Friday, September 23, 2011

Sustainable influences and water risks

Part I: Pension fund influence on water issues

Count a major pension fund as the latest group to "influence" a corporation's sustainability program.

Perhaps more noteworthy is what appears to be the fast-growing sector in the environmental risk reporting arena: water.

CalSTRS is the California State Teachers' Retirement System and the lesser known of California's two major pension funds (Calpers being the other). Sysco announced this week it agreed to a set of new environmental strategies proposed by CalSTRS.

Influencing corporate policy and governance is a big part of large shareholder group actions, aside from picking the right stocks. Until recently, these demands usually focused on ensuring a company focused on making profits and, say, avoiding ventures in high-risk countries.

Perhaps more influenced by legal and financial exposures than noble intentions, companies are adding more and layers to their sustainability policies. And large shareholders like CalSTRS are demanding more environmentally-related risk disclosures from a range of market sectors, such as for insurance companies as highlighted here.

CalSTRS submitted five environmental proposals to Sysco, but only two were adopted. Besides the water one, the other approved policy involved sustainable agriculture, which makes sense since the company is a food service industry leader.

There is room for debate on whether these adoptions count as a major win for CalSTRS, especially given the number of global companies that have voluntarily adopted water-risk strategies and Sysco should have a sustainable agriculture policy anyway.

Growing sector
The water-risk disclosure is quickly gaining strength, thanks in large part to a global non-profit organization essentially forcing companies to report full disclosure of their climate change risks and exposures.

First proposed in 2009 as a pilot effort by the Climate Disclosure Project, water risk management is now a major new reporting segment for the CDP. The CDP is about to send out its second major water-risk questionnaire to global companies.

The 2010 CDP water report is somewhat predictable: Most responding companies said stable, clean water supplies and access to these supplies are critically important. Nearly 90 percent of the responding companies said they already had developed water strategies and plans, but 60 percent had specific targets. Again, this makes sense since the CDP issued its questionnaire primarily to companies with some level of water-related risk and exposure. (Note: water risks also include exposure to floods!)

This area of environmental disclosure is still in its infancy - in terms of its true "impact" on the environment. As the CDP report reveals, many companies are unaware of their true risk to such critical issues as water supply chain management. In places like California, this means they haven't looked thoroughly at long-term risks associated with potential water shortages.

As has happened in the sustainability "movement" among corporations, it will take a few more years before any true "meat" is placed on the bone for water-risk reporting and true change occurs. While companies like WalMart are considered visionaries with regard to forcing real change in "greening" their products and supplies, these changes evolved after several years of "forced" disclosures and heavy lobbying by environmental groups.

Next up will be how public relations professionals should prepare for this next "hot" topic of sustainability reporting - water-risk management.

Tuesday, September 13, 2011

Paying for positive coverage

10/3 Update: The Los Angeles Times has published a significant correction to its story and this changes some of the aspects of this column. Read the Times correction below in full:

"Central Basin: An article in the Sept. 14 LATExtra section about Google News delisting a website that had published stories "written in the image of real news" paid for by the Central Basin Municipal Water District incorrectly stated that the agency contracted with the website,, to create the promotional stories. The agency contracted with a public relations consultant, Coghlan Consulting Group, for the stories and other public relations efforts. Also, the article misstated that the agency paid the consultant nearly $200,000 under the contract. While the district approved paying that amount, it has paid only $70,000 so far, according to public records. The online and print headlines for the article also incorrectly said that the consultant created the website to tout the water agency and that it was financed by the agency. Although consultant Ed Coghlan stated that News Hawks Review was a part of his company and he was listed as a reporter on the website, he did not create the site for the agency and it was not directly financed by the agency. "

While this correction clears up the financial amounts involved and whether there was a direct financial or contractual connection between the water district and a "news" website, it doesn't change the basic ethical underpinnings called into question.

There still remains the issue of the News Hawks website appearing to be an independent news outlet, and how the water district - through its consultant - sought to obtain more balanced or favorable coverage through this "news" site. The major goal was to "build a base" of online stories favorable to the water district so that Google searches would bring these up first. This is a very admirable pursuit and one that public relations firms get hired to do all the time.

But, again, we do this through "earned" media under the presumption that we are getting stories published in "trusted" and independent institutions like the LA Times (of course, that trust is damaged when a reporter makes major mistakes). A story in the Times or other credible news organization is thought to have passed "the test" for accuracy and independence.

The Times' review of water district contracts combined with interviews of public officials who were quoted in the News Hawks articles clearly revealed an issue of the "independent" nature of these "news" articles. ("How about our own news outlet?")

Neither the consultant nor Central Basin have answered the question.

In its news release about the correction, the water district says it merely hired the consultant to provide news content for local news agencies. Google clearly did not see News Hawks as a "news agency" and delisted it.

Was it up to the water district to raise questions about whether this website was an independent news outlet? Yes. For other water agencies needing help in this area, ask this question: Is the "news" article I'm reading online or in print appear to be 80 percent or more verbatim to the news release or bylined article I had previously approved? If so, then it raises the question whether this was a "bought" story.

Was it up to the consultant to divulge the true independence of this website? Yes.

Is disclosure still the best policy when creating and managing a public relations program involving the news media? Yes

9/14 Update:
Ragan's PR daily covered the same and included the letter sent to the LA Times by PRSA Director Marisa Vallbona, APR, Fellow PRSA.
Update #2: LA Times reports that Google has removed the website financed by the water district.

Sooner or later, reporters will find out when you pay for positive news coverage.

Case in point today with the LA Times reporting about a local water district spending nearly $200,000 to place positive stories on a "news" site that gets indexed by Google news.

The water district has justified this as a legitimate expense and tactic because it is generating more traffic to its website and more interest in water conservation than sending out the typical news release.

So, here is a water district that I know very well, and which has battled a series of negative news articles and other attacks. I can certainly sympathize with this district: As these attacks grew over the Internet, it sought solutions to generate "balance" to the coverage.

But, as we see by the scathing news article, the solution ends up generating more negative coverage.

Worse? The tactic also creates issues for all other public relations professionals who are conducting their business within the ethical boundaries established by PRSA and from decades of experience acting with full disclosure.

PR veterans will tell you that shortcuts usually lead to a breach of ethics. An "easy solution" to generating positive news media coverage should send warning signals.

It is perfectly legitimate and ethical to hire a public relations pro to help an institution or company generate positive news coverage, to counter negative information, to go on the "offensive" to get "our" side of the story told, to promote the many other sides of a company that are doing positive things in the community, etc.

It can be hard work and the "wins" may not come as frequently as hoped. Yet, these wins and positive milestones are "earned" media - not paid. The news media is viewed as an independent group - so if we happen to get a positive story out of it - everyone will trust that story. It is credible reporting. That is why we PR pros work so hard at earning these stories. The credibility and trust associated with a truly "earned" story translates into incredible amounts of ROI for our clients.

Otherwise, any other effort that resembles a "news" story should be clearly marked as a "paid" effort.

Disclosure wins, every time.

Decades ago, Mobil spent considerable dollars in a paid advertising campaign to counter what it saw as unfair news coverage. These "columns" ran in newspapers and magazines, like Time and Newsweek. Although they were designed to look like news columns, they were clearly marked as "paid advertisement." The campaign was very effective for Mobil.

In the case of this water district, the goal was to build positive Internet traffic that counters the negative stuff on the web. Fine. Let it happen, but with a disclaimer. There are plenty of legitimate tactics to counter negative Internet traffic. Misleading the public into thinking they are reading "real" news stories is not one of them.

As for the PR industry and this latest episode, let's make sure we examine this lesson and not fall into "easy solutions." This simply would not have passed the sniff test for most of us.