15. Suspected killings on Del Monte Kenya farm
Last year, a joint investigation by Britain’s Bureau of Investigative Journalism and the Guardian newspaper presented evidence that they claimed showed security guards working for Del Monte had killed and brutally assaulted villagers suspected of trespassing on the multinational food company’s Kenyan pineapple farm.
Shortly afterwards, Del Monte commissioned a human rights impact assessment of its Kenyan operations. According to the Guardian, “the report describes an intense conflict between loosely organised groups of pineapple thieves and Del Monte security staff, causing casualties on both sides, including injuries and death. It concludes that the Kenyan farm is causing major human rights harms across multiple areas to its staff and those living in communities surrounding it.”
The situation has continued to escalate since the initial reports. A new report by social auditor Partner Africa was sent to UK supermarkets last month, alleging major human rights violations — resulting in heightened pressure and product withdrawals from some of these supermarkets (including Tesco and Waitrose), the Guardian reports.
In addition, Kenyan police have been investigating another four deaths of suspected pineapple thieves.
“All too often brands and companies make the mistake of thinking they can communicate themselves into a reputation” says Dustin Chick, MD at Razor PR. “This is either the misguided belief that consumers and stakeholders won’t connect the dots, or is a serious case of naivety. Realistically you can’t divorce yourself from the realities much further down your supply chain — ignorance is not the right defense.”
“Doing the right thing is always the right thing,” adds Chick. “And serious allegations of human rights violations require the firmest of responses, and it is only in your actions that you will address the failings of your reputation.” — Arun Sudhaman
16. CNN’s meltdown
The first six months of 2023 went from bad to worse for CNN under Chris Licht, the CEO who the previous May took over for longtime boss Jeff Zucker who resigned under a cloud after not disclosing a romantic relationship with a top exec.
Going into the year, staff morale had already tanked. Since arriving, Licht nixed CNN’s month-old subscription service, CNN+, and the channel’s longest-running show, Reliable Sources. The show’s host, media reporter Brian Stelter, used his final episode to chide his new boss and his effort to make the channel’s coverage more politically neutral. In December, hundreds of staffers got their pink slips as part of larger cost-cutting measures by parent Warner Bros. Discovery.
In a memo to remaining employees, Licht announced restructuring and programming changes he said “are necessary and will make us stronger and better positioned to place big bets going forward without fear of failure.”
The drama carried into to 2023. Longtime host Don Lemon, part of a new morning show team, was canned two months after saying that Nikki Haley was past her prime — comments widely seen as sexist. Lemon, who didn’t go quietly, said he was blindsided by the move. Then came the channel’s disastrous town hall with Donald Trump — “a spectacle of lies” during which Trump steamrolled anchor Kaitlin Collins, sparking a backlash from critics who blasted CNN for giving the former president the platform in the first place.
“CNN’s crises last year, particularly around staff turmoil after the network’s controversial town hall with Donald Trump, are prime examples of leaders — whether of major corporations or boutique small businesses — sitting in their ivory towers and failing to have the pulse of their rank and file,” said Bryson Gillette’s Kevin Liao.
But, as BerlinRosen executive VP Andrew Friedman, who leads the firm’s crisis comms practice, said, CNN’s “defining moment of 2023” came on the first Friday in June, when The Atlantic posted Tim Alberta’s deep-dive profile of Licht under the headline “Inside the Meltdown at CNN.”
“Within hours of the story posting, CNN had become the story once again, rarely a good position for any news brand to find itself. Alberta’s well-reported story kickstarted a feeding frenzy of hot takes about CNN’s leadership, its problems and its future. By the following Wednesday, Chris Licht and CNN parted ways. In late August, respected former New York Times executive Mark Thompson was named the network’s new chief executive,” said Friedman, who has a background in broadcast journalism.
Some of the tumult at CNN, however, reflected challenges bigger than Licht — notably the existential crisis facing traditional news organizations going into what promises to be a politicized — and polarizing — year.
“CNN’s most pressing challenge (and the network is not alone in this regard) is that the very definition of what constitutes news has become, at best, a debate. No one has really figured out how to bring viewers into the story — as CNN famously did during the first Persian Gulf War, proving it was ‘perfectly suited for the hour-after-hour, you are there narrative,’ as the Associated Press’ Frazier Moore wrote in 2001 — without becoming the story,” Friedman said.
“What is not in dispute is that presidential election years put a magnifying glass on news organizations just as they do candidates. While that means missteps can be costly, presidential elections also offer news outlets the chance to (re)define a brand. Coming off a tough year, CNN has the opportunity to put its head down and redirect focus back to its core mission: helping people better understand the world around them.
“In this moment though, CNN may do better to let its work be the story, which seems to be a large part of the strategy Thompson laid out this week. Just as any campaign embed is one big scoop away from becoming the next household-name journalist, so too is CNN one strong election cycle away from shifting the focus back to its roots,” Friedman said. “For CNN in 2024, the goal must be to tell the story, not be the story.” — Diana Marszalek
17. Disney vs activist investor
While generations of Magic Kingdom-goers may forever equate Disney with the Happiest Place on Earth, it seems the Walt Disney Company that oversees the entertainment empire just can’t muster that kind of good feeling.
In last year’s crisis review, we wrote about Disney’s deafening silence on a Ron DeSantis-backed Florida law designed to limit discussion of LGBTQ issues in the state’s schools. When then-CEO Bob Chapek finally came out against the bill the backlash from the right was swift and severe, with DeSantis retaliating by removing the company’s special tax district.
This year’s Disney crisis — a corporate power play — is not as sexy a controversy for most Americans, but it is not necessarily detrimental to the company’s well-being.
Last fall, activist investor Nelson Peltz, whose Trian Fund Management owns about $3 billion in Disney stock, launched his second proxy fight against Disney with the aim of securing seats on the company board. Peltz is eyeing for himself and another for former Disney CFO Jay Rasulo.
Peltz’s reason: Disney’s underperformance, which he sees as being too closely tied to current CEO Bob Iger and disconnected from shareholders’ interest.
“Trian believes Disney is the world’s greatest entertainment company, BUT it hasn’t performed for shareholders. We want this beloved company to live up to its potential for shareholders and generations of Disney fans, Trian wrote on its website, Restore the Magic. “Trian beneficially owns a ~$3B stake and believes the board needs new, truly independent directors. Trian’s board nominees, Nelson Peltz and Jay Rasulo, want to #RestoreTheMagic.”
Which is a 180 degree change from where Peltz was last February, when he dropped his first proxy battle after Iger — who led the company for 15 years before returning with Chapek’s ouster — announced a restructuring that included $5.5 billion in cost-cutting measures and the elimination of about 7,000 jobs.
And it’s not like 2023 was a big bust for Disney. The company beat Wall Street expectations, with revenues rising 7% during the fiscal year, thanks to its theme parks offsetting losses from the likes of Disney+ and Hulu.
But Peltz’s reignition of his power play shows that Iger, for all the adoration he garnered during his first run at Disney, is missing something in trying to convince investors that he has the company and its future interests covered, said Bryant Madden, MikeWorldWide’s VP of corporate reputation.
“Iger’s return to Disney after the brief tenure of his supposed successor was tangible proof for investors that Disney doesn’t have a coherent plan to shift its business model. While his return may have caused a short-lived period of nostalgia for investors, hoping the long-time chief had a silver bullet solution, but 2023 proved that not to be the case. Instead of expecting, preparing and communicating about the obvious question: ‘What’s the plan, Bob?’ Disney has announced half-measure after half-measure,” Madden said.
At the same time, Iger isn’t doing himself any favors by repudiating Peltz, who blamed the board for “self-inflicted wounds” resulting from major gaffes like resisting change and not having a succession plan.
“With the rejection of Peltz’s bid, a major proxy fight will likely ensue. It may also make the company a further target of the political right who can look to leverage its board and leadership with its social and public policy stances. “Disney has become a punching bag and proxy for all that is wrong with corporate America for right wing politicians, most notably Florida Governor DeSantis and its board fight with Peltz may only increase the target on its back,” Madden said.
“Iger has fought back publicly and in court in relation to Disney’s social and public policy stance and now is battling on a potentially more treacherous front — his business strategy, management style and corporate goals. If Disney has a plan, it needs to communicate it with stakeholders quickly, clearly and convincingly. Otherwise, an alternative path with Peltz at the helm will begin looking quite appealing,” Madden said. — Diana Marszalek
18. Web Summit CEO resigns
The divisive nature of the Israel-Hamas conflict has meant that most CEOs are opting to play it safe when it comes to public commentary. Not Web Summit co-founder and CEO Paddy Cosgrave, who suggested Israel was guilty of war crimes in its response to Hamas’ terrorist attacks.
The backlash against Cosgrave’s comments was swift, forcing him to resign as CEO of one of the world’s biggest tech conferences, following a second post in which he said he would not “relent” in calling out Israel. Despite Cosgrave’s decision to step down and install a new CEO in Katherine Maher, most high-profile speakers from major tech companies withdrew — including Amazon, Meta, Intel, IBM and Stripe, along with European Union officials and celebrity speakers Amy Poehler and Gillian Anderson.
Cosgrave remains the majority shareholder, owning 81% of the company, but it is clear that the exodus of US companies has put long-term sponsorship money and relationships at risk — what Axios describes as an “existential crisis.”
While the corporate world has become increasingly comfortable sharing political views in recent years, the Web Summit crisis reflects how fraught these issues can be. “Today’s environment is extremely divisive,” explains Sway Effect founder and president Jen Risi. “Based on the current state of the world, companies are reconsidering when, how and why their leadership should speak out and on what topics.”
Indeed, Risi believes that “senior leaders should never share their political perspectives,” because it “risks alienating a brand’s core audiences who might share different perspectives.”
Meanwhile, Cosgrave’s comments are not Web Summit’s only issues. The three shareholders, including Cosgrave, remain in place — in a relationship described as “irremediably toxic“. — Arun Sudhaman
19. Bigmotor inflates insurance claims
Japan’s biggest used car dealership, repair and insurance brand, a family-owned concern that traded on honesty in a business known for dishonesty, lost its reputation overnight when it was found to have engaged in systematic fraud.
In short: staff at the company deliberately damaged cars using implements such as golf clubs to lodge inflated insurance claims and overcharge customers to meet unrealistic sales targets. Insurance giant Sompo, a supposed victim, was also implicated as being in on the scam. Close to 1,300 cases came to light. Investigations also uncovered toxicity in the workplace, with abusive power harassment a fact of life for some employees.
“As is the norm in Japan, the founder, Hiroyuki Kaneshige, tendered a tearful resignation but claimed the incidents were down to rogue employees,” says Hoffman Agency content director David Blecken. “He also apologised to golfers for casting a shadow on their sport — but not to those the company had defrauded.”
“To be sure, he had to go and could have bowed out more gracefully,” continues Blecken. “But some observers argued unfair financial regulations contributed to the malfeasance and have implications beyond the used car industry. This at least warrants examination and suggests the Bigmotor issue is unlikely to be the last of its kind to surface.”
“Reputations, once lost, are hard to recover,” adds Stephen Givens, a partner at law firm JLX Partners, writing in Nikkei Asia. “Mental images of body shop workers deliberately exacerbating dents with golf balls will be hard to erase. Bigmotor’s national television commercials caricaturing its competitors as crooked and untrustworthy will now inspire giggles.”
Givens adds that Bigmotor’s woes also reflect the difficulties of getting regulation right. The company’s relationship with Sompo benefited from under-regulation of conflicts of interest, but “overregulation of insurance agency commissions pushed Sompo to find other ways to reward Bigmotor.”
Either way, Blecken questions whether Kaneshige’s resignation truly serves as the best response to the scandal.
“More broadly, it is worth asking whether resignation is always the answer to a scandal,” says Blecken. “There are times when accepting responsibility but working to redress the problem would be more honourable. If external factors are truly at play, redemption may not be out of the question. In this case though, short of gutting the entire company, rebuilding reputation is likely to be equally difficult with or without the founder.” — Arun Sudhaman
20. Greenwashing airlines fall foul of advertising watchdogs
Corporate communicators know better than most that the rise of ESG as a business imperative is proving to be a reputational minefield, in which companies are having to carefully tread the line of underlining their sustainability credentials while avoiding the very real risk that they will be accused of greenwashing.
Two airlines on opposite sides of the globe found this out to their cost in March last year, in separate cases where advertising watchdogs in the UK and Australia were called upon to flex their regulatory muscle against environmental claims by first German flagcarrier Lufthansa and then Etihad, one of the two big UAE carriers.
After pledging in 2021 that it would come down hard on environmental pronouncements, the UK’s Advertising Standards Authority (ASA) banned an ad campaign by Lufthansa, saying it was misleading consumers about the environmental impact of flying. The poster campaign featured a head-on shot of a plane with its undercarriage depicted as Earth, and the strapline “Connecting the world. Protecting its future”.
Lufthansa said the tag line was “open to interpretation” and consumers would not see it as an “absolute promise” relating to the environment or that its planes did not cause harm; rather, its claims were based on “aspirations” of becoming carbon neutral by 2050 and halving carbon emissions by 2030.
In its ruling, however, the ASA said consumers would view the ad as a claim that Lufthansa had already taken “significant mitigating steps” to ensure that the net environmental impact of its business was not harmful, despite there being no environmental initiatives or commercially viable technologies in the aviation industry which would substantiate the absolute green claim ‘protecting its future’, as we considered consumers would interpret it.
The ASA told Lufthansa to make clearer and better substantiated environmental claims in the future and to not give a misleading impression of the impact caused by flying with the airline. Lufthansa appeared to learn little from its tussle with the ASA, however, because just four months later, in July, it received a second rap on the knuckles from the watchdog, after a Google ad used the phrase “fly more sustainably”. The ASA considered that consumers would understand this to mean that Lufthansa offered a way to travel by air that had a lower environmental impact than alternative airlines, and told the airline not to use the phrase again.
Boldt partner Steve Earl says Lufthansa won’t be the last firm to fall foul of the UK’s advertising watchdog on environmental grounds: “You can sense what Lufthansa was trying to communicate, and why it was allowed to do so in other countries, but the decision highlighted why advertising in the UK about environmental factors now amounts to walking on eggshells. This time, the airline simply overstepped the mark.”
As the ASA made clear when the rulings were announced, ads cannot give a misleading impression about environmental credentials, and also cannot make claims unless they’re substantiated with robust evidence. “This puts brands in a tight spot,” says Earl. “While there has long been a need for substantiation, the need to couple that proof with a clear and unequivocal view of broadscale, positive environmental progress and still meet regulatory stipulations can be a recipe for very dull and factual advertising.”
Earl says the additional difficulty with such rulings is that there is now a real risk of legitimate attempts to bring the facts to life being decried as greenwashing, because so much can be open to interpretation: “Where companies have invested in long-term decarbonisation, are tracking genuine achievements and want to share that transparently through paid platforms, they are going to have to come up with new ways to make their point emotively. Just as we’re going to need new forms of language and new written techniques for reporting on sustainable change programmes, advertising is going to need to evolve similarly.”
On the other side of the world, the second airline greenwashing accusation was directed at Etihad by aviation emissions advocacy group Free Flight Australia, which complained to the Australian Competition and Consumer Commission (ACCC) that two Etihad ads shown on digital banners during a football match between Melbourne City and Adelaide United were false or misleading. The ad copy on one ran “net zero emissions by 2050” next to Etihad’s logo, and another said “Flying shouldn’t cost the Earth.”
The pressure group said the airline had no credible path to net zero emissions by 2050 as it was not “technologically, practically, or economically feasible” to reach net zero through current industry reduction initiatives, and its claims not only lacked integrity (and overstated its own emissions progress) but also undermined trust in climate action.
The complaint came after the ACCC, like the ASA, had announced it would focus on environmental claims after it found that 57% of 247 brands surveyed had made misleading statements. The ACCC has not yet announced its ruling on the complaint.
In its statement in response to the complaint filing, Etihad said it runs “a comprehensive research, development, and innovation programme to address aviation decarbonisation, and is committed to achieving net zero emissions by 2050, in line with IATA’s declared industry-wide net zero ambition for 2050”.
“Our ambition is to reduce the impact of aviation on the environment, and we continue to explore and test all possible ways to decarbonise – from research into sustainable aviation fuels and contrail avoidance to offsets and reforestation.”
Craig Badings, partner and head of reputation at SenateSHJ in Sydney, says many companies are stepping into the ESG minefield “ill equipped or they are purposefully and, in some cases, cynically paying lip service to it. In Etihad’s greenwashing case before the Australian Competitor and Consumer Commission, it would appear to be the latter.
“Given government, regulator, supply chain and consumer focus on company’s ESG performance, companies cannot merely state what they intend doing about ESG targets, instead they must set and publish those targets, monitor them and provide robust, verifiable and updated reports on progress. Etihad failed on all these counts. Companies doing the same will also fall foul of the regulator as they are held to account by consumers, competitors, employees and activists alike.”
Badings adds that Etihad is just one of many cases which highlight that “reputation risk is not the sole domain of legal and compliance. Instead, it requires a coordinated lens across every facet of the business. The challenge for companies is how they align creative outputs and activations with their values.”
At Four Communications, which was Etihad’s PR agency in the UAE for several years, group MD Ray Eglington says “the easiest moles to whack are the ones that stick their heads out of the hole. I can’t help feeling that’s Etihad here.”
He says while most communications professionals would look at the net zero section on the Etihad website and feel there were some strong measures in place, and would be happy to be putting that story out there, it was also easy for detractors to “forget the new (lower-emissions) fleet; the partnerships with global innovators; the clear, published strategy to get to net zero; the reporting of results against that strategy. It’s easier (and gets more column inches) to assume it is all green-washing by an airline based in an oil-producing nation.”
Eglington concludes: “We absolutely should whack the moles that deserve it. Green-washing should be discouraged. But we should be careful not to dismiss real efforts too quickly. Without ambitious goals, we achieve nothing. And too much mole-whacking means none put their head up in future.” — Maja Pawinska Sims
21. Boycott campaigns against Western fast-food brands
Barely three months old, the Israel-Hamas conflict has already reared its head in this year’s Crisis Review. In this case, Western fast-food chains became the subject of boycott campaigns across Middle Eastern and North African countries, because of their perceived pro-Israeli stances, or (as for McDonald’s) supplying meals to the Israel Defence Forces.
With protests in these countries tightly restricted, Reuters reports that boycotts like these are often viewed as one of the few ways for people to make their voices heard.
McDonald’s, which has admitted a “meaningful business impact” from the boycotts, has responded by blaming disinformation, and pledging millions of dollars in Gaza aid. Starbucks has also faced vandalism and boycotts across the Islamic world.
Babar Khan Javed, chief communications officer at MENA and Pakistan venture accelerator Z2C Limited, believes that claims of the boycott’s success should be taken with a grain of salt — given McDonald’s operating model of local franchisees.
Indeed, Khan Javed argues that those brands which stayed silent probably benefited the most.
“The lesson that QSR brands need to learn from this is to stay silent while preparing their content and messaging as early as possible when needed,” he explains. “No content creator in the GCC region or Pakistan was willing to push the factual counter-narrative regarding MNC QSRs being represented by local owner-operators who support their communities and employ thousands of their fellow citizens.”
That is just one of several lessons that Khan Javed thinks MNCs need to learn when it comes to operating in the broader MENA region, including a better understanding of each region’s “cultural sensitivities, political dynamics, and media landscape.”
“Responding directly to boycotts and online outrage can give them undue attention and legitimacy,” says Khan Javed. “You can focus on communicating with your core audience and stakeholders, showing your values and positive contributions to the community.”
“When facing criticism, consider amplifying the voices of local franchisees and employees who can effectively address community concerns and demonstrate the positive impact of the CPGs and QSRs on the local economy and workforce,” he adds.
These steps, which include “prioritizing facts over hasty reactions”, become even more important in an online environment that is dominated by misinformation. — Arun Sudhaman