How do communications leaders keep reputation risk on the agenda? We spoke to Håkon Mageli, comms head at Norwegian branded goods company Orkla about compliance, culture and palm oil.
Interview by Dennis Larsen
Håkon, what is reputation risk to you?
For us, important reputation risk areas are connected to issues that can have a potential damaging effect on our business. Being as diversified as we are presents both many sources of potential risk but also means that the potential overall group damage associated with individual risks around a single product or category can be contained.
Given our presence in the food sector, we take particular care of food safety given the potential risk any issue around this topic can pose to our consumers, our customers, our immediate business performance and longer-term reputation. All Orkla companies that produce food and beverages comply with the Orkla Food Safety Standard (OFSS). This standard was introduced in 2004 and is based on the internationally recognised British Retail Consortium Global Standard for Food Safety. Safe products, in fact, are a cornerstone of our approach across our businesses. We take our reputation for quality and safety extremely seriously as we rely on the continued trust our consumers and customers put in us.
How do you embed reputation risk into business processes?
Given the inherent reputation risk associated with any failures in our production processes, we make sure we continuously improve and apply high standards and have auditors regularly check our factories and supply chain. Here operational risk reducing tactics are essential and we recognise the potential follow through to short- and long-term reputation damage if we don’t keep doing this well.
We also work systematically on our supply chain embedding conscious decisions around where and who we source our raw materials from sustainably and ethically. Our customers and other stakeholders expect this.
Are there reputation risks associated with raw materials like palm oil and cocoa?
Palm oil is a chapter in its own right. In Norway and the rest of Scandinavia there has been a great deal of attention on saturated fat and the environmental issues surrounding palm oil. We have been early in addressing this have worked very hard to find alternatives so that most of our grocery products in the Nordic grocery market are now palm oil free.
"Palm oil is a chapter in its own right."
Where we do use it, we source from suppliers with improvement programs on the ground and we are converting to certified raw materials. Across our supply chain our goal is to source 100% of our raw materials from sustainable sources.
How do you manage reputation risks connected to changes in your production facilities?
The most important thing is to be open with stakeholders about the plans you have from the beginning. Through open dialogue and consultation around production changes including factory closures, we are able to retain trust and manage our reputation with our stakeholders including our colleagues, local communities and authorities around potentially disrupting changes.
Does reputation risk feature on the executive and board agendas?
Yes, in various ways. It is addressed through specific issues requiring leadership attention, for instance palm oil and food safety. As leaders we are all concerned with the potential reputational impact of our business decisions.
There is also a broader interest among leaders about how we can further build our reputation and continue to be an authentic company and how we can lead new developments in sustainability for instance.
What is the specific role of your role and your function in reputation risk management?
Given that the corporate communication function is best positioned to understand corporate stakeholders and the future issues landscape, it would be a business risk if we were not involved early in the decision-making process and around our large change programmes. We bring the reputation risk and opportunity components into the strategic discussions. To do that we have to translate everything we know about our stakeholders and their concerns into language that leaders understand.
"We bring the reputation risk and opportunity components into the strategic discussions."
Reputation and reputation risk is everyone’s responsibility but as communicators we are uniquely placed to help course correct our businesses if what they are doing can have a damaging impact.
Is it about compliance or culture?
We do need to set strong standards and adhere to them, but I am a firm believer of building a culture in which people identify with the business and engage responsibly with colleagues and stakeholders. That is more important than controls and compliance. It starts with good leadership. I believe the Orkla culture helps minimise behaviour that would put our reputation at risk.
Reputation thinking has always been part of good business practices. If you look back at management textbooks from the 1950s, there was already this notion of considering whether a business decision has a positive impact on direct stakeholders, society and the environment- the same concepts repackaged more recently as reputation management or sustainability. This has always been built into our business ethos and we continue to adopt enhancements to our approach every day.