360 Degree Annual Reports: Helping intangible assets have
real world impact
By Hampton Bridwell, President, BrandLogic
Corporate America is reexamining the content and scope of their
annual reports, for a variety of reasons. Companies are realizing
that they must not only perform well, but they must explain to a
wide range of stakeholders why and how they're performing well.
Additionally, they need to explain how they hope to continue doing
well, and the good things they're doing to improve the spheres they
operate in. Why is this the case? We see a number of reasons, not
the least of which is increasing regulatory and compliance
concerns-such as Sarbanes-Oxley-across industries and the
transparency compliance demands. Shareholders are more concerned
with the totality of an organization's activities, as they realize
that any of a myriad of corporate activities could adversely or
positively affect stock value.
Institutional and individual investors are interested in
environmental issues, their potential impact on business, and how
business ethics and corporate social responsibility impact brand
reputation and performance. Partners are also more concerned than
ever that every link in the supply chain is rock solid, and hence
are investigating relationships more deeply. Employees feel the
need to know exactly what is going on, and how a company's
activities may impact their future security. Additionally,
communities want to understand the impact of these activities
locally, regionally and globally. Finally, as the competition for
skilled and dedicated employees has never been more intense, top
job candidates today are putting opportunities under the microscope
and weighing corporate reputation, performance and sustainability
factors in their career decisions.
How does a corporation answer all these questions and provide the
right information to the right group of stakeholders? Some leading
companies - such as Citigroup,
BD, Hewlett Packard and Starbucks - are addressing this annual
reporting issue by producing a Corporate Social Responsibility
Report, as an adjunct to their annual reports. Starbucks offers the
full version on the Web and an abridged version in print. Still
others approach the issues in a cursory fashion, without a sense of
how the items covered in that section relate to the company's
reputation and performance overall.
The relationship between reputation and
brand
At BrandLogic, we feel that companies need to move towards 360
Degree Reporting. In our extensive annual report practice, we've
realized that the interrelationship between reputation and brand
and stock momentum is becoming increasingly clear. Reputation and
brand are directly influenced by a company's actions on economic,
environmental and social performance. Taken in total these greatly
impact the company's image, brand perception and, eventually, the
bottom line. Reputation and brand perception are intangible assets
that represent significant monetary value and in today's business
environment, depending on the industry, these factors can range
between five and 50 percent of a company's overall net value. These
are significant assets, and must be regarded and managed as
such.
To protect and manage these assets, a company's CEO and executive
team must communicate their overall approach to managing the
extended relationships that a company has with employees, channel
partners, community locally and globally, environmental policy,
governance and its ability to create sustainable future
performance. And depending on your industry, there could be even
more points to communicate. It's a long list, but for every one of
those components, one or more groups of key stakeholders are
keeping a scorecard, and grading a company's performance. Taken in
aggregate, this shift in responsibilities for corporations is
clearly putting increased pressure on the reputation of its senior
management, its corporate brand, and any actions taken under the
aegis of corporate leadership or the corporate brand.
Enhancing your brand reputation with 360 Degree
Reporting
Moving towards 360 Degree Reporting can have a dramatic effect.
Your ability to clearly show excellent performance on all these
fronts can lift a company's overall value and make it more
attractive to investors and other stakeholders. In addition, an
ability to outperform your industry peers on these measures can aid
your company's reputation, and protect it from those inevitable
moments when its reputation is being questioned. The annual report
is a great forum in which to communicate performance and corporate
social responsibility, as it is one of the few forums in which a
company can control all the parameters of the discussion.
Furthermore, 360 Degree Reporting can more clearly communicate a
company's focused, performance-based message for the year, as well
as its strategy for going forward-how it is positioning itself for
continued or improved financial health, performance and
growth.
Some companies are already working on this type of annual report.
Healthcare company Novo Nordisk named their annual report
Financial, Social and Environmental Performance 2006 and is one of
the better examples of 360 Degree Reporting. The Starbucks offering
is available in print or PDF, and is a 24-page version abridged
from the full online report. Starbucks calls their report the
Corporate Social Responsibility/Fiscal 2006 Annual Report. At
BrandLogic, we have recently helped BD (Becton, Dickinson and
Company) a global medical technology company focused on improving
drug therapy, enhancing the diagnosis of infectious diseases and
advancing drug discovery, move its reporting goals forward by
adding a Corporate Citizenship overview into its annual and
developing a complete Web site detailing its performance and
activities. You can see the Web site at
http://www.bd.com/citizenship.
Staying ahead of the curve in reporting
practices
To see just how many global corporations are moving towards 360
Degree Reporting go to http://www.globalreporting.org/Home. This is
the homepage of the Global Reporting Initiative (GRI), an
organization that promotes the inclusion of transparency,
accountability, reporting and sustainable development in annual
reports. The GRI's vision is that one day reporting on economic,
environmental, and social performance by all organizations will
become as routine and comparable as financial reporting. To that
end, the GRI has published extensive guidelines on what it feels
that companies should be reporting on, and all of these guidelines
are downloadable on the organization's Web site. One particularly
interesting feature of the site is that any company that meets
those published guidelines can have their annual report available
for download on the GRI site. You might be surprised at the
companies in your industry that have already begun this
comprehensive reporting practice.
To find out more about 360 Degree Reporting, and how it can enhance
the relationship your company's reputation and brand have on your
bottom line, visit:
www.brandlogic.com/ar