2019 | Edelman

With feverish speculation about the imminent calling of a General Election – perhaps as early as 6pm this evening – the Edelman Public Affairs team assesses the likely outcomes ahead and their impact on businesses.

While just three ultimate end states remain the same - no deal, deal, no Brexit – the former is becoming increasingly likely, and the routes to achieve them are also crystallising.

This week will see rebel Conservatives join forces with other parties to seek to extend the Brexit deadline, while Team Johnson has vowed to eject and deselect any Tory MPs seeking to undermine his no deal position.

It is hard to see any outcome being reached without an election being called to give the Prime Minister the majority he craves. The question is whether Labour would vote in favour of an election (which could fall in November), having spent the last three years calling for one, or whether they follow Tony Blair’s advice not to “fall into the trap” of enabling an accidental no deal.

Buckle in for the biggest week in politics since the last. But this time we may well see the real splitting of the Conservative Party and without doubt a test of nerve on all sides.

Click here to read the full analysis.

I flew back from Chicago to New York City yesterday on United for the 20th time this year. I have flown United to Asia and to Europe on multiple occasions. The gate staff always thanks me for my loyalty. The flight attendants are focused and courteous. The pilots are good team captains. What a difference four years makes!

When Oscar Munoz came to United, he replaced a CEO who resigned under much scrutiny, was dealing with a rather contentious merger with Continental Airlines. And he was honest about the state of United saying that the company hadn’t “lived up to our promise or potential.”

From the start, Oscar was out to change the game. He promised to come to a better place with the United unions and make it a unified company dedicated to customer care. He didn’t lead from behind the desk. He went out on a 100-day familiarization tour and spent time with mechanics, baggage handlers, catering operations, flight attendants and pilots. He posed for selfies. He went to customers, at consulting firms and food companies. He listened, took notes and went back to fix operational problems.

He would eventually shepherd the company’s global ad campaign: The New Spirit of United. Within weeks this became the headline of his administration, a people-focused company with a CEO who cares. Shortly thereafter, he hosted a suits and slippers party for high frequency United customers in New York City with sleep experts, including Arianna Huffington, to debut the new United Polaris business class service – designed to provide the best sleep in the sky. He built the strongest executive team in the industry by surrounding himself with smart and talented leaders like Scott Kirby. And he managed crisis by changing company policy.

Oscar came to the Edelman global leadership meeting in June. The oldest of nine children of Mexican-born parents, and the first in his family to graduate from college, he talked about the critical lessons he learned about hard work and the uniting power of shared purpose. He spoke about our relationship and the importance of PR counsel and culture to the success of CEOs. The lessons he imparted, about building trust with his team and thereby with his customers, about fair bargaining with unions and the necessity of shared prosperity, about admitting mistakes and taking corrective actions to make it right, and finally about his sunny approach to life, are ones that I will carry with me for my life.

Whether it was during the good or deeply trying times he stayed true to his promise and his approach. He is an example of a CEO leading, learning and persevering. Oscar will continue as CEO through May then move into the role of chairman. Yet, it’s clear today that he will leave United better than he found it. The people of Edelman salute you. You are a profile in courage and a transformative leader.

Richard Edelman is CEO.

What could have stopped Royal Bank of Scotland from embarking on a boomtime deal binge 20 years ago that eventually resulted in the largest corporate blow-up of the global financial crisis?

Richard Buxton, head of UK equities at Merian Global Investors, offered a simple solution while speaking at a panel debate at Edelman’s London headquarters to discuss the findings of our latest Trust Barometer Special Report into the views of Institutional Investors.

“If half the board of Royal Bank of Scotland were women they wouldn’t have pursued this crazy macho acquisition strategy,” explained Buxton. “Women don’t do silly macho things.”

What Buxton was talking about is Governance – the third letter of the three-letter acronym that has become central to every conversation about investment of recent years: ESG.

While some CEOs still like to roll their eyes at the mention of the phrase, or see it is part of a leftist conspiracy to bring down capitalism, investors are crystal clear on its importance. In fact, they believe that the businesses who get ESG right also tend to perform better.

Edelman surveyed more than 600 fund managers in six different geographies (U.S., Canada, UK, Germany, the Netherlands and Japan), in researching our Trust Barometer Special Report into the views of Institutional Investors. Some 58% of our respondents said they believe that companies that disclose their ESG risks also perform better. Among the UK investors, that figure stood at 66%.

Seemingly in light of this correlation, 61% of our global investors said they are allocating more of their funds towards companies that excel against ESG metrics.

“I’m a Wharton MBA for my sins,” explained Marisa Drew, Head of Impact Finance at Credit Suisse during a panel debate at Edelman’s London headquarters on December 10. “When we were taught Finance 101 we really were taught that the purpose of the body corporate is to make profits for shareholders. It was pretty monochromatic. I think there’s a much greater recognition now that there was a missing link there.”

When we asked investors what they considered to be the key factors that make for a good long-term investment, they pointed to the growth profile of that company and the risks that stand in the way of that growth. When we probed a little further into the specific risks that worry investors, all of them could be bucketed into one of the three criteria of ESG.

Unsurprisingly, investors believe it is risky for companies to ignore the climate debate, to turn a blind eye to the divides in society or to operate without proper checks and balances in place.

There was a stern reminder from Simon Dingemans, the new chairman of the Financial Reporting Council and former chief financial officer at GlaxoSmithkline, that all of this should be happening anyway. Under Section 172 of the UK Companies Act 2006, British companies are obliged to think about more than just shareholders. He plans to ensure that this is better enforced.

"When we say 'risk" we do mean this area as well, and how it integrates into your business," said Dingemans. He wants to see “facts and figures” on ESG risks he added – and much more than has been offered previously.

“Investors have a big role to play and it’s why we put into the new update of the stewardship code some very specific asks of investors as to ‘how are you engaging with companies to make them publish and articulate and describe their strategies in all of these areas.”

Dingemans’ message has been received by the investor community. Some 57% of the UK investors polled by Edelman said they are hiring more people to do deal with ESG risks. A staggering 84% even claimed they would consider accepting a lower rate of return from a company that offered better compliance with ESG risks or impact investment factors.

Dame Helena Morrissey, the seasoned fund management CEO and a member of Edelman’s UK advisory board, disputed this finding. No fund offering sub-par returns will ever get off the ground, she argued. Yet many impact funds that have been launched have performed well. By avoiding unacceptable sectors such as tobacco and mining, their returns were strong.

In terms of enforcing compliance with ESG factors, the panel was split on the best plan of attack. Buxton argued that it can be powerful to hold shares and argue for change. Morrissey retorted that the ultimate sanction of selling a company’s shares was often a tool needed in the debate.

“You have to show that ultimately you either vote against [the board] or you divest, otherwise it just becomes empty words,” she said.

Buxton also pointed out that there needs to be some flexibility to governance; an acknowledgment that sometimes the box-ticking rules may not quite be right – expressing sympathy with JD Wetherspoons boss Tim Martin.

“You know what you’re investing in if you’re investing in Wetherspoons,” he said. “To invest in it and say you don’t like the governance arrangements? Come on guys.”

Marisa Drew made a similar appeal to pragmatism in the context of energy transition. “You can’t turn off the taps on oil and gas today,” she said. “If you did, 80% of the world would be without electricity. But we need to help these companies transition faster.”

That, argues Morrissey, is partly where a diverse board can be a good starting point.

“Identity, diversity, whether you are a woman or a man, or black or white, is more a starting point to bring different perspectives,” she argued. “Putting more women on the board is a bit of a blunt instrument to just shake open the boardroom.”

The full survey findings can be read here:

A couple of months ago a piece of news hidden in one corner of the newspaper titled, ‘Game’s up for toys that reinforce gender roles’ got us looking back, thinking about the toys we played with. The article talked about the pact signed by the French government, the French Federation of Toy and Childcare Industries (FJP) and the association of toy manufacturers to rid games and toys of gender stereotypes . The argument behind the decision is that such stereotyping is a scourge that starts in early life and could deter women from taking up careers in maths and science.

It immediately sparked an old and recurring debate about toys, cultural differences, gender and responsibility of choice. In our conversations, we discovered stories of older siblings sneakily adding their preferred toys to our lists and parents persuading us to ask Santa for whatever toy they felt was more convenient for them, their wallets, the space at home and their own childhood frustrated desires. With more or less influence from our relatives, we used to write our Christmas lists unaware of gender bias, only fearing the consequences of our recent past naughtiness and with a future vision tarnished by tonnes of bows and colourful wrapping paper. What did we know about gender gap, roles and conditioning? The coolest toys were those that appeared on TV and allowed us to play adults – as we knew them back then.

Now that we hold responsibility of toys shopping, we have just started to consider the influence that others had in our own toys preferences and the criteria that dictates what are the toys that make it under the tree. Children may be the consumers, but it is us, adults, who ultimately make the choices for them. Elizabeth Lloyd-Parkes, senior lecturer in marketing at South Wales University, who specialises in child consumer told the BBC that adults purchase within their own comfort zones. For her, toys are supposed to fulfil what the consumer wants, and respond to what the parent wants to buy for their child.

For millennial parents is clear and more than two-thirds would be more likely to buy from a brand that offers inclusive product ranges according to a recent Accenture survey. However, a Pew Research study showed that 76% of Americans believe parents should steer their daughters towards toys and activities that are traditionally associated with boys, while only 64% think boys should be encouraged to play with ‘girl’ toys.

Are we, adults, toy and ad makers, parents and toy buyers making choices for our kids driven by our own cultural and generational stereotypes? Are we the ones responsible for unconsciously creating bias and limiting their potential?

We can’t deny that girls & boys are different. They behave differently, react differently and tend to like different things. It took years of research and several failed attempts for Lego to discover that while girls enjoy building just as much as boys, differed in what they wanted to build, and in their preferred colours for the sets.

It is still unclear if the reason behind toys preference is biological and consequently innate, or it’s a product of socialisation. However, we do know that toys can have lasting developmental implications influencing their perceptions of gender and conditioning their interest, abilities and scope of their futures. While traditional boy toys, like blocks and puzzles encourage visual and spatial skills, toys traditionally targeted at girls encourage communication and social skills. Lauren Spinner, a developmental psychologist at the University of Kent spoke to the New York Times about how research has shown that when the lines are drawn too strictly, a children’s world becomes more limited, missing opportunities to learn a different set of skills.

In 2014, Charlotte Benjamin, a 7 year old wrote a letter to Lego noticing a lack of ‘girl Lego’ characters and complaining about these characters being stereotypical and one dimensional which in the language of a 7 year old means that girls only ‘sat at home or went shopping’, while the “boys went on adventures, saved people, had jobs...and even swam with sharks”. A few months later, Lego answered Charlotte’s plea launching their first-ever set to feature female scientist figurines. The miniature astronomer, chemist and palaeontologist were the result of a successful pitch by a female geophysicist. Charlotte wasn’t asking for “boy toys”, she was asking for the “girl toys” to be different.

And they are not the only ones, Mattel, as part of their efforts to break stereotypes has launched a range of Ken and Barbie dolls with different races and body types as well as a range of dolls with customizable gender identities. Most recently, BMC Toys has announced plans to create toy soldiers depicting women in combat roles. The decision took place after receiving a personal letter from a six-year-old girl, pledging for female fighters. In words of Jeff Imel, owner of BMC Toys. “It shouldn't be up to us to decide who the hero is.”

The underlying shift is the one witnessed at home. Children are growing in a world where women represent 46.8 % of the UK workforce and are more and more present in professions from which they were previously banned . The changes adults have started to see are slowly becoming the norm for younger generations; a normal where their fathers take months of paternity leave to stay at home and take care of their new born siblings, where mums are pilots, women are astronauts and men flight attendants.

The rules in society are changing slowly – too slowly – but quicker than the unwritten laws of the toy world. The UK ban on advertisements containing “harmful” gender stereotypes approved this year and the first step taken in France to let toys be toys reflect the need for regulation, a push to pull the laggards out of their inertia and encourage the front-runners to challenge individual convictions and biases to improve as society.

There may be a need for toys for girls and boys, that’s up to them to decide. However, the responsibility of creating and marketing toys that represent the world as they know it, without limiting the scope of their choices, is on us. A war unicorn or a Tyrannosaurus Doll may not make sense for us, but, it’s Christmas; presents are delivered in just one night, by a single man, on a sleigh powered by flying reindeers. Who are we to set up the boundaries? Let’s empower kids to make free choices, they seem to be getting into the habit of responding to that with lessons for all of us

Not long ago, influencer marketing was a trend. Every year-end report marketers could get their hands on invariably had a chapter on “The Rise of Influencers” or “Why Influencers Are Here to Stay.” This made sense in the past because this marketing tactic – powered by social media – began in the mid-2000s and for quite some time was considered an emergent marketing tactic that lived under content creation, community management or paid media.

Today, influencer marketing is a critical part of the marketing mix. In fact, according to Business Insider Intelligence, it’s expected to grow to a $15 billion industry by 2022, up from $8 billion in 2019.

Edelman’s 10 Trends Influencing 2020 report offers an in-depth look at the 10 important influencer developments we believe will impact business, society and government in the coming year. This report is designed to serve as a guide to the challenges, experiences and opportunities your organization, employees, customers and stakeholders will face in 2020 and beyond. Here is a breakdown of three of the 10 trends we explore:

Listen Up: The Rise of the Audio Influencer

Podcasts offer a new medium for creativity in a landscape where influencers and sponsored posts are everywhere you look on social media.
32 percent of Americans reported having listened to a podcast within the past month.
The worldwide podcast market is growing rapidly, and this is expected to continue as tools to facilitate the creation, publishing and management of podcasts become mainstream.

Going Steady: From Influencer to Ambassador

As brands seek influencer content that is authentic, relationships with influencer partners are moving from transactional to long-term.
As their audiences grow, brands are relying on influencers for insights into engaging and maintaining loyal fans. With long-term (or always on) influencer partnerships, audiences are more likely to trust an influencer’s recommendation and to act when key messages are reinforced over time.
Long-term collaborations allow influencers to have more time and flexibility to develop creative ideas that the brand and their audience will love.

In Authenticity We Trust: Get Real or Get Lost

Millennials and Gen Z are becoming more wary and distrustful of artificial or inauthentic influencer content, creating a new challenge for influencers and brands.
72 percent of consumers said they would unfollow an influencer over disingenuous endorsements.
A shift from a depiction of the idealized toward more relatable and real is underway and becoming the new cultural norm.
Influencers and brands will prioritize authentic partnerships and collaborations to meet the increasing demand led by Gen Z and millennials seeking real and relatable experiences.

Download the Report

Ann Newland is Head of Strategic Operations of Edelman’s Influencer team.

After a series of knife edge elections, last night delivered what the Prime Minister has called ‘a stonking majority’. Click here to read detailed analysis of what next for Boris from Will Walden, who ran the Prime Minister’s transition team and was his press secretary for many years.

Will concludes that Boris is ‘A believer in the power of wealth creators to do good; to help change society for the better; to level-up opportunity. But Johnson is almost unique in British political life precisely because he’s a leader who isn’t driven by ideology. Neither is he a strategist, or a nuts and bolts guy.’ This vision-first approach has big implications for how the next parliament will play out which Will discusses in the note. The note also includes key results and the immediate next steps for the government.

DOWNLOAD THE FULL ANALYSIS HERE

For more information please contact James Morris, MD, Public Affairs

The world is full of cynics. With that in mind it is easy for many of us to roll our eyes when big business starts talking about its commitment to environmental factors, social practices and governance – the holy trinity of ESG that has worked its way into the corporate lexicon. Yet we are now at a tipping point.

Or so it seems, based upon the findings of the Edelman Trust Barometer Special Report on the views of institutional investors.

We surveyed 600 fund managers globally, including 100 in the UK. Our investors told us that a corporate’s failure to tackle ESG issues properly is now viewed as a more general failing of risk. A staggering 66% of UK investors said they believe that the companies that tackle ESG issues properly are the same businesses that deliver strong operational and financial performance.

As one audience member observed afterwards, having a sensible approach to climate change, societal concerns and governance is “just good business”.

The presentation below was used to facilitate a panel discussion in our London offices on December 10 2019.

Last night I was inducted into the PRWeek Hall of Fame. It’s an incredible honor made even more significant by the fact that I follow my father Dan, who was posthumously inducted five years ago.

I’d like to thank Steve Barrett and the staff at PRWeek for bestowing this honor upon me. I’d also like to thank the people at Edelman and Zeno for constantly striving to make real change in the world and for always putting our clients first.

Please see my acceptance speech below.

I am deeply honored to be on this stage tonight. I was here five years ago to accept the award posthumously for my father, Dan, the founder of our firm, my mentor and my best friend.

Tonight, it is my turn. I am not by nature a reflective person. In my mind, I am still in my early 30s and running the New York office, waking up every day to win new clients, to come up with great ideas for existing clients, to beat our competitors, to work with the media. But news of this honor has moved me to look back on the past 41 years.

Working at a family business is a special privilege. I had the opportunity to work with my dad for 35 years. I learned from my mother the importance of networking and of maintaining true friendships. My brother and sister have brought their unique talents in sustainability, HR and tech. My wife Claudia helps me to see the colors in life and has brought me into the burgeoning Hispanic community. Now my children are preparing to take this firm forward. But know that I am going to be around…for a long time because this is my life’s work.

I’d like to take a moment and acknowledge all Edelman and Zeno employees, past, present and future for your tireless work, commitment, fearlessness and drive to deliver innovative and industry-leading work for our clients every day.

I am so proud to have been a mentor to many of the most senior people at Edelman and the DJE companies. I am fortunate to have around me people such as Matt Harrington, Vic Malanga, Russell Dubner, Lisa Sepulveda, Katie Burke, Barby Siegel, Rob Rehg, Ed Williams, Kristine Boyden, Nancy Ruscheinski and Fiorella Passoni. And to have worked with people like Jody Quinn for more than 35 years.

I was lucky to have had mentors such as Mike Morley, Pam Talbot, John Scanlon, Mike Deaver and, most of all, my dad.

They have all dedicated their careers to the proposition that an independent firm can make it in a world of giant holding companies.

Among the many assignments and moments that stand out from my career are:

The launch of Advil OTC ibuprofen with Hall of Fame pitcher Nolan Ryan; reputation work for Penn State and the Great Lakes Dredge and Dock Company;
And our nonprofit work including the rebuilding of Lower Manhattan after 9/11 and our current partnership with the Gun Safety Alliance to help reduce gun violence.

One of the things I am most proud of is the Edelman Trust Barometer. This January will mark the 20th anniversary of our annual look at the state of trust in the world. I had the idea for the Edelman Trust Barometer in 1999 after the “Battle in Seattle.” I am beyond pleased that it has developed into the industry’s most important piece of intellectual property.

I’m also proud of the bold move we made to be the first communications agency to significantly invest in digital, starting in 1997 with the Butterball Turkey Talk Line.

As an industry, this is our time to directly challenge ad agencies and digital firms. The traditional model of communicating through advertising is no longer effective due to ad blocking and Netflix. But in today’s complex world it’s not just about how you communicate, it’s also about what you do. We want to serve companies who are interested in real change and looking to become advocates outside their own arenas.

And that’s why Edelman will continue to sail on as a proud independent with the broader ambition to be a communications firm based on Earned Creative and strategic advice.

With all that to do, I feel that I am just getting started. Benjamin Button watch out.

Richard Edelman is CEO.

Paul Green

Richard Edelman delivers his acceptance speech at the 2019 PRWeek Hall of Fame.

We are preparing the Edelman Trust Barometer 2020 for release in Davos in January. But this week our financial team released the Edelman Trust Barometer Special Report: Institutional Investors, a study of 600 institutional investors in six markets around the world probing the importance of ESG issues (environment, social, governance). The findings are stunning, especially that 84 percent of respondents believe that maximizing shareholder returns can no longer be the primary goal of the corporation, that business leaders must commit to balancing the needs of shareholders with those of employees, customers, suppliers and local communities. Bye-bye Milton Friedman, hello Klaus Schwab and the world of stakeholder capitalism!

Here are the key findings of the study:

Building Trust is Key to Multi-Stakeholder Commitment—75 percent of respondents said that companies need to have high trust levels to attract best and brightest employees, 74 percent said it was critical to win new customers and 72 percent said it would increase valuation multiples.
ESG Practices Build Trust—59 percent said maintaining a healthy corporate culture increases trust for investors. 53 percent said that addressing societal issues raises trust.
Investment Depends on ESG—Three of five respondents said that they have increased their investment allocation to companies that excel in ESG factors. 56 percent of investment are hiring more ESG staff internally.
ESG Practices Lead to Better Performance—54 percent agreed that ESG initiatives lead to favorable impact on growth, followed by risk management (54 percent), reputation (51 percent) and return on investment (47 percent).
Board Involvement is Expected – 99 percent of investors expect the board of directors to oversee at least one ESG topic. 57 percent said that they vote for board candidates who will increase attention to ESG issues.
Board Composition Matters—55 percent said that board diversity has a significant impact on trust. Diversity characteristics that investors look for, include business expertise (59 percent), strategy philosophy (53 percent) and experience outside of the industry sector (52 percent).
Link Compensation to ESG Progress—More than half of the investors surveyed say that linking executive compensation to ESG target performance improves trust in the company.
Key ESG Priorities for Investors—The most important are: data privacy, cybersecurity, employee health and safety, eco-efficiency, diversity.
Without Trust, Beware of Multi-Stakeholder Activism – 71 percent said that companies will make themselves responsible for employee or consumer activism if they overemphasize shareholder returns, at the expense of other stakeholders. Three-quarters say that a company with employee activism are less attractive investments.

Our Lex Suvanto, global managing director of financial communications, calls this study a “wake-up call for corporate leaders. Investors are drawing a straight line between corporate investments and societal value. ESG priorities are no longer optional.”

I would only add that the Business Roundtable announcement in August of stakeholder replacing shareholder is now echoed by the investment community. The investors want companies that are looking ahead, recognizing that consumers buy from and employees work for institutions that make values and value of equal importance.

Richard Edelman is CEO.

Mihály Köles

The 2019 Edelman Trust Barometer Special Report: Institutional Investors identifies pivotal issues shaping investment criteria and how companies can build trust with the investment community.

Edelman’s third annual Investor Trust report reveals that investors believe companies must address the needs of a wide range of stakeholders, not just shareholders, and must implement effective environmental, social-impact and governance (ESG) practices to win trust across all these audiences.

The research surveyed 607 institutional investors, including financial analysts, and stewardship officers, chief investment officers and portfolio managers across six countries (U.S., Canada, UK, Germany, the Netherlands and Japan), representing investment firms that collectively manage over $9 trillion in assets. The report is a supplement to the Edelman Trust Barometer launched annually in January at the World Economic Forum.

Contact us to learn more about the 2019 Edelman Trust Barometer Special Report: Institutional Investors findings and events being held globally.

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