A one-two push to the Stockholm Accords: Integrated reporting and brand monetary evaluation

By Toni Muzi Falconi

Stockholm Accords definitions

As defined by the Stockholm Accords, the PR leader of a communicative organization plays two fundamental and strategic roles:

  1. 1.  A “political” role in supporting and providing the organization’s leadership with the necessary, timely and relevant information, which allows it to effectively govern value networks, as well as an intelligent, constant and conscious effort to understand and interpret the relevant dynamics of society at large.
  2. A “contextual” role, which implies the constant delivery of communication skills, competencies and tools to the members of those value networks, so that they may improve the quality their relationships and therefore create more organizational value.

The Accords also detail the concept of “value networks,” in that:

“…a substantial part of the value created by the organization is generated today from fuzzy (non-linear) and immaterial networks that normally disrupt the distinction between internal and external publics. Members of these networks play specific and value-added roles defined by their relationships, rather than by their formal position. The generated value is based on the quality of the relationships that exist between members of each network and on the quality of the relationships which exist between the various networks.”

It’s been approximately 100 days since the Stockholm Accords were approved; this agreement serves as a “briefing” for a two-year program of “public relations for public relations.”

Those interested in finding out more about the process and movements within the global PR community (since being approved in Stockholm at the 2010 World PR Forum) are invited to visit the Accords digital Hub, with its mission of providing updates and ongoing discussions (e.g., internal and external blog posts) about the Accords.

While the Global Alliance maintains and feeds the Hub, many other things are happening elsewhere in the world that impact on the implementation process of the Stockholm Accords. In this post I address two external events that, in my opinion, represent highly significant breakthroughs.

The first pertains to organizational reporting and the second one to the monetary “value” of the brand. On the surface these areas may seem unrelated, but a closer examination suggests some exciting integrations and interactions with the Accords mission to argue with stakeholders the value that effective public relations bring to organizations.

1. Integrated reporting from the IIRC

If you visit Integrated Reporting you may learn about (and browse through) the International Integrated Reporting Committee’s (IIRC) initiative, which was formalized in late July and announced in early August.

The IIRC’s remit is to, “create a globally accepted framework for accounting for sustainability: a framework that brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format…. The intention is to help with the development of more comprehensive and comprehensible information about an organization’s total performance – prospective as well as retrospective – to meet the needs of the emerging, more sustainable, global economic model.”

Earlier this year, Professor Robert Eccles (Harvard Business School) and Michale Krzus published with Wiley, One Report, integrated reporting for a sustainable strategy. It’s an intelligent and informative book, which lays the groundwork for the transition to multi-channel and ongoing integrated organizational reporting.

This development is influenced by the South African King Report 3 (its author, Mervyn King, a keynote speaker at the Stockholm World PR Forum and one of the leaders driving the IIRC’s initiative, continues to be in deep dialogue with our professional and academic community, particularly in South Africa).

Similarly, the Stockholm Accords refer explicitly to integrated reporting as a challenge/objective for the communicative organization as well as for all “aware” public relations practitioners and scholars. This also explains why the Global Alliance is developing an interactive relationship with the IIRC, both directly and indirectly, through an active role that national public relations associations are beginning to produce.

For example, in Italy FERPI has formed a coalition of national professional and management associations that locally represent IIRC members, in order to proceed in parallel with the global body and ensure that specific applications also be considered in the process when indicating generic principles and standards.

This coalition includes associations of financial directors, accountants, auditors, financial analysts, non-executive directors, public relators, CSR specialists, etc.

2. A monetary evaluation of intangibles related to the brand

Furthermore, it was only last week that the International Standards Organization (ISO) released its first-ever, official global process for a monetary evaluation of intangibles, specifically dedicated to the evaluation of the brand.

The process explicitly states that all stakeholder groups (not limited to just consumers) need to be included in the evaluation process. Many financial, marketing and communication consultancies in the majority of markets have been applying their own processes to assess the monetary value of a brand. In an increasing number of cases, these evaluations – along with those related to other intangible assets – are regularly included in the organizations financial reporting tools. Yet financial markets and analysts, as well as regulatory bodies, need global agreement on how to assess these inputs to the balance sheets.

One may, however, imagine at this stage that the ISO-determined procedures, as well as the process being developed by the IIRC, will inevitably shape the future of organizational reporting.

Input from Scandinavian senior public relations specialists

Interestingly, senior public relations specialists (at least from Scandinavia) actively participated in the definition of the ISO process. (Sweden’s Margaretha Sjoberg, for example, who was one of the very early movers of the Global Alliance and of the Stockholm Accords.). Reportedly, they were instrumental in ensuring that the monetary evaluation engagement process be extended to all stakeholders, rather than limited to consumers. Again, this is in alignment with the Stockholm Accords’ explicit option for the stakeholder governance model.

The two strategic functions of our profession

Moreover, as I noted in a recent comment on PR Conversations, this development is very important for our profession, as many public relations scholars and practitioners around the world have come to agree that the new frontier for the profession implies managing (governing?) an organization’s stakeholder relationships, provided that the “governance/management” aspect relates to the two strategic functions of our profession:

  1. Listening, gathering, interpreting of stakeholder expectations before decisions are made, in order to enable management to improve the quality of its decisions and accelerate the time of implementation of those decisions [reflective or political function].
  2. Enabling other managerial functions to improve the quality of relationships with their respective stakeholders, to ensure coherent and more effective practices, acknowledging that effective stakeholder relationships are also a basic function for every manager and that the public (stakeholder?) relations function occupies more a facilitator, consultant and a coherence-seeking space rather, than a direct managerial role, when not referred to those core stakeholder groups that are traditionally the domain of public relations, which may vary in number and nature according to the organization’s culture [contextual or educative function].

Involving the perceptions of an organization’s stakeholder groups

The ISO paper clearly indicates that the monetary evaluation of a brand needs to involve the perceptions of the organization’s stakeholder groups. The implication is that: if the brand under evaluation is the corporate brand, then the public relations function needs to be directly involved in such evaluation (i.e., one of the core managerial functions).

If the brand under evaluation is a product or a service, then the public relations function needs to directly work with the marketing function in the process, and enable the latter function to effectively involve all of the organization’s stakeholders, rather than simply the consumer segment.

Relating this to the Stockholm Accords

In reading the process that led to the Stockholm Accords, this paragraph stands out:

“…there was general agreement that (while) the section devoted to marketing, that participants acknowledged it is going through a radical conceptual overhaul, had not been able to produce significant added value more than what is generally and commonly understood.”

Also, under the “external communication” paragraphs of the final Accords, one finds:

“As the expansion of the network society accelerates, organizations must review and adjust their policies, actions and communicative behaviour to improve their relationships with increasingly influential stakeholders, as well as with society at large.”

In conclusion

The communicative organization develops skills to continually nurture its relationships with customers, investors, communities, governments, active citizen groups, industry alliances, mainstream and digital media and other situational stakeholders.

Public relations and communication management professionals:

  1. Bring the organization’s “voice” and interests into stakeholder deliberations and decisions.
  2. Assist all organizational functions in crafting and delivering effective communication, fostering understanding and building and sustaining relationships.
  3. Contribute to the development and promotion of products, services or processes that strengthen brand loyalty and equity.
  4. Advocate for stakeholder groups within the organization and sustain an appropriate dialogue in order to maintain social and reputational capital.

This very recent (ISO) development, in my view, opens a thoroughly innovative and powerful potential opportunity to make a case for the value of public relations at the higher (and more strategic) end of the marketing discipline. In no way does this diminish the fundamental contribution that public relations has always given to operational marketing practices.

Agree or disagree?

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9 Replies to “A one-two push to the Stockholm Accords: Integrated reporting and brand monetary evaluation

  1. This all sounds very high-toned and on a plane of existence that most practitioners never reach, but saying that public relations should be strategic won’t make it so. Only thinking and hard work will.

    And it should be noted that Rosanna Fiske, the elected Chair of PRSA in the United States, has taken to conducting “listen only” teleconferences during which members have no opportunity to voice their opinions or record gripes about governance, lack of transparency, annual dues increases, etc.

    How does that square with Grunig’s two-way symmetrical model and the Accords themselves?

    1. Bill, agree that only thinking and hard work will make public relations strategic.
      I will be speaking about this at Slovenia’s pr association conference in a couple of weeks. Here are excerpts from the abstract:

      While the International Integrated Reporting Committee -based in London and formed by an unprecedentently powerful coalition of global accounting, auditing, legal, public relations professional and standard-setting Institutions- is globally advocating its way through a rehaul of organizational reporting processes, the concept of ‘integrated reporting’ is being adopted in many financial communities around the world.
      My presentation dwells on how the concept could be used by the Global Alliance for Public Relations, representing our professional community in the IIRC, to transform the very concept of the organization by advocating a practice of continued, multichannel, differentiated-by-stakeholder-group reporting by private, public and social organizations, integrating all forms of mandatory and voluntary narrative.
      The real challenge is: will pr professionals be up to it?

      In the minds of many reputed auditors and accountants the turmoils that led to the global financial crisis were also caused by standards and regulations in corporate reporting practices believed to be unsustainable.

      Since then much has happened and the first proposed framework for integrated reporting was issued for comments just a few days ago.
      In the meantime various countries have adopted some sort of guidelines for integrated reporting.
      While optimists expect the framework to be issued next year, the pessimists say it will take at least three years, while realists believe that integrated reporting practices will be widely adopted in the next five years by the more advanced organizations and will become standard practice in the next ten.

      What is meant by integrated reporting?
      Today there is at least one mandatory reporting practice for listed companies: the financial report.
      In many countries today these financial reportsalso require added sections on governance and sometime social and environmental performances.
      A few thousand corporations (including social and public sector organizations) voluntarily produce sustainability reports and most of these follow the gudelines and platforms offered by the Global Reporting Initiative.

      An integrated report is in no way the sum of current financial, governance, environmental and social reports.
      It implies a fully integrated process (well before any product for others to consult..) requiring a rehaul of procedures, indicators etc…
      Of course other mandatory reporting procedures relate to safety, employee and other areas according to the country and the sector in which the organization operates.
      Of course other voluntary reporting procedures relate to advertising, marketing communication, public relations in its widest interpretation, employee relations and other areas, according to the organization’s culture and the sector in which it operates.

      The challenge for an organization’s integrated reporting is to :
      a) collect all this information internally and from key stakeholders following a specific framework; b) process all this information in a way that allows final users to gather what is relevant to them;
      c) leave behind the daily, weekly, quarterly, biannual or annual cadences and
      d) set up a reporting system that is ongoing, multichannel, usable according to the diverse information needs of key stakeholder groups (both in depth, in time, yet fully coherent).

      This implies data mining and aggregation systems that receive coherent inputs from every organizational function of the organization.
      Also, this implies that public relations and communication specialists be inspired as well as capable to coordinate and execute the reporting process as well as narrate the organization to key stakeholder groups in multichannel and multiformat modes, according to each stakeholder’s needs.

      This challenge, is not only technological or professional, it is also and mostly organizational and communicative.

      When adopted, this practice abruptly modifies traditional organization charts based on material (line) and immaterial (staff) divides.
      One could envisage an organizational chart in which the organization wears two faces on the same head and at the same time. Thus the Ceo’s responsibility to the Board is directly over both: traditional materiality and reporting. Somewhat like the Greek god Janus.

      There seems to be little doubt that we, as public relations professionals, will need to speed up the radical overhaul of our basic competencies and practices that has confronted us in this last decade of didintermediation of our more classic and consolidated practices.

      Basically we need to learn how to listen to stakeholder expectations; how to understand, use and adapt data base integrated information; how to advocate and collaborate with all other organizational functions to producee coherent reporting procedures both in content and form; how to understand specific information reuirements for each stakeholder; how to retrieve and supply this info via multichannel formats, mostly digital…..

      Or will the disinermediation process accelerate as this new paradigm proceeds at the speed it is now going?

      Not everything, but almost everything depends on us, our awareness, our leadership, our willingness to change.

      Let me conclude by informing you that:
      a) In south africa the 400 corporations listed on the Johannesburg exchange are required to adopt integrated reporting this year, 2011;
      b) In sweden every company receiving beneifts from the state are required to adopt this next year;
      c) In denmark all companies with more than 400 billion euro income need to adopt this next year;
      d) In the uk every central government organization needs to adopt it this year;

      IIRC working groups are cuurently active in New Zealand, Australia, France, Germany, Italy, Canada and the Usa.

      The Global Alliance is very committed to participating to the leadership of this movement through the active presence of its past chair John Paluszek, and has included integrated reporting as one of the values that public relations brings to organizations and society in the 2010 Stockholm Accords brief and is now integrating the process into the new brief that will begin global discussion at the end of this month and will be approved at the november 2012 World PR forum to be held in Melbourne Australia.

      Hope this helps….

      1. Toni, this is an enlightening update, but I’m not optimistic about integrated reporting catching on rapidly. After all, it took the U.S. financial system until the end of the 20th century to decimalize stock quotations and stop using fractions based on the Spanish pieces of eight that were currency in the 18th century.

        And changing the cadence of quarterly and annual reports involves a profession that is even more resistant to change: accounting. I can’t imagine the largest U.S. financial institutions reporting continuously. In fact, it would scare some of them to death if they couldn’t use the repo market to cook the books temporarily while scrambling to cover their losses.

        Moreover, PR will encounter trouble with continuous, “differentiated-by-stakeholder-group” reporting, since, as Grunig has noted, stakeholder groups are continually inventing themselves. A further obstacle is the fact that PR people often do not practice segmentation the way their marketing colleagues do. Some don’t even understand the concept.

        But let’s hear it for good old Sweden—requiring every company that receives state aid to comply with these guidelines. In the USA, that would mean nearly every sizable bank, as well as General Motors, General Electric, and AIG, to name but a few. And if “state aid” were interpreted to include the numerous tax loopholes and subsidies to American corporations, it would include practically everyone.

  2. In my weekend house in Southern Tuscany, where I spend many hours reading and writing when in Italy, I am surrounded by minuscule, unoffensive mosquitoes that don’t hurt, but simply annoy.
    I have learned to ignore them: there is very little to learn, as they alwasy repeat their performance.

    Please, Paul, make a double effort to surprise me.

    Or are mosquitoes in your Lake of Zurich as vicious as they appear from your rants?

    Maybe some valium for you and some autan for them might be of assistance….

    Don and others,

    I apologise for this nasty reaction, but it comes from the heart.
    Not because I disagree with some of Paul’s arguments (after all, he is intelligent…), but because he is so fervently faithful to his own agenda that he never digs into the issues which are raised.

    Like retiring generals, he repeats himself, form blog a to blog z.

    This time he must have been so furious that he even forgot to ‘push’ his own blog….

    It’s the first time. Fatigue?

  3. Paul,

    I have followed your critique the Stocdkholm Accords since the process started. Your eloquence is indeed unrivalled in this regard. But the conclusion in your last sentence above, is both rash and harsh.

    Fine, it is your priviledge to disagree with what your perceive as the “political” or “ideological” slant in the accords but does that make them “useless.”? Can they only be “useful” after your views are incorporated into the accords. What can shape a positive reputation for our profession?

  4. Toni, I see, If I read this post correctly, that you have dropped the word “ideology”. For the record, the original Accords coming out of Stockholm effectively defined PRs as, “ideological governors of value networks”. But as John F. Kennedy said in 1962:

    “Today…the central domestic problems of our time are more subtle and less simple. They do not relate to basic clashes of philosophy and ideology, but to ways and means of recasting common goals–to research for sophisticated solutions to complex and obstinate issues.
    What is at stake in our economic decisions today is not some grand warfare of rival ideologies which will sweep the country with passion but the practical management of a modern economy. What we need are not labels and cliche’s but more basic discussion of the sophisticated and technical questions involved in keeping a great economic machinery moving ahead.”

    His words apply even more to firms and to other non-political institutions than they ever did to politics (where one could pick a fight with him, though recent trends suggest most contemporary politicians have bought his line).

    However, if you think the word “political” gets around the problems of positioning PRs as people associated with “promoting ideologies” – you are mistaken. PRs are not (and for the sake of our reputations must not be positioned as) “political commissars” or even as playing a political role or a supervisory function responsible for the political education (ideology) of an organisation to ensure the loyalty of its people (that’s the language of dictatorships). Neither do we or can or should we seek to “govern” value networks, which is another repellent notion promoted by the Accords.

    The language of the Accords remains obtuse, and in so far as it is clear it is potentially damaging to our image. If the Accords are to be rescued they require a lot of fresh critical thinking. They also require a good command of the English language in terms of their presentation.

    Sorry, but as they stand, these Accords remain useless for PRs in terms of shaping a positive reputation for our profession.

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