The pressure on organisations to implement change through ESG has gathered considerable momentum and imperative.
Those businesses that are judged to fall short in demonstrating their ESG credentials will inevitably suffer reputationally. It is an issue that has become increasingly important to consumers and brands. Qatar, the host of the 2022 World Cup, and FIFA have come under pressure over the treatment of migrant workers.
These workers have been building the country’s brand-spanking new football stadiums. Closer to home, P&O was recently criticised for its handling of the dismissal of 800 staff, without consultation and via a video call.
The environmental element of ESG seems to dominate the media’s attention, but the social and governance pieces are catching up fast. A recent legal dispute involving Dyson, the iconic consumer brand, has highlighted some of the reputational issues that can come into play when allegations of ESG failures concerning workers are raised.
On 10 February 2022, Channel 4 News ran an “exclusive” report about ATA, a Malaysian company that manufactured Dyson-branded vacuum cleaners. The report contained allegations that employees of ATA “suffer abuse, inhuman working conditions and in one case even torture”, and are paid £9 a day.
The broadcast featured allegations that Dyson was warned about conditions at ATA in November 2019 but continued to use the firm. It also alleged that when conditions were subsequently reported in the UK press, “Dyson’s PR operation went into overdrive… the company told the media it did not recognise the allegations... and there was no evidence… insisting the report gave an inaccurate impression of conditions in Dyson’s supply chain”. Channel 4 News asked whether the Dyson brand had “lost its credibility”.
Sir James Dyson and two Dyson companies started a defamation claim against Channel 4 and ITN (which makes Channel 4 News for the broadcaster) over the programme. As is not unusual in defamation disputes, the parties disagreed about various central legal issues, including the actual meaning of the allegations broadcast. A trial of “preliminary issues” took place.
Unfortunately for Dyson, the Court’s findings did not go entirely to plan. The Court decided that the broadcast was not defamatory of Dyson’s founder, Sir James. The Judge also found that the Dyson companies had not satisfied the legal test to show that the broadcast “referred” specifically to them. Dyson has suggested that it intends to reformulate and refile its legal claims on behalf of the companies only.
As the Dyson case illustrates, ESG has created new and complex reputational challenges for organisations. Comms teams must understand the human side of their business’/clients' supply chains. It is no longer a purely commercial or procurement matter. Undertaking a full ESG audit is a belt-and-braces option, but discussing the core issues and the relevant assurance frameworks with commercial and risk teams is a sensible first step. It will also inform discussions with the media and stakeholders.
Supply chains involve investment, job creation and the chance to raise standards, and so can actually be a “good news” opportunity in waiting.
This article first appeared in PR Week
