Companies Failing to Engage Stakeholders Online

The TakeAway: New rankings on corporate online CSR communication and engagement classify US firms as “below average”

Companies are failing to take full advantage of interactive technology for stakeholder engagement and reporting sustainability performance.  That’s the primary finding of the Online Global Leaders 2010 report issued earlier this week by Lundquist, an Italian based communications firm.  Companies are “locked into a once-a-year reporting mentality, failing to keep stakeholders updated in an engaging and dynamic manner,” according to this second annual evaluation of how global corporate sustainability leaders utilize the Internet for corporate social responsibility (CSR) communication. “[C]orporations aren’t keeping pace with the needs of a skeptical audience for dialogue and engagement on the internet – from setting up effective feedback channels to adopting social media,” Lundquist reports.

The report evaluated 91 companies from two funds of the Dow Jones Sustainability Index (the DJSI World 80 plus Supersector Leaders) on a 100-point scale according to 77 evaluation criteria drawn from an online survey conducted earlier this year.  First place went to Italian oil company Eni (a Lundquist client), with Hewlett-Packard and Nestlé tying for second (up from their 2009 status of 38th and 43rd, respectively.  Rounding out the 2010 “top ten” (in descending order): UBS, RWE, General Electric, Kingfisher, Enel, Xstrata, GlaxoSmithKline, and Royal Dutch Shell.  (UBS and Enel also are Lundquist clients.)  Lundquist presents the awards today at a day-long event in Milan.

The study assesses how well companies communicate online about sustainability and engage with stakeholders, but not on their actual sustainability performance – a limitation it shares with most  sustainability ratings schemes.  While the Lundquist report focuses on social media and Web 2.0, now popular conference topics, it overlooks how these tools tie in to organizational behavior.  Engagement for engagement’s sake is meaningless; engagement for good ties directly to a comprehensive vision of improved sustainability performance and accountability, involving the entire organization.

Still, the Lundquist study helps move the needle forward by showing how far companies need to go to get up to speed on the technology revolution that surrounds them.  This particularly applies to US firms, which performed “below average” in the Lundquist rating. “Industries with major environmental impacts continue to do best, such as utilities and oil and gas companies; financial and telecommunications companies fared worst,” Lundquist reports.  Other key findings:

• Companies provide a fair amount of pertinent CSR information online, but fail to use the Web’s potential for providing ongoing engagement and interactivity;

• Websites perform best in providing environmental and social information as well as presenting CSR/sustainability reports; and

• Companies perform weakest on dialogue, interactivity, and providing information on governance, ethics, and socially responsible investment (SRI).

The last bullet explains why Hewlett-Packard, considered a “serial corporate governance offender” by governance expert Nell Minow, scored so highly on the Lundquist list.  Meanwhile, Nestlé made a number of highly visible missteps when venturing online, including its non-interactive “Bottled Water: Things to Know” video website and its clumsy response to a Greenpeace video.  “Perhaps the Lundquist ranking rewards Nestlé for its recovery,” said Murninghan Post Editor Bill Baue, who analyzed the Nestlé case in a recent Webinar on social media and stakeholder engagement with Judy Sanford of Addison.  “In response to stakeholders, Nestlé strengthened its palm oil sourcing policy to include best practices such as free, prior, informed consent of indigenous and local communities.”

Notably absent from this year’s list:  BP, whose 2009 ranking was 13.

We look forward to the day when social media and other online technologies closely align with sustainability mission, strategic planning, and operational excellence.  Now that’s engagement for good!