Here’s the essence of Professor Karnani’s case:

“Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.”

Here’s the essence of Mr. Edelman’s reply:

“[Edelman's case studies] demonstrate that contrary to Karnani’s assertion, the decision isn’t whether to run an effective, “smart” business or a socially responsible, engaged one. Performance with purpose (a term used by PepsiCo CEO Indra Nooyi) is not an either/or proposition.”

Now, as it happens, Richard Edelman makes a good point. But he also misses it completely. The core social purpose of a corporation is to provide whatever goods or services it is in business to deliver – be that street cleaning, cigarettes, incubators, medicines, machine guns or bubble gum. Mr Edelman, in contrast, believes that a smart business is an engaged one with a purpose. Engaged in what else other than what it does, I ask.

Mr. Edelman tries to explain it with three examples drawn from his client base:

“Unilever’s Omo Detergent adopted the “Dirt is Good” campaign – aligning with the brand’s business proposition by asserting that “every child has the right” to be a child and get dirty. After fielding new academic research highlighting the importance of outside play for the physical and social development of children and engaging parents, governments and NGOs to take action, the campaign triggered real social change – Vietnamese schools agree to assess national provisions for school recess while the brand commits to build 100 playgrounds over three years.”

He’s shooting himself in the foot. Unilever’s campaign has self-interest at its core. The aim here is to produce more dirty children that will require the use of more of its product to clean up the mess. Moreover, from my experience as a parent, kids don’t need much encouragement to get their clothes dirty or to play outside (try stopping them).

He tells us how the Clorox Brita’s FilterForGood campaign:

“…inspires consumers – and communities – to take a personal pledge and even engage in (planet) healthy competition with others to reduce their bottled-water use, as well as informs them about other environmentally-friendly decisions that each can personally make.”

In essence, he’s positioning his client’s “healthy product” against the bottled water industry’s and mains suppliers’ supposedly environmentally unfriendly or unhealthy alternatives. That is, for as long as Brita remains a client and come the day Edelman represents, say, San Pellegrino, or has to convince us that a utility produces a product fit to drink straight from the tap. This should warn us that the “public interest” Mr. Edelman favours is often just the selfish interests of his clients.

Then, if those two weak cases weren’t enough, he adds:

“The Pepsi Refresh Project, partnering with NGOs and experts, is directly crowd sourcing ideas from consumers to foster innovation in social good – awarding more than $20 million this year to fund local community initiatives and ideas that refresh the world.”

Regardless of the trendy crowd sourcing, that’s just a classic – old-style – brand marketing and awareness-raising campaign. It is, actually, a very low budget one for a company with $9.4 billion in revenues.

One wonders why Mr. Edelman didn’t mention another esteemed client: Ryan Air. It is one which is likely to accuse Professor Karnani of being soft rather than harsh in his defence of profit. Ryan Air states unambiguously that shareholder value comes before its staff, customers, partners and suppliers. Ryan Air has little time for stakeholder PR or for CSR, except as the butt of jokes. Here’s the brief that Edelman pitched for:

“Wanted: PR firm who is able to LOL at the advertising gags, and doesn’t mind poking fun at expensive airports, rivals, prime ministers … and even popes! No precious, sensitive, politically correct or clock-watching publicists need apply. Long hours, stamina and patience of St. Christopher, the patron saint of travel, are all prequisites.”

Now, don’t get me wrong. I’m not against corporations acting responsibly or managing their risks properly. I accept Ryan Air is an outlier; though it is one which has moved an entire industry’s behaviour in its direction. It is just that most CSR is shallow dishonest nonsense that sails close to propaganda, as BP’s Beyond Petroleum clearly did.

It is precisely such transparent charades and double-speak that generates the disabling cynicism that undermines public confidence in modern institutions. So there’s something refreshing about Professor Karnani’s bluntness and Ryan Air’s Michael O’Leary’s loud mouth.

Of course, in one sense there’s a bit of voodoo coming from both Mr. Edelman and Professor Karnani. The problem with deciding between profit-first or profit-with-purpose is that they are difficult to separate. Firms live within society and have all kinds of unavoidable obligations to fulfill as they produce profit.

One has to ask some tough questions about Mr. Edelman’s motivation, however. His main concern seems not to be the public good as much as helping firms restore their credibility and by so doing avoid state interference in their affairs. He says:

“We are at a very important moment in the relationship between business and society. The catastrophic economic events of September 2008 undermined the confidence in the private sector’s ability to self-regulate. Bankruptcies of centerpiece companies in the global economy, such as GM, plus reputation issues for leaders in finance (Goldman Sachs), energy (BP) and transport (Toyota) have called into question the values of corporate leaders. In the race for public credibility, it is fortunate for business that its prime regulator, government, is not seen as a worthy replacement as the leader in the dance.”

My beef is not with what Mr. Edelman wants to achieve; a free and mostly self-regulated market place. It is with how he believes that he can win public acceptance for it. I rebel, as do most people who are moderately sceptical of corporate humbug, to his pandering to the more infantile elements of this discussion; you know, the audience who cannot (supposedly) be told the truth because it would destroy their illusions.

So, I’d like to leave you with what I think is an effective demolition of Mr. Edelman’s style of PR, by quoting Professor Karnani’s robust expose of it:

“Executives are hired to maximize profits; that is their responsibility to their company’s shareholders. Even if executives wanted to forgo some profit to benefit society, they could expect to lose their jobs if they tried—and be replaced by managers who would restore profit as the top priority. The movement for corporate social responsibility is in direct opposition, in such cases, to the movement for better corporate governance, which demands that managers fulfill their fiduciary duty to act in the shareholders’ interest or be relieved of their responsibilities. That’s one reason so many companies talk a great deal about social responsibility but do nothing—a tactic known as greenwashing.”

Exactly!

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Here’s what Vidal says:

“A three-year investigation by the United Nations will almost entirely exonerate Royal Dutch Shell for 40 years of oil pollution in the Niger delta, causing outrage among communities who have long campaigned to force the multinational to clean up its spills and pay compensation.”

Of course, he slips in that Shell paid for the research (though it was environmentalists who campaigned to make “polluters” pay for such reports). He quotes Nnimmo Bassey, chair of Friends the Earth International and director of Environmental Rights Action, saying:

“It is incredible that the UN says that 90% is caused by communities. The UNEP assessment is being paid for by Shell. Their conclusions may be tailored to satisfy their client. We monitor spills regularly and our observation is the direct opposite of what UNEP is planning to report.”

But it beggars belief that a 100-strong multi-national team of UN investigators could be bribed or influenced by a research budget of $10 million from Shell. The report, it seems, will find that the majority of the spillage and environmental degradation was caused by locals, as Vidal reports, “illegally stealing oil and sabotaging company pipelines,” a practice known as bunkering.

I have plenty of reservations. The main one is the casual assumption by so many journalists that there is a handy split (let alone a 90/10 split) between “the communities” or “communities” and Shell. The official report is not yet out, but it is clear to me that the distribution of blame cannot credibly be split 90/10. That’s because Shell, however influential, is just one of many players in the region in the oil business. For a start it is partnered with the state oil company. On the “other” side, too, there are myriad complex relationships between every sort of “official” power, the “communities”, and criminal gangs.

There’s no doubt in my mind, however, that criminality both at a local level (from gangs to corrupt officials) and at a national governmental level (within the oil ministry and its state-run companies) must take most of the blame for the region’s plight.

Here’s what Mike Cowing, the head of a UN team, told Vidal by email:

“UNEP is not responsible for allocating responsibility for the number of spills being found in Ogoniland. Rather, we are focusing on the science. The figures referred to are those of the ministry of the environment and the department of petroleum resources.

“This is a Nigerian issue, not a UNEP issue. However, I would add that from our extensive field work throughout Ogoniland we have witnessed, on a daily basis, very large scale bunkering operations.

“It’s very controversial. We cannot say whether a particular spill is from one cause or another. Our observation is that there is a serious [bunkering ] problem. I am being seen to be siding with the oil companies, but I am not.

“We were provided with the official spill site list. This is given by the oil companies themselves but is endorsed by the [government] agencies. We are not on the side of the oil companies.”

What Vidal does not mention is that Shell has allocated at least $22 billion, a sum approaching what BP is spending to clean up the Gulf of Mexico, to clean up the Niger Delta (see my: Let’s interrogate Shell’s CSR in Nigeria). It seems that Shell is prepared to take responsibility for the clean up, despite, and with the proven moral authority, that it caused just a small fraction of the overall damage.

According to Vidal, the UN team took 1,000 soil and water tests, and other investigations were carried out, and hundreds of communities consulted.  This scoping of the extent of the problem will most likely form the basis for focusing the clean up effort that Shell looks set to fund also.

Will this work? I think it might, up to a point. But on the ground it is most likely doomed to fail. That’s because the scale and complexity of the problem in a region of 30 million people is beyond Shell, and currently beyond the Nigerian government’s ability to solve.

It was always simplistic (and mostly entirely without foundation) of the likes of Amnesty International to accuse Shell of human rights abuses and causing mass poverty on top of the pollution in the region.

However, the UN report looks set to give Shell what it badly needs: a shield to defend itself in the West against the nonsense it has suffered from campaigners over many years. That’s got to be good for its reputation and PR. The rest of the solution rests with the Nigerian people.

Having said that, the question remains about just how honest Shell is going to be about the realities it faces on the ground. Those are realities which should urge Shell to set realistic expectations, or risk the issue blowing up in its face at a later date on a greater scale, the way it did for BP with its Beyond Petroleum charade.

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There was no upside to HP’s reputation from ridding itself of Mark Hurd. The Economist described HP as Hurdless chickens. Wall Street pulled the rug on the share price. Shareholders looked on bewildered as, as the FT reports, transparency turned to opacity as the Board lost its nerve. Now let’s review how this might make a movie.

Married and slightly nerdy CEO gets obsessed with an events contractor, B-movie actress and former soft-porn star. He buys her dinner more times than he ought. She claims she was sexually harassed and hires a top lawyer with a nose for publicity.

The CEO gets cleared of the charge by the company. But he has difficulty explaining the more than $10k (perhaps $20k) he claimed on expenses to entertain her. He gets told to jump ship. As a result, HP’s share value drops by around $13 billion. That would be the opening scene. Then would come the flashback.

Mark Hurd’s predecessor knocks billions off HP’s share price after her fraught merger with Compaq proves nigh on disastrous. The Board that once backed Carly Fiorina decides to ditch her, but the news leaks. Yet only fellow Board members were in the know. So she orders private detectives to spy on the Board to uncover the traitor. Before they can report, Carly’s fired.

However, the chairman of the Board continues with the investigation (widened to include senior executives), which stoops to lies and deceit and unethical borderline legality. When the rest of the Board discovers how the culprit was identified, members resign in protest and the chairman is forced out. From then on, whenever somebody knocks on their front door, they fear that they’re being bugged by a colleague (the film would portray their spouses’ paranoia).

Carly’s merger antics alone mean that from day one, Mark Hurd is CEO of a company with a psychologically damaged and neurotic Board. The breaking of the spying story and near-implosion of the Board, just deepen his problems. But against the odds, he restores HP’s fortunes, winning widespread praise for the turnaround.

To top it all the temptress in the story proves to have a heart (surely that’s a heart on her sleeve?). She weeps and says she never wanted him fired. She backs up his defence and says that they never had intercourse. The audience weeps with her on behalf of their fallen hero.

What can we learn from this mess?

Above all, the scandal at HP is more about a failure of corporate governance, team-building and trust, than it is about Mark Hurd’s peccadilloes. The major issue for the Board was trust, and the issue of Hurd’s seemingly falsified expenses.

Contrary to popular opinion, corporate governance is not about CSR and personal ethics so much as about improving corporate performance. It is about making the right operational choices. It is about protecting shareholder interests and about assessing strategies to ensure that corporate assets are used properly to achieve corporate purposes. As Larry Ellison has pointed out, HP’s Board has clearly failed to do its job.

The PR consultants at APCO recommended, rightly, that the Board should proactively make a full disclosure of the “scandal”. However, they wrongly advised that Hurd should be sent packing. They produced mock scandalous headlines of what the media might say if Hurd was not ousted. This scared the risk-adverse, emotional Board. In APCO’s favour, however, they probably knew better than anyone else just how broken were the internal relations at the top of HP (leadership requires trust to function). This was no ordinary crisis.

The Board was like a rabbit caught in headlights. It first froze, then panicked. Not for the first time it collectively put personal feelings before the company’s interests.

Meanwhile, Wall Street punished the Board and the company for firing Hurd.

But what about Mark Hurd’s role in all this? His comment about his resignation (cue $40 million pay off) was revealing. He said:

“I did not live up to the standards and principles of trust and integrity that I have espoused at HP”

So, he knew that he broke the bonds of trust at HP, and that he was guilty of hypocrisy on the morality front. So here’s my guidelines for how to avoid such moral hazards in future:

• Don’t let PRs sell the politically correct narrative of your personal life.

• Don’t use personal virtues as a shield to promote your professional ones.

• Headlines about your personal virtues are hostages to fortune.

• Avoid the temptation to indulge in moral outbursts on any topic.

• Don’t bring your personal life to work or include it in your PR.

• Those who live by the sword die by it.

• Don’t lecture anyone (especially not your staff) about personal morality.

• Always assume that everything always gets into the media in the end.

• The public love sinners and winners. It loathes saints.

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Vision 2050 advocates that big business solves mankind’s major social and environmental problems in partnerships with government and society. The aim is to produce enough food, clean water, sanitation, shelter, mobility, education and health to provide for 9 billion humans.

Here’s some of what they think needs doing over the next forty years to make a sustainable planetary society possible:

“These include incorporating the costs of externalities, starting with carbon, ecosystem services and water, into the structure of the marketplace; doubling agricultural output without increasing the amount of land or water used; halting deforestation and increasing yields from planted forests: halving carbon emissions worldwide (based on 2005 levels) by 2050 through a shift to low-carbon energy systems and improved demand-side energy efficiency, and providing universal access to low-carbon mobility.”

The WBCSD explains that:

“As part of this transformation, Vision 2050 calls for a new agenda for business: to work with government and society worldwide to transform markets and competition. New rules for markets will reframe environmental challenges as economic challenges, driving innovation and competition in the direction of sustainability and away from resource- and energy-intensive production. Rationalizing prices to include such externalities as climate and biodiversity impacts will make corporate environmental efficiency a true competitive advantage across all industries and regions.”

How to interrogate this stuff from an independent PR perspective? Sceptically, I suggest.

Big business likes this stuff because it sounds and even is virtuous. It has the merit of turning all kinds of uncertainties into market opportunities. I certainly warm to Vision 2050′s commitment to raising productivity (output) by improving land usage and making better use of genetically modified organisms. I can also see the logic of accepting political realities and in proactively helping governments turn costly externalities into profit-centres.

It’s worth noting, though, that this means that externalities and social desirables become goods and services which have a state-subsidy or state guaranteed price.

The problem is that state planning risks making the future of the world dependent on the short-term political thinking politicians are prone toward, which is the very opposite of what Vision 2050 aims to achieve. Certainly, WBCSD hopes that governments will map the paths to achieve pre-advertised and pre-announced priced services (the ex-externalities), which is something that may or may not happen.

Yet, when the state is required to map out the big things it wants to happen, won’t it be natural (as the WBCSD knows well) that big firms will be able to gear up to deliver it quicker and better than small firms? Won’t government find itself talking with the big firms which can deliver big stuff?

For instance, BP may have cocked-up in the Gulf of Mexico, but a small firm couldn’t have even begun to get the deal. If you electrify cars, the trains, build new track, put in huge windfarms or solar arrays, deliver new low-pollution chemical plants etc, etc, almost all the sustainability deliverables get delivered quicker by giant firms. So the big problem-makers become the big problem-solvers. Yummy. Trebles all round. And a PR victory to boot, you would think. Perhaps, says I, but it is a short term and limited one. Here’s why.

Vision 2050 assumes that in the future the world will have to cutback on carbon dioxide usage to combat global warming. However, what if we could either suck the carbon from the atmosphere or clean it up effectively as we go at little cost? With the former solution we could turn-reverse global warming and keep using fossil fuels. With the latter solution we could make use of all the fossil fuel resources we desire for as long as they are available without making AGW any worse than it already is (evidence suggests there are still huge reserves of gas, oil and coal waiting to be exploited).

Moreover, if the nuclear fusion technology comes on tap in the next 40 years then our energy usage could increase in intensity almost without limit forever. Energy production might remain centralized with the emergence of fusion. It would also make desalination possible on a grand scale; ending all worries about water shortages in a world that is two thirds covered by oceans. We already know how to build gas pipelines over distances of thousands of miles to deliver energy to our homes, so building a global water-pipe network should not be beyond us (something states might legislate for but might not pay for; while the market might be able to sustain the entire costs because it is profitable to do so).

By making best use of nuclear fission, solar and wind technology, this might facilitate the trend toward greater decentralized energy provision that environmentalists demand and Vision 2010 supposes: that is until fusion  - or something else – replaces them all (again subsidies might help, and they might not, and special pleading might not be attractive to taxpayers either).

My point is not to favour this or that solution over some other possible solution. My point is that innovation creates new industries, new possibilities and paradigms. Another issue is that the WBCSD Vision 2050 is in the business of envisioning. In that regard, I accept that the BCSD has identified all sorts of problems which are up ahead, and it may be right that government has a role in fixing them, helped by big business. My concern is only that we should be careful when big business signs up for a green agenda, but only because it’s neat and now it suits them.

Regardless, they may still be right. But I suspect they’d be quick to argue, whatever the reality was, for legislation, controls etc, which make their life more mappable. That doesn’t make them wrong, but it takes away some of their virtue, which they so boldly lay claim to. In any case, they may – as I fear – wrap us in all sorts of expensive taxpayer action which turns out misguided and which leads to its own backlash that undermines their credibility and reputations for honesty, integrity and insight.

The future is almost certainly unpredictable. And perhaps my most important point of all is that we should instead be encouraging new risk-takers to emerge to solve today’s and tomorrow’s problems. Such risk takers are as likely as not to be competitors to today’s major solution providers. They will make best use of scientific and technological breakthroughs to challenge the existing order. Such innovation and innovators rarely emerge from partnership relationships (cosy clubs) but unfold as the work of disruptive entrepreneurs, as the railways, automobile, IT, internet and bio-pharmaceutical industries did.

Vision 2050 does have PR potential, certainly for spin. It also has potential for making progressive progress through the promotion of partnerships, even if its difficult to know in which field. What grates on me is the self-interested certainty that is embedded in the content and tone of Vision 2050. At the very least I counsel that however well intentioned Vision 2050 is, I don’t think it is a sustainable plan over the next 40 years given the nature of the unknown unknowns – such as politics, serendipity and competition – that are as likely as not to tear the plan’s assumptions to shreds.

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I’m not qualified to know whether Mr Thiam was more right than wrong in seeking to buy AIA. What I do know is that too many CEOs believe that they are laws unto themselves or that today all stakeholders are equals.

So the assertion by Pru shareholders of their power to stop the bid for AIA is a timely reminder of where the priorities and corporate lines of accountability lie. The deal’s collapse makes it clear to CEOs everywhere that they must listen to their shareholders more.

I’ve been predicting that in the future shareholders will, and need to, assert their power more and more. That’s because – contrary to popular mythology – one of the lessons from the last boom and today’s bust is that shareholder-value was not over-valued so much as marginalised in the pursuit of short-term interests. Real long-term shareholder value was denigrated by management teams which ran companies more or less for their own benefit whilst covering themselves in the rhetoric of wider stakeholder interests.

My bottom line (and the firms’)? Shareholders may be quite good custodians of long-term value after all. Perhaps even better ones than the “stakeholders” who bang on about sustainability.

I’m not saying that always applies or is even what’s applying in this case. I’m saying that it’s wrong to assume that modern shareholders always fit the short-termist stereotype that’s foisted on them.

What’s more, it may be that Mr Thiam has understood where the long term prospects of the Pru really lie (it may be that his spate with shareholders was mostly about the price of AIA rather than his strategy).

The challenge now is for the Pru to repair its broken relationship with its shareholders, particularly with Prudential Action Group, which planned to oppose the deal at a shareholder vote due to be held on 7 June.

Personally, I hope that the impressive Mr Thiam survives. I believe he should be given room to learn from this setback. But if the price is his head, so be it, because it will provide a much-needed reality check throughout the corporate and PR worlds.

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There was something very panicky about what Shell called its visionary remediation plan for Nigeria. The press release partly explained the company’s motivation thus:

“The expected hurricane of regulation and policy change across industry, resulting from the negligent practices [in the Gulf of Mexico] by one pair of companies especially, means that all of us need to try to push harder in the interests of long-term survival. Shell will therefore distinguish ourselves by being the first oil company in history to cease taking risks with important delta ecosystems.”

But Shell has no more idea what caused the accident in the Gulf of Mexico than does BP. There’s been some discussion as to likely causes at a Senate hearing (dubbed the blame game by President Obama) but there’s been no conclusive evidence revealed that negligence sparked the accident. It is highly indecent, opportunistic and disrespectful of a rival for Shell to say or suggest otherwise right now.

Let’s get back to Nigeria. There is a blinding omission in Shell’s picture of its work in the Niger Delta. It has completely ignored the truth of the damage it is supposed to have done. Instead, it has scapegoated itself. It has seemed to accept responsibility for stuff it didn’t do. Maybe the “truth and reconciliation” work it is funding will start to reveal the rights and wrongs of all the parties in Nigeria, but I frankly doubt it. This is a pity. Nigerians have the right to know the truth about their country’s workings.

Poverty won’t be dented much

Shell proposes to spend $8 billion over the next two years followed by $1 billion per year over the following ten years to clean up the Niger Delta. That’s a region in which more than 30 million people live. So there’s no way that an investment of $2.50 per person per week for two years, followed by $0.62 for ten is going to lift the region out of poverty.

Such an expenditure might help clean up the Niger Delta. Equally (perhaps more than likely) it might not. Shell promises to use locally-sourced suppliers and staff in a region in which it was and remains responsible for just a small proportion of the overall oil pollution, and in which it has little power to tackle the problem of leaks at source. Moreover, the Niger Delta is the most corrupt region in one of the world’s most corrupt countries (the world’s 130th most corrupt state, and falling) as I recently explained in my personal account, CSR: it’s not the same in Lagos as in London.

Shell also said yesterday that it proposes to establish a $4 billion fund earmarked for compensation for perceived injustices in the Niger Delta caused by its operations since 1958. In describing its intentions, Shell borrowed emotive language from post-apartheid South Africa. It talked about creating a $45 million ”truth and reconciliation process” fund, which will assess and award reparations. That’s likely to create a feeding frenzy centred on locals involved in the fund in which those that win bank in Zurich, and those that lose reach for their guns and head back to the Niger Delta’s creeks.

To glimpse the trouble Shell might encounter, we need only examine how hard it has been for Pfizer to handover around $30 million worth of compensation to 100 or so so-called victims of its meningitis-related drugs trial in the north of Nigeria. Unlike Pfizer, however, Shell possesses no DNA data-bank of the people affected by its activities (regardless of the evidence, Pfizer has been unable to convince the other side of who is entitled to compensation and who is not).

China seeks to replace Shell

But there was also some more weird stuff wrapped up in yesterday’s press release from Shell. I say weird because it strikes me as unreal, and therefore as untrustworthy. Shell promised to:

“…cap oil production at current levels until 2015, and then to gradually reduce production to 10 percent of current levels by 2050, while compensating for this reduction through the development of renewable energy sources.”

Yet Nigeria has just concluded a deal with the Chinese to construct three oil refineries at a cost of $23 billion. It is clear from this that Nigeria is dreaming of an oil-filled future, not one based on renewables. But this deal might explain Shell’s warped CSR strategy, as the WSJ says:

“For the Nigeria government, the deal represents a victory of sorts over U.S. and European oil companies, which have long turned a deaf ear to Nigerian government calls to operate refineries in the country because of the poor financial returns.”

The real prize for China is getting its hands on Nigeria oil reserves. To do so it needs to displace the Western companies already established there with their rights to exploit the resource. So that perhaps explains why Shell took the bold step yesterday to cease:

“…deepwater drilling off the coast of Nigeria until the conclusion of a full independent safety review by our local government partners with international oversight.”

This will, as Shell explained in its release, ensure that it has a secure long-term licence to operate in the region (assuming it jumps this self-made hurdle). This pro-active move might well strengthen Shell’s grip on the Nigerian market in the face of stiff competition. It might well explain Shell’s CSR flannel. But yesterday’s announcement is not so easily dismissed. Hidden away, low down in the release was this very significant global commitment to create:

“…local stakeholder program [s] that gives decision-making and veto capacity over new and ongoing projects to communities affected by Shell and SPDC projects worldwide, pending more formal control at the level of local government.”

Exactly how this will be implemented is not explained. Whether Shell would really give, say, the spokespeople of 500 000 local Ogoni tribes people in the Niger Delta region the right of veto, when it has the support of the Nigerian government representing 150 million citizens, remains to be seen.

Lending Goodluck a hand?

There’s a new President in Nigeria. Goodluck Jonathan’s chances of remaining President come the next Presidential election depend in large part upon whether or not he can secure peace in the conflict-ridden Niger Delta region from where he hails. So one suspects Shell has a two-pronged approach. Its latest strategy looks like a ruse to see off Chinese competition and to curry favour with the new President. As I see it, Shell simply decided that its survival in Nigeria depended upon it helping to fund the peace process through its CSR initiative.

Much of yesterday’s announcement came wrapped in today’s obligatory language of sustainability:

“The unique geology underlying these deltas have sustained our shareholders very well, but we must not let that kind of sustainability come at the the expense of the biodiversity, carbon absorption and O2 production that are their true worth.”

But Nigeria’s economic future and sustainability depends upon oil revenue. The sustainability of Western economies also in large part depends upon continued oil supply. China’s future economic growth depends upon cheap energy much of which it hopes to obtain from Africa.

Some home truths

Sure, nobody can doubt that the Niger Delta needs cleaning up and that Shell should have stopped gas flaring years ago, which it announced it was ceasing immediately. Sure, it is also welcome news that Shell now proposes to exploit the surplus gas instead to provide free energy to local people. Sure, nobody can argue with a commitment to protect the region’s biodiversity. Actually, though, Shell has wanted to reduce gas flaring for many years and for several years (I cannot speak for the very recent history) its investment was bedevilled by the failure of its Nigerian government partners to cough up their share.

The issue I’m exploring right now, however, is what’s really driving Shell’s new strategy.

We immediately meet the oldest problem in discussing CSR. When a firm claims to be interested in environment and society, does it matter if these are cloaks for its own self-interest? Is it morally and strategically sort of OK for firms to claim an interest in being virtuous when, after all, it happens that the wider human and planetary good happens to flow alongside their own advantage?

I would not want you to think I am too much of a purist. Hypocrisy and humbug are often valuable. We need lots of sleeping dogs to have their peace.

But when a firm announces a CSR programme, half-way sensible people start digging (it’s better than running straight for the doors). Maybe we’ll never know what Shell’s motives really are. One casualty of the CSR process is honesty: outsiders will never now know what Shell is really thinking. We have to speculate.

Using Nigeria as a poster child

My main guess is this: Shell has decided that it will turn the Niger Delta into a poster child. It will do a very great deal to buy itself a good global reputation by its work there.

I believe that Shell’s imprudent comments on the Gulf of Mexico disaster reveals boardroom-level angst about the likely consequences of the spill for the entire petroleum industry. That will have tempted the company to over-hype the virtue of its CSR spend in Nigeria and throw into the mix some loose global commitments to listen more to stakeholders.

There must also be a very big Nigerian dimension. It takes very little cynicism to speculate that locally, regionally and nationally in Nigeria, these new CSR schemes have been designed to do some quite shabby or at any rate covert and unseen work whilst flying the CSR banner.

So I can’t help feeling that Shell’s response is a self-interested and cynical abuse of CSR and all that it should stand for.

Peter Vosper puts his foot in it

There is something comic in hearing CEO Peter Voser say:

“At long last the words ‘stakeholder’ and ‘sustainable’ will actually mean something. CSR-ND means planning not just for short-term profits, but for what actually matters, including the viability of the planet itself.”

It’s as though he’s admitting that CSR has been hogwash so far, and this time it isn’t, honest injun. But maybe his successor, and his successor’s successor, will be making similar declarations that CSR is at last the real clean, saintly, truthful thing.

Shell’s stunt may work on most levels. The Niger Delta may be a slightly nicer and happier place. Shell may secure its place in Nigeria’s tortuous political economy. The firm may acquire a global bloom at tolerable cost. It may be able to feel better about itself.

I still think it matters to say that corporate culture is polluted when the necessary, expedient and self-interested are dressed-up as outward looking, transformative and virtuous. I don’t know how much narrow self-interest and canny show-boating lies behind this new strategy of Shell’s, but my guess is that there’s a fair bit of it. Anyone interested in the well-being of Shell, but especially of Nigeria, ought to keep watching and inquiring.

Maybe we should be asking Shell to archive its discussions on this CSR programme, and promise to publish them in 30 years. In the interests of intellectual and moral sustainability, you understand.

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This manifesto might seem a lost cause. Speaking at the RSA/Sky Sustainable Business Lecture Series in London, Richard Lambert, director-general of the CBI, the British employers’ group, said “what you might call Jack Welch [1980s] capitalism” was drawing to a close – a reference to the former General Electric chief executive’s championing of shareholder value. Last year Welch dubbed his old mantra “the dumbest idea in the world”. He added: “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

Richard Lambert advocates that doing good is good business and that:

“The risk now is that the public and political response to what’s happened will itself have troubling consequences. If you don’t trust an institution to behave well, you impose regulations – perhaps to a point that undermines the dynamic workings of a market economy, and in turn holds back the forces of job creation and sustainable economic development”

He’s not alone in thinking that shareholders are now just one of many competing interest groups CEOs work for. In a recent FT interview, Paul Polman, Unilever chief executive, said:

“I do not work for the shareholder, to be honest; I work for the consumer, the customer. I discovered a long time ago that if I focus on . . .  the long term to improve the lives of consumers and customers all over the world, the business results will come.”

I think these intelligent people are setting up a false dichotomy. Shareholder value is not necessarily at odds with social value. Customers and employees are not necessarily at odds with shareholders. Sure, running a socially respectable, customer-facing business may well be the ticket for shareholder value.

So I prefer the more robust approach of Lord Haskins, the former chairman of Northern Foods, who has questioned Mr Polman’s assertion that he does not work for Unilever shareholders, saying:

“Isn’t it the shareholder who appoints him, provides him with the funds to run his business, and awards him with his substantial pay package?”

Moreover, many firms, such as Swiss Re and DuPont, to name but two, still put creating shareholder value at the top of their stated objectives: see here and here.

To echo Michael Skapinker writing in the FT, before we consign the shareholder value movement to the dustbin, it is worth remembering why it arose: to prevent chief executives from running businesses in their own interests rather than those of the companies’ owners.

So here are my manifesto’s key points:

The problems:

• The emergence of a generation of CEOs who ran companies for their own benefit;
• A generalised passion for short-term stock value.

The solution:

• CEOs (agents) should be more accountable to the owners (principals) of their businesses;
• They should agree and assert the kind of firm they are running (long or short term value, for instance);
• They should communicate and sell these propositions.

Some principles:

• As a fan of Theodore Levitt, I’ve no doubt that Welch and Polman are right that great products, services and customer focus are the key ingredients of a successful company;
• No firm can function without a licence to operate;
• Key stakeholders need to be kept onside – employees, customers, suppliers and the like;
• If the longer term is what counts most, CEOs need to do more than they currently do to invest in innovation and in R&D (here’s a useful manifesto addressing this issue).
• Longterm profits matter a great deal to some firms, but that requires great flexibility and constant change.

PR challenge

PRs would do a much better job for their employers and clients if they spoke plainly and honestly about the realities of business. The current recession is caused by a crisis of profitability and negative growth. It is experienced as a crisis of confidence and trust. But it is not helpful to the cause of restoring growth and boosting reputations in society when PRs communicate that profit and growing shareholder value no longer matter most.

Today, the reality is that millions of people are losing their jobs, accepting pay freezes, going part-time, and feeling insecure about their futures, precisely because there’s not enough profit or a strong enough expectation of long-term shareholder value growth in the system. We’d all do better with our PR if we faced the truth rather than evaded it.

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My profession seems to be obsessing on stakeholder relationship management. I see why. When the angry mob is howling at the gates, it seems sensible to pretend that crowds have wisdom. Like politicians, media and most bosses in the West, PRs are terrified of seeming elitist. They believe that leadership is no longer possible, or is toxic.

I have often banged-on about how PRs fear that corporations are seen as evil, so now mistakenly believe they must wear a bleeding heart on their sleeve. That’s not my point today. I want to stress here that it is a profound problem that PRs and many organisations – from firms to political parties – dread leadership and responsibility.

There’s a shortage of adulthood

What I’m on about today is related to a wider social problem. I think it’s time the grown-ups behaved like adults.

We live in a society in which people strut about in a macho culture of bullying, slap-head, hyper-fit, scowling aggression, but at the slightest set-back everyone’s weeping and in therapy.

Big cars, sharp suits and watches the size of dinner plates don’t confer anything worthwhile on a person. Aren’t you struck by how fragile the self-esteem of so many modern pseudo-adults seems to be?

We have watched stars, CEOs and politicians behave like greedy, petulant, hysterical teenagers rather than heroes, but what is striking about many of them is that they have so little fortitude. Most CEOs disappeared from view when the credit crunch struck. We just heard how the British Prime Minister’s inner circle phones bullying help-lines to complain about him. Their confidence is wafer thin.

At this year’s Davos we were told that profit, shareholder value and shareholders are no longer priorities. All stakeholders are now equal. Such talk came from Western leaders. The bosses in the East held their nerve.

We need corporations rooted in a solid culture

It’s this bifurcation I’m after. I want to try to make it understood that ordinary decency, a workable sense of fairness, a sellable ideal of enlightened self-interest - proper trust between firms and employees and customers and wider society – has to flow from a far deeper sense of corporate culture than can ever be achieved by becoming a weather vane.

Today I want to try to get a proper handle on this particular concern: that our clients cannot afford to aim to become whatever the ether-mob, the gobby bloggers, the placard-wavers fancy. They can’t pick up a self-definition by triangulating the top three or four messages they get from a consultant. Even if they did, they’d have to live it and that involves sticking with it and that involves ignoring the next fashion which hurtles into view out of the mists.

I am tolerably sure that floating along on public opinion is never good. It sometimes leads to rushing weirs and crashing Niagras, but more often to long dreary shoals where no-one’s boat floats.

The public says it wants to humble corporations and corporate bosses, just like it  says it wants to humble political parties and politicians. So it has created the risk that firms, parties and institutions become rudderless (sorry, I couldn’t resist another water analogy).

In fact though, if there’s one thing the public fears and distrusts more than strong, mean, unaccountable and self-serving public bodies and leaders, it’s bodies which are too weak to do their job.

Before we can have listening and flexible firms, we need to have firms which are quite strong and quite clear about what they actually want to be.

So the perpetual self-abnegation involved in stakeholder relationship management is a folly. I believe it is a chronic abdication of responsibility. It is also constitutes a surrender to short-term market and social instrumentalism.

It is a myth that the best reputations must be sustained by stakeholder management crowd sourcing. Good reputations are not based on living within limits set by consumer or voter research and stakeholder engagement, but on breaking down barriers and achieving something significant.

Reputations, trust and success

The best reputations arise from doing things and from keeping promises and delivering results and sometimes from managing failures well. Reputations that endure do so because they inspire.

Great companies and governments transform the world by creating demand and conditions that didn’t exist before. They often do so at great risk in the face of fierce opposition.

There’s more for PR to do than to get their clients to reflect what audiences say they expect or claim that they will accept. There’s more for PR to do than to try to forge consensuses before advising firms to make decisions. Good PR acknowledges that what’s wanted in society is not fixed. Great PR helps society transform the prevailing perceptions of sustainability on business, cultural and environmental matters.

Successful countries from the democratic UK and America to today’s China and India were not built on the back of listening, engagement and consensus, but on the back of courageous leadership and innovation. Let’s review a few examples.

According to Edelman’s trust survey, trust in business and government is strongest where stakeholder relationship management matters least and among the weakest where it seemingly matters most. By a significant margin, China leads the world in both categories. India and Indonesia score highly. While Russia records higher trust levels than do France and Germany.

Moreover, the PC, the internet and Google’s search engine are all examples of top-down disruptive innovations, not ones driven by bottom-up demand-led engagement-based consultation. They did not arise from listening to the market or to stakeholder groups.

Google

Google’s search engine was an innovative marriage between algorithms and computing power. Google created its own demand.

The motto of Google founders Larry Page and Sergey Brin was “question everything”. As this review of recent books on Google explains, they were like postindustrial Henry Fords, using digital technology to eliminate all inefficiencies in traditional economies.

Ironically, Google’s Eric Schmidt’s recent Washington Post piece, Erasing our Innovation Deficit, advocates bottom up crowd-sourced innovation. It under-estimates the risk-taking top down investment and leadership which helped Google succeed, the internet take-off and the US put a man on the moon: see here. However, that weakness should not detract too much from the mostly timely, insightful points Schmidt makes.

Unloved Microsoft and lovable Apple

Microsoft at its peak never won our empathy. Microsoft never engaged with stakeholders. It hardly consulted anybody. Bill Gates wielded Microsoft’s power like a blunt instrument against all comers, including customers and partners. But if Microsoft was always unlovable, Apple is its polar opposite. Its fans adore it, believing it to represent an anti-corporate, culturally-fresh, arty sort of an entity. That’s mostly nonsense, but in any case Apple achieves this myth-making with top-down communication and command and control management.

Rock ‘n’ Roll

The electric guitar transformed music. It created new possibilities by creating new sounds. It helped spawn Rock ‘n’ Roll, including Punk, that outraged public opinion. But its hall of fame contains some of the greatest reputations of the last century. But as Simon Cowell shows, even this grass-roots business is managed from the top, even if it draws inspiration and talent from the bottom.

Ryanair: nobody’s friend

Last, Michael O’Leary’s Ryan Air’s low-cost digitally-networked business model revolutionised the airline industry. It was an achievement of an aggressive innovative genius, not of stakeholder collaboration, which he despises.

These examples provide evidence of Joseph Schumpeter’s law of creative destruction that drives the capitalist market. They support my argument that PRs who think our trade is all about aligning values, listening, engagement and relationships need a reality check; though I’m very pro using those techniques in the right context.

Key manifesto messages

In contrast, I say PRs should be more prepared to defend, advocate and promote risk taking. They should be less concerned about what’s acceptable and what’s popular. They should be more willing to celebrate elitism and success. They should be less concerned with the crowd as it is currently constituted or inclined to emote and opine.

PRs should be more willing to celebrate the arrogance of the change-makers who bring innovation to society. We should be less concerned with bad headlines and with tyranny of media produced crises. Instead we should focus our campaigns on achieving positive outcomes and on getting things done. We should be the torch bearers honing the narratives and messages of the people and forces which challenge or ignore society’s constraints. In that game PR plays a transformative role.

The blog which got me going

Here’s the article that inspired this manifesto: To listen, to engage: empty buzzwords? Let’s discuss. It sums up the risk adverse stakeholder relationship management approach of mainstream academic PR. According to this school of thought progress depends on winning the public’s trust by establishing empathy. For them it is all about connecting with stakeholders by gathering sense:

“The consequences of the interpretation-of the comprehension-of the gathered sense need to be explicitly related to the listener’s decision making process and are inherently fuzzy, non linear and situational. The competencies are creativity, feasibility, and time framing with their respective tools.”

This piece of gobbledygook is typical of current PR thinking. It springs from a misplaced faith in Grunig’s two-way symmetrical model of PR. Amusingly the author is so sure of his ground that he asks What comes after Grunig? and replies, “the answer to that looming question is that after Grunig…comes Grunig.”

The danger here is that Grunig’s supporters have ended up trying religiously to make reality fit the theory. That’s the trap, if I’m any judge of PR-related text, that the Stockholm Accords, arising from the Global Alliance’s World Public Relations Forum debate, is falling into right now.

In summary, my point is that PR is a multi-faceted, flexible profession. Sometimes it is top-down and one-sided. Sometime it is a two-way interactive real-time force. In whichever way it does its job, however, PR is an objectives-driven art rather than a science that’s reducible to orthodox formulas. My take home message is that PR makes its most useful contribution to society when it advocates transformative risk-taking on which great reputations are built.

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This year’s World Economic Forum in Davos was very downbeat. Still, even as profits are becoming difficult to make, we are still (Davos-style) asked to believe they’re not that important anyway.

To take one important example, Edelman’s trust survey reports that respondents rated financial returns at or near the bottom of their priority list in nearly all of the world’s major economic regions. Business, it seems, should be more concerned with wider social issues and causes that are not necessarily connected to its core purpose.

What’s this? False consciousness? Cognitive dissonance? Denial?

As Sandra MacLeod puts it – in an interesting piece here on sustainability and CR – the aha factor was “we can do well by doing good.” She makes some good points about CR, but they’re not ones that will help companies finance innovation.

Meanwhile, business leaders Twitterd from Davos things like “we have to change the success measurement system beyond just money and share price” if we are to rebuild trust.

Few business leaders at Davos felt confident enough to question the notion that shareholders and profit don’t matter most. Few argued that one big problem is that there’s too much waffle. It was almost taken for granted that all stakeholders are now equals.

So, I welcomed the robust counter view in The Times today from Jonathan Waxman, Professor of Oncology at Imperial College London. He makes a compelling case in defence of the importance of the bottom line. He highlights how much harm to the greater good can be done when the profit motive is undermined:

Today it is unusual to see people die in the industrialised world from diphtheria or pneumonia, and we are at the edge of developing effective therapies for Alzheimer’s, multiple sclerosis, rheumatoid arthritis and diabetes.

But where do these marvellous advances originate from? Not, as you might imagine, from the golden glades of the University of Arcadia. The universities have elaborated hypotheses and elucidated mechanisms, but it is the profit motive and the market that have been responsible for these life-improving changes. Big Pharma, that boggle-eyed devil in the undergrowth, has brought forward virtually all the drugs that make our lives liveable.

He points out how the bureaucratization of risk management by over-regulation strikes at the bottom line and sidelines R&D. This is no small matter.

SmithGlaxoKline is axing 6000 staff, mostly from its R&D departments, and AstraZeneca is cutting 8000 more, while Pfizer its slashing its R&D budget from an equivalent of around $11 billion today to around $8 billion and $8.5 billion by 2012. As Waxman says:

The bottom line does matter to the drug industry — and Britain has created a regulatory environment that makes it harder for them to make money and produce the drugs that we depend upon.

He calls for an overhaul of the regulatory system. I concur. I would add that in the interest of the greater good we need to overhaul our attitude to profit, and the bottom line, and to rehabilitate its importance in the public mind. That’s a pressing PR challenge.

No related pages.

In the past footballers, like most employees, were not allowed to issue press releases, but Twitter and Facebook can easily amount to doing just that. Their bosses are nervous, and rightly so. Footballers are, after all, mostly only of interest because of their association with the game and a particular club. So every public utterance they make and the way they behave becomes of concern to the football companies.

The same goes for the likes of Kate Moss, Tiger Woods as representatives of their sponsors - just as it does for Jonathan Ross and John Humphrys as voices of their employer, the BBC. (With Ross the thing is complicated by his being not merely a freelance, but also a corporate sub-contractor.)

However, there’s distinction between Tweeting as an individual and Tweeting as someone who is clearly identified with an entity. The question is maybe this: should entities allow their members to Tweet about the entity but not about the wider world. Or is it, weirdly, vice versa?

Well, one wonders whether the wannabe editor of The Independent Rod Liddle now regrets writing on Millwall Online fan site that it was:

“Fcking outrageous that you can’t smoke in Auschwitz. I had to sneak round the back of the gas chambers for a crafty snout. Also, I wasn’t convinced by the newish Auschwitz Burger Bar and Grill.”

I’m sure that Amanda Knox wishes she’d never been described as Foxy Knoxy on a social media site, and then gone on to build on that reputation, if only for fun.

Perhaps that explains why one of the fastest-growing social media services is www.suicidemachine.org, which allows you to watch as your online history and friendships are shredded.

The reality is dawning, I believe, that the web is not a place to abandon inhibition. It is a place that should be engaged with confidence, but with the knowledge that everything is public, transparent and potentially damaging. Indeed, the new media have not overthrown (actually they have reinforced) old wisdom about reserve and caution.

Firms need to be able to say that they have a right to expect loyalty, up to a point. Individuals have a right to assert that they have a right to “voice”, up to a point. How can we get too cross when we find even footballers want to be articulate?

Well, one moderating influence might be for organisations to caution their staff that they’ll have to live with what they say: Tweets are horribly permanent. Best to be sensible, then.

Frankly, I suspect that organisations and their PRs will approach these issues very variously.

The best hope may be not to control what your people say so much as to get them to make it clear when they are speaking as individuals and when as representatives of the corporation. Indeed, an organisation should at least insist that their employees make it clear when they are not being “official”.

That’s one reason why, in contrast to the likes of Neville Hobson, I argue that corporate utterance is collegiate, not personal. If anyone wants the corporate view, they’ll need to log-in and get the official line or stick in the SM world but listen to people licensed and badged as corporate. The individual can say “I”, but only the PR or the manager can say “we”.

It’s easy – perhaps too easy – for some organisations to claim security is a problem. For instance, the US Marine Corps has banned all social media usage on its networks for security reasons, while allowing soldiers to continue to use them at home. I can’t judge the merit of the decision of the brass, but I recognise that firms are often paranoid about criticism and may attempt to silence their employees under a cloak of commercial confidentiality. The tension here is natural and sometimes healthy, as it was with Pfizer’s whistle-blowing saga.

An assessment of risk should determine the degree to which individuals are left free to exercise their judgment when it comes to using social media, or whether they will be restrained by bans on this or that topic or using this or that channel.

The case for corporate censorship is particularly strong in instances in which the distinction between “we” and “I” is difficult to separate in the public mind, and when the “I” helps calibrate the brand’s value. But censorship, whether corporate or self, will often make sense.

There are some big general points to make.

1. Companies never really could control what people said about them, and certainly can’t now. But for as long as they’re being talked about (bigged-up, dissed, or whatever) at least they are the subject of interest, and what they say is of interest. They’ve just got to be better and better at their end.

2. But to do so they need to be more strategic and approach messages from an evidence-based, grown-up, real-world position to win or retain credibility. They need to tie communication to business goals online and offline, and that requires a strong strategy backed by clear tactics in the face of chaos.

3. So with social media just like old media, if you are not proactive you let someone else define your brand, which was always the case, but only more so with SM etc.

The refractions, perceptions, versions and channels through which the world perceives you are as various as there are people looking and talking about you, and are growing all the time. Whilst you – the entity – can’t be static and rock-like, you should at least aim to be considered, serious, adult and stable. That’s surely the best way to earn respect and see off  – or even gradually respond to – the gales of opinion and gossip swirling around.

The trick for PRs is to anchor our communication in a solid reality and to get the message out to wherever audiences are. (But that shouldn’t stop us being adult just because we’re speaking with young people on our employer’s behalf.)

Everything else will come out in the wash.

Hence, the less we as PRs can control the perceptions of employees or customers on SM, or anywhere else, the more we’d better be good at managing and communicating the underlying realities to a wider audience. As ever, our messages need to be heard by as many of the disinterested or the uninterested as possible. All the people who aren’t talking (or even thinking) about our employers or clients matter as much as the tiny number who are making their life bloody.

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