet today it can’t take a journalist to lunch or convince a client that giving a specific journalist an exclusive is a good idea. This AI application and the role of a media relations specialist are likely to change in the future. This illuminates the necessity to consider how the value of PR changes over time, reskill existing workforces and provide education for new employees. A friend of mine recently shared with me his visit to a pharmacy in Shanghai where prescriptions are filled solely by robots, which then automatically distribute them to their recipients’ assigned drawers. While AI is automating a process previously filled by humans, there is still a pharmacist on staff, monitoring and adjusting the entire process. Today.
• If it replaces jobs and creates new ones, the model of PR will inevitably change. We knew it was bound to happen. We have been considering which functions and roles will be improved or changed. For example, through innovations in AI, the way a crisis is anticipated or mitigated will likely change drastically. Data will continually be collected and through machine learning and natural language generation, some crises, especially reputational, may possibly be averted, to the extent communications and actions may be sent throughout a supply chain and to news outlets, in machine to machine communication, to minimize or avert a crisis.
• On the agency and client side, while the marketing industry is more data-driven, enabling AI for PR is woefully behind. Most are in the beginning stages of collecting data and trialing new technology to derive value and insight from it. What we absorb as humans is a narrative – the opportunity is taking data and transforming it into meaningful and understandable communications. The immediate future opportunity is the advancement that will be made integrating that narrative into an experience across all platforms – virtual reality, augmented reality, TV, social media, video, etc.
• Just for fun, check out Crystal Knows. While I am not one to subscribe to tools and gadgets without prioritizing business purpose and impact, (and admittedly don’t have direct experience with this tool) it’s worth knowing what’s out there and where the “low hanging fruit” of automation can make your life just a little bit easier or add more value.

This education we are experiencing in the industry is natural, and a part of how change begins. And that is exactly what is important to highlight – change. These innovations can bring advancements to the industry and to roles to further develop the field and ourselves.  I always appreciate that saying, “Nothing changes if nothing changes.” A colleague of mine says data is a dirty word. It’s time to remind ourselves what an asset it is.

Despite what we’re seeing politically and the increasing vitriol on social and traditional media, it is incorrect to assume that we’re careening toward a compassionless future. There is evidence to suggest that empathy is an emerging societal need.

We see evidence of empathy in action, though it may not get as much media coverage as it deserves, from everyday people all around us. It is people, not the corporate world, leading on the empathy front. Perhaps taking their cue from people – their consumers – organizations are starting to see the need for empathetic leaders.¹ Social media makes the corporate world increasingly immediate and intimate, adding pressure to corporations to be truly responsive and empathetic.

Bianca McCann, Chief Human Resources Officer at BetterWorks, has studied the subject of empathy in the office. She noted that “having powerful empathetic conversations is a critical piece of being a great manager, and to truly hear the employee, deep listening and suspended judgment are needed skills. Yet in the busy world in which managers are entrenched, both of these skills are a real challenge.²

How Can Companies Show Empathy?

While there has been a lot of talk and research on the qualities of empathetic leaders, what does it mean for companies to show empathy and what do consumers expect?  Based on research that we conducted on the qualities of empathetic leaders, we identified seven qualities that companies should have to be considered empathetic. We then surveyed 1,000 Americans online between May 21 and May 25, 2018. We found most Americans feel that all of the following qualities are extremely or very important to a company being considered empathetic, setting a high bar for corporate expectations:

• Kindness – Lead from the heart and use the kindness of their spirit in how they treat and think about people. (59%)
• Active Communication – Rely on communication as a two-way, collaborative process as a catalyst for change. (59%)
• Self-control – Seek to understand first and react second. (59%)
• Adverse to toxic behaviors – Set boundaries on people that exhibit negative behaviors. (58%)
• Other-centered – Continually seek to understand how customers and employees are doing, what they need and how they feel. (57%)
• Self-aware – Transparently lead through their own challenges and fears, and then help their employees and customers through theirs. (56%)
• Unselfish – Companies that understand they get more from giving than from getting. (55%)

Our research indicates that there is a strong desire for companies to embrace and display empathetic qualities, and that desire will continue to grow as solidarity and empathy are built through digital media. Rather than viewing empathy as a “soft skill,” companies must regard it as a hard and essential skill from the CEO on down.

View the research here.

1. Gill B. Empathy is crucial to any personal or professional relationship. Here’s how to cultivate it. Forbes. Nov. 17, 2017. https://www.forbes.com/sites/bhaligill/2017/11/17/empathy-is-crucial-to-any-personal-or-professional-relationship-heres-how-to-cultivate-it/#403b15677961

2. Lipman V. How important is empathy to successful management? Forbes. Feb. 24, 2018. https://www.forbes.com/sites/victorlipman/2018/02/24/how-important-is-empathy-to-successful-management/#67b63b90a46d

Survey Methodology:

TRUE Global Intelligence, the in-house research practice of FleishmanHillard, conducted this research as an online survey. The sample size consisted of 1,000 Americans aged 18 years and older and was fielded between May 25 and May 21, 2018. The margin of error is +/- 3% and is higher for subgroups.

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Contact Catherine Reynolds, senior vice president and partner, or Natasha Kennedy, global managing director for more information.

Well-funded environmentalists take a page from hedge fund playbooks, with meat in their crosshairs

Activist groups pushing to further reduce greenhouse gas emissions, water use and meat consumption have initiated a new strategy and enlisted new allies in their quest. Partnering with doctors, academics and investors who control trillions of dollars, activists have set their sights on the environmental impact of meat and poultry production.

We seem to have arrived at a tipping point. Going forward, the actions of food and beverage companies could have a fundamental impact on the future of their supply chain partnerships, communications with Wall Street, CSR efforts and how we raise animals for food.

Here’s a quick review of what’s happened over the past month or so, and what it represents for the industry.

From EAT-Lancet to Green New Deal

Mid-January 2019 saw the launch of the EAT-Lancet Commission report, which enlisted the expertise of doctors and academics to define the best diet for us and the planet. The report calls for a dramatic reduction in our consumption of meat, dairy and other foods for environmental and health reasons, as well as a similar call to action to cut food waste.

Though The Lancet has been writing about the health risks of animal protein since 1897, it significantly shifted its approach to the topic in 2015. While the journal previously focused on controversies surrounding red meat and associated risk factors for specific diseases, it now speaks more broadly about the negative impacts of meat consumption and calls on the general public to establish limits.

While the EAT-Lancet Commission report wasn’t a major turning point in policy and societal conversations around this topic, it set the stage for a broader movement designed to reduce red meat consumption, and disrupt production.

That movement received further support recently, with the introduction of the Green New Deal resolution, which calls for recognition that the U.S. government has a responsibility to achieve “net-zero greenhouse gas emissions through a fair and just transition for all communities and workers”. The initiative was inspired by the Intergovernmental Panel on Climate Change’s proclamation that we have slightly more than a decade to get carbon emissions under control before catastrophic climate change impacts become unavoidable.

Among other things, the resolution calls for collaboration with farmers and ranchers to build a more sustainable food system. The Green New Deal would include, according to an FAQ released by Rep. Ocasio-Cortez, efforts to “create a sustainable, pollution and greenhouse gas free, food system that ensures universal access to healthy food and expands independent family farming.”

Investor Letter from Ceres and FAIRR

The most significant development on this front, however, is a letter released last month by CERES and FAIRR from more than 80 global investors who manage $6.5 trillion in assets. It urged Domino’s Pizza, McDonald’s, Restaurant Brands International (owner of Burger King), Chipotle Mexican Grill, Wendy’s Co. and Yum! Brands (owner of KFC and Pizza Hut) to set aggressive targets to reduce the greenhouse gas emissions and water impacts of their meat and dairy suppliers.

This letter represents the first time that investors have launched a coordinated effort to address the environmental impact of meat and dairy consumption. More so than pressure from academics or NGOs, this development poses very real business and profitability risks that industry leaders must respond to or face the potential for shareholder proposals and damage to their reputation with investors and customers.

Investors have a successful history of motivating corporate action on sustainability issues. CDP (formerly the Carbon Disclosure Project), created in 2002, is a good example. CDP started with a letter from 35 investors calling for climate information from a broad cross-section of companies; 245 of them responded. Today more than 6,000 companies publicly disclose environmental information from CDP, and nearly a fifth of global greenhouse gas emissions are reported through CDP.

The Ceres and FAIRR investor letter sounds a loud and clear signal of things to come by asking QSRs to work with their supply chains to reduce emissions and water use. Whether the industry stands together or points fingers on this issue will determine whose reputation is on the line.

Time to Unite … and Take Action

Depending on how QSRs react, all these efforts combined represent either a threat or an opportunity, both financially and reputationally, for food companies, meat producers and farmers and ranchers.  Significant and measurable progress in reducing the environmental footprint of meat, poultry and dairy production has already been made. It’s critical that all parties up and down the supply chain unite to clearly communicate that progress and tackle these issues in an even more transparent and comprehensive fashion. If they don’t, proxy fights, share price erosion and reputational damage lie ahead.

The time to act is now – before others firmly control the message … and potentially the future of the industry.