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Research Paper Measuring Sustainability: An industry case study of Maersk Line

02 Feb

How could I forget to blog about the CSR Academic Conference I was invited to attend in October! It was a great experience and an amazing opportunity to both  meet academics and practitioners and of course to present my research paper. Above all, it was an honour for I was the only undergraduate to attend and to even present a paper. Having been the youngest, I must admit I was underestimating myself. However, my attitude changed when I realized I was the only one to discuss the VMM and the Barcelona Principles which surprised me for this is a milestone that has changed the whole industry. Besides, linking it to another topical issue – CSR, added an interesting twist to the whole paper which in my opinion makes it a unique piece of work. There were also other things that sparked my attention during the conference. For example, after presenting I was sarcastically asked if I was trying to offer a way of measuring ethics. Well, I wasn’t even intending to because obviously there is no way to do it. Why? If we simply start our reasoning from the definition of ethics (moral philosophy) we would figure out that this is something personal, something that depends on one’s own views, something that is influenced by cultural/political/socioeconomic/ historical and even age factors. In other words, what is good for me might not be good for you and vice verse. Hence, it cannot be measured. Hence, the real purpose of my paper is not to measure an organisation’s ethics but its stakeholder relationships in terms of preference, attitude and engagement regarding the company’s CSR activities, as it is the case of my paper. That’s not are quantitative data which makes it hard to evaluate even with the VMM. It is easy to prove the first four boxes of the VMM (awareness, knowledge, interest and preference) but how do you prove the last one – action, e.g. behavioural change? This is what every communication campaign should be aiming at – a behavioural change in target audiences, not just creating of buzz and that is why it is very important to constantly measure and evaluate it. The VMM offer a way of doing it but it seems to me that there are still areas of improvement and this is what I argue about in my paper. I believe there is no (and should be not) a universal formula of measuring performance because each and every industry is unique and therefore requires evaluation techniques tailored specifically to the specific communication program and organisation, in the case of my paper Maersk Line.

I forgot to mention that this paper started as a uni project and  Maersk Line’s Head of Climate and Sustainability liked it so much that I was invited to their corporate headquarters in Copenhagen! Then their Senior Director of Sustainability was very pleased with what I did which led to another invitation which I am planning to do in near future. What is more, I was quoted in their global Group newsletter as a specialist! So, this is the paper I presented:

 

Abstract

Purpose – The purpose of this paper is to prove that the new International Association for the Measurement and Evaluation of Communication (AMEC) measurement and evaluation guidelines (the Barcelona Principles and Valid Metrics Matrix) are useful tools for measuring ethical behaviour and they could and should be even applied to industries with specific requirements.

Design/ methodology/ approach – this paper evaluates the role of the Barcelona Principles and the Valid Metrics Matrix (VMM) as a useful platform for measuring the outcomes of Maersk Line’s efforts to showcase ethical behaviour .

Findings – Maersk Line tends to focus on the technical aspects of public relations; however, the new AMEC framework could further improve the carrier’s evaluation indicators by enabling the company to measure the combination of reporting its environmental footprint and its quality of building and sustaining relationships.

Originality/ value – Many companies focus their CSR efforts on customer satisfaction. However, little is done in terms of measuring performance. This paper provides an interesting perspective of this issue   and focuses on applying the new CIPR measurement and evaluation framework to sustainability business strategies.

Key words Corporate Social Responsibility, Barcelona Principles, Valid Metrics Matrix, AMEC, Maersk Line, Measurement, Evaluation

Paper type Research paper

1.   Introduction

“He who would learn to fly one day must first learn to walk and run and climb and dance; one cannot fly into flying”

NIETZSCHE

 This quote perfectly describes the long journey that the public relations industry has started in terms of developing its measurement and evaluation framework. After more than a decade of learning and improving, the public relations industry is ready to embrace these new changes which allow every public relations practitioner to “fly”, i.e. to demonstrate their success through their ability to influence change and meet objectives. That quote may also be valid for every public relations professional: one must always upgrade their knowledge and skills to remain competitive and useful for their organisations or clients. In other words, customer satisfaction starts with improved quality. Stakeholders are adding CSR to the mix of their expectations for good services. As a result, measuring public relations’ impact on businesses has never been of such importance.

It is interesting to see how one particular industry has responded to the challenge.  For the maritime industry in particular, these new trends of measurement mean that their PR has entered new waters. Even though most of the concepts of Corporate Social Responsibility have been spreading through businesses in all sectors, some of the conglomerates in container shipping, like Maersk Line, are already far ahead in their proactive approach compared to other industries which is an interesting field to explore.

Back in 1994, the International Public Relations Association predicted the gradual priority of outcomes over outputs, but it took until 2010 to secure the introduction of a new measurement framework, i.e. the Barcelona Principles (INTERNATIONAL PUBLIC RELATIONS ASSOCIATION 1994; INTERNATIONAL PUBLIC RELATIONS ASSOCIATION 1994a). The Barcelona Principles marked both the death of the Advertising Value Equivalents (AVEs) and the start of a new era in measuring public relation’s impact on businesses. Here we can ask: can we measure everything? Can the Valid Metrics Matrix (VMM) be applied everywhere? The new toolkit still does not provide all the answers but it is the backbone for showing the real value that public relations can bring to business quality.

This paper evaluates how the maritime sector has responded to the new CSR trends by examining Maersk Line’s sustainability agenda. The paper then applies the VMM to Maersk Line’s green strategy with the attempt to argue that definitive research needs to be done to prove to businesses that the new measurement and evaluation guidelines could and should be applied everywhere, even to industries with specific requirements like container shipping. Finally, the paper suggests that the VMM should be further improved in order to provide more accurate ways of proving public relations’ positive contribution to managing reputation.

2.    Corporate Social Responsibility and the Container shipping industry

Corporate Social Responsibility is one of the most important issues and developments of the 21st century. Within the field of sustainability two major CSR movements could be identified: environmental and social. Environmental issues are often the sole focus on sustainability programs (as seen in CLIFTON and AMRAN 2011; HOGAN 2010; DUCKWORH and MOORE 2010; HORRIGAN 2010; REGESTER and LARKIN 2008) with societal activities usually overlooked, especially in sectors that are hugely exposed to environmental disasters. Nevertheless, increased activity in environmental management can be evidenced by actions taken by both the government and private sector resulting in proactive or reactive management company policies (FISK 2010; HADDOCK – FRAISER and TOURELLE 2010; PEACH 1987; TENCH and YEOMANS 2009).  Where does container shipping stay on the proactive – reactive agenda axis? Unfortunately, the marine industry is one of the most passive sectors in terms of measuring and reporting its environmental footprint. Protecting the environment is the biggest sustainability challenge for container shipping and yet no international regulatory framework exists despite the fact that international shipping, according to recent studies, carries more than one third of the world trade with a rapidly growing demand expected to grow even more (WORLD SHIPPING COUNCIL 2011; INTERNATIONAL MARITIME ORGANIZATION 2010). Subsequently, it is further exposed to possible unethical practices (PRUZAN – JORGENSEN and FARRAG 2010; KANTER 2010).

However, this provides only a partial explanation of the whole problem. When the social CSR movement has started shifting from a mere “shareholder as stakeholder” concept  ( as seen in HADDOCK – FRASER and TOURELLE 2010) to a beware–of-the–activists one, i.e. emphasizing on the importance of end users in sustainability reporting (as seen in HADDOCK – FRAISER and TOURELLE 2010; JOHAR, BIRK and EINWILLER 2010), the marine industry still fails to make reputation and legitimacy within a society key value propositions, let alone measuring its performance and relationships with stakeholders.

 Against an obvious lack of regulatory standardization Maersk Line’s decision to become the first carrier to take actions of compliance and subsequently of adoption of a proactive sustainability business strategy seems to deserve admirations. World’s largest container shipping company measures, reports and reduces its environmental footprint and has recently started increasing its transparency  and end user engagement. But how does the conglomerate measure its performance?

 3.     Measuring sustainability

 Most businesses still view and measure quality in terms of customer satisfaction and container shipping is no exception. Maersk Line has already introduced various programs and initiatives to both showcase best practice of measuring and reporting its environmental footprint and to encourage other carriers to follow this fine example (see Appendix…) However, this is the technical aspect of public relations – whether there are no errors, no pollution, delays, no mechanical breakdowns or no customer complaints (as seen in INTERNATIONAL PUBLIC RELATIONS ASSOCIATION 1994). These aspects are doubtlessly very important, especially for high risk industries like the maritime business. What about the managerial aspects of quality? Both service and process require quality. Service delivery is of course of greatest importance; however, process plays a vital role in terms of quality performance. Therefore, some marine companies, like Maersk Line, have realized the essential role of performance in achieving their goals.

 “The company has always had a good reputation of strong values so now we have a solid foundation to build on. However, 3-4 years earlier there was almost no communication to stakeholders but this has changed. The decision to communicate much proactively is a great opportunity to take the lead and win by doing so…We are trying to mobilise the whole company in order to meet our customers’ needs…We are going to develop a special training program for our staff that will be delivered this year”

                                                Maersk Line Head of Climate and Sustainability

 The key to understanding corporate reputation has become the measure of the relationships it is based on, especially with the rise of CSR. The world’s largest container shipping company has obviously become concerned about it, implementing it into its long – term strategy. The need for transparency, reliability and lower costs are already exerting pressure on International Maritime Organization (IMO) to eventually introduce a global regulatory framework, and thus on business operational models in the industry where customers are already greening their supply chains. As a result, the urge for proof of ethical behaviour has changed the perception about organisations. However, is it enough for Maersk Line to only measure its environmental footprint when it is now seen more as a strategic innovation partner rather than a mere cargo carrier? When the levels of communication channels surrounding sustainability have increased and altered the way businesses manage relationships with their various stakeholders? The result is an increase of the importance of these relationships. Therefore, building, managing and measuring them is fundamental to an organisation’s success. Thus, it could be argued that understanding how to measure should become a part of the sole focus of Maersk Line’s strategy: if relationships can be measured then they can be improved, and so could communication effectiveness and overall performance (PAINE 2011).

4.    The Valid Metrics Matrix

 According to Fraser Seitel, a former vice president for public relations for the Chase Manhattan Bank (as seen in INTERNATIONAL PUBLIC RELATIONS ASSOCIATION 1994), the underlying concept in all definitions of public relation is the word performance. In other words, performance becomes a communicative concept which in turns makes public relations the key to managing an excellent reputation. But what does excellent reputation mean for container shipping? How do we know it is well managed?

The recently introduced Barcelona Principles and VMM are a solid platform that could be used to measure excellent reputation and stakeholder relationships in a time of great uncertainty in the maritime sector. However, these guidelines are not the definite rules of measurement for public relation’s impact reaches different audiences and appears in a variety of forms, i.e. crisis communication, reputation building, community engagement. In other words, there is no universal metric for all PR activities, even though the industry was entirely used to the already doomed AVEs (CIPR 2010). Thus, to truly communicate the value that public relations activities add to achieving business goals, measurement was agreed to be seen as a continuum of metrics – a combination of outputs and outcomes that ideally leads to achieved business results tailored specifically to match the program’s objectives (AMEC 2011a)(Figure 1: A Very simplified way of how PR works).

 

Figure 1: A Very simplified way of how PR works

As seen in Figure 1, the Matrix is a simplified representation of how PR functions – starting with disseminating information (PR Activity) to third parties (Intermediary) which then communicate the message to stakeholders (Target Audiences). Generally, the philosophy behind the Matrix lies in the concept of behavioural change: moving from mere target market awareness and knowledge created by PR activities to preference and action amongst target audiences (Figure 2: The Valid Metrics Matrix).

   .Figure 2: The Valid Metrics Matrix (AMEC 2011)

This appears to be the focal point of every campaign for two primary reasons. Firstly, this very box shows the final outcome of any communication program, i.e. whether the business objectives were achieved or not.  Secondly and most importantly, the last grid is said to serve as a proof of the positive contribution public relations practitioners make to an organisation’s reputation management. Therefore, measuring the impacts of PR activities on target audiences is crucial. Demonstrating the shift from Awareness, to Understanding, to Interest/ Consideration, to Preference could easily be done through the application of a continuum of metrics which, most of the times, even overlap (see Figure 3: Reputation Building). How could it be proven that effective public relations activities were the heart of a company’s successful end results? Was PR the reason behind the increase in Maersk Line’s market share, profit, customer demand or cost savings in 2010 and if so could it be measured and explained using the VMM?

 

Figure 3: Reputation Building (AMEC 2011)

The launch of the first global standard for PR measurement allows a careful analysis and evaluation of the managerial impact of quality to sustain Maersk Line’s reputation. In 2010 A. P Moller–Maersk Group reported both record–breaking net profits and hitting of sustainability performance targets ahead of schedule (WRIGHT 2011; A.P MOLLER–MAERSK 2010). In contrast, demand rates have been continuously dropping in 2011 despite the expected demand in growth, the progression in creating sustainable shipping that led to customer satisfaction and increased visibility to end users (MAERSK LINE 2011). The VMM can easily illustrate public relations’ positive impact on the shift and increase in Awareness, Knowledge, Interest and Preference levels (Figure 3: Reputation Building). How can we demonstrate that behavioural change has taken place?

The new framework improves the company’s evaluation indicators because it enables it to measure the results of its efforts in terms of building and sustaining relationships; in terms of improving its communication channels. To illustrate, Maersk Line has been awarded various prizes because of its investments in sustainable growth and transparency and has also won plaudits from their ethically conscious customers and media, including the Financial Times, The Wall Street Journal and the Guardian (www.maerskline.com; MAERSK LINE 2011; JOURNAL OF COMMERCE 2010; www.changingthewaywethinkaboutshipping.com) This certainly proves that the company has already entered the Preference Grid (see Figure 3: Reputation Building). The launch of Maersk Line’s various initiatives certainly proves that Awareness, Knowledge, Interest and Preference have been created:

“We see our customers putting more and more emphasis on environmental issues and now they started looking at transportation as well. We can choose to do nothing and risk losing out business but we can also respond. But we want also to help this trend grow, we want to drive that demand and create solutions…The decision to communicate much proactively is a great opportunity to take the lead and win by doing so”, Maersk Line Head of Climate and Sustainability*

Maersk Line manages successfully to combine corporate continuity and sustainable trends. It has already set a solid foundation for measuring and reporting its environmental footprint in order to develop a greener and more transparent company. Even though the world’s largest ocean carrier is a pioneer in adopting its ethical performance in a rather unethical industry, it still has areas to improve. It could be argued that Maersk Line tends to focus on the technical aspects of public relations, i.e. its carbon and C02 footprints or its supplier performance.  The complex and changing nature of relationships between an organisation and its publics not only requires measurement and evaluation of the outputs but also of outcomes to provide competitive insights. It could be argued therefore that the Barcelona Principles and the VMM could be a useful platform for measuring Maersk Line’s performance: a combination between the carrier’s efforts to showcase ethical behaviour by reporting its environmental footprint and its quality of managing relationships in and outside the organisation. However, it seems that the new PR measurement and evaluation framework proves to be insufficient in terms of driving behavioural change in target markets. Therefore, it could be argued that the VMM should be further reevaluated and improved in order to ensure more accurate measurement of public relations’ effective impact on managing business reputation.

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2 Comments

Posted by on February 2, 2012 in CSR, CSR in container shipping, PR

 

2 responses to “Research Paper Measuring Sustainability: An industry case study of Maersk Line

  1. bizzibiz

    February 5, 2012 at 11:07 pm

    would love to constantly get updated great site ! .

     
    • fameface

      February 6, 2012 at 8:51 pm

      Thanks! I’m in the process of improving my paper so wait and see what’s coming next!

       

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