The Silent Takeover by Noreena Hertz

Author:Noreena Hertz
Language: eng
Format: epub
Publisher: Simon & Schuster
Published: 2002-10-06T04:00:00+00:00

Beautifying the BrandIn the age of the logo, reputation is paramount. Corporations are increasingly realizing that there are new expectations of them. As their actions become more and more public, they are expected to justify their policies and actions, and address their consumers’ and shareholders’ concerns, to a hitherto unprecedented degree. Does the company mistreat its employees? Is the company damaging the environment? Is the company backing a repressive regime? Can the company be trusted? These are increasingly asked questions, from key stakeholders rather than by politicians.No wonder, when such priorities are stated, that many corporations are professing great concern. CEOs of several leading brand name companies confess to the vulnerability that they feel under the media spotlight. “What we fear most,” says one, “is not new legislation, but consumer revolt.” Another speaks of a feeling of powerlessness: “If people think corporations are powerful, they haven’t been in a corporation. We are by no means powerful—we are confined and restricted in what we do. Consumer choice doesn’t allow us to have unfettered power.”20

Although still a relatively new phenomenon, the forcefulness of today’s consumer and shareholder activist movement, and the breadth of its “church,” have triggered a response from corporations or, at least, from those who are caught. While governments have allowed the interests of corporations increasingly to take precedence over the public interest, the public, through the marketplace, is reclaiming its interest for itself.

It is too early in this process to gauge the size of the impact. Only a few corporations have been actively targeted; corporations that do not sell consumer goods are to a large extent shielded from activist action, for highly visible brand names obviously provide a better target for smear campaigns and other public attacks;21and instances of active protest are still relatively few, so that each gains significant media interest.

However, in the same way that governments are now unwilling to risk raising taxes because of the backlash from voters, many captains of industry have a fear of adverse publicity.22The cost of rebuilding a negative reputation is high; in fact, once lost, a reputation may be impossible to regain. Memories of the GM debacle, Brent Spar, and Kathie Lee Gifford have left their mark.

Increasingly, the cost advantages of cheaper labor or cheaper inputs from suppliers dismissive of human rights, or actuarial calculations of the risks of retroactive environmental rulings, must be weighed against the damage from negative publicity, the cost of poor public relations, and the possibility of consumer protest. “The spotlight does not change the morality of multinational managers; it changes thebottom-line interests of multinational corporations.”23Bottom-line interests that politicians seem increasingly unable to meet.

Many corporations are now concerned with ensuring that they are well thought of by the public and the media. In practical terms this has meant a substantial increase not only in the number of multinationals that now have codes of conduct ( all Fortune 500 companies in the U.S. do), but also in those now willing to undergo an audit of their environmental, and to a lesser extent social, policies.

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