Chemical Industry Reputation

1
Chemical Industry Reputation

• Key to future success

2
Overview

• Why Reputation is important
• Cost of a poor reputation
• What the industry is doing
• Chemical Industry Reputation in UK and Europe

3
Some Factors that determine reputation
Public Stakeholder perception
4
A Poor Image Costs
Product withdrawn
10m costs later
EU Ban Phthalates
5
Gender-Bending Chemicals Linked to Breast
Cancer Rise Telegraph 18/10/2006
Millions of Children Damaged by Chemicals
Telegraph 08/11/2006
Concern Over Chemicals Brain Risk BBC News
website 08/11/2006
6
NGOs influence the media

• Chemicals with frightening sounding names
• Target vulnerable / VIP populations (women,
  children, elderly, politicians and celebrities)
• Detection levels set as low as possible to ensure
  presence detected

• Accusations directed at industry
• Draws the wagons into a circle when under
  attack
• Trade groups defend position of slowest ship
  in convoy
• Plays the employment card
• Sometimes tries to convince public its product
  are harmless
• Kicks issues into long grass of expert
  processes

7
Cost of a Poor Reputation
Cost of Raising Capital
Legal Fees
Planning Regulations
Compensation Claims
Insurance Premiums
Remediation
Choice of Location
Operating Costs
Management Time
Recruitment Costs
Staff Morale
Staffing
Public Confidence
Staff Retention
Legislation Compliance
Dealing with Complaints
Legislation
Compliance
8
Real costs of a poor reputation within the
chemical industry

• Move a manufacturing facility - 6m
• Sale of a business - lost 3m
• Planning delay - 200k
• 3-4 years of staff time per year (200k)
• Annual budget 250k 3 staff
• 40k p.a. on recruitment

9
High profits but low share price

• Most recent results
• Sales up 20
• Profit up 18
• Shares almost at 12 month low 30 down
• June 07. Employee rights violation case brought
  by US Gov.
• May 07 Forced to back down after Oxfam gets
  involved in price tussle with Ethiopian coffee
  growers

Loosing its ethical reputation?
10
Hard Won But Easily Lost
11
Reputation recovery
Activity level
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CIA Reputation Programme 2002-05

• Concerted effort to get members engaged with
• Media, schools, communities, politicians,
  employees
• Positive response
• Local good news stories up 40 to over 1000
• Sites hosting visits by politicians up from ¼ to
  just under half
• Sites having primary school visits up from 1/3 to
  almost ½
• Good progress but more to do
• Measurable effect on local reputation

13
CIA Member community engagement
14
CIA Member engagement with schools
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Favourability to the Chemical Industry General
Public - Trends
Change 2004-2006 Favourable 3 Unfavourable 2 N
ET FAV 1
Favourable
Favourable 26
21 Unfavourable
Unfavourable
Base All general public (2,000-4,000)
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Key Groups - Demographics
Change 04-06
Net Favourability
All adults
1
Sex
Men
2
Women
1
Age
15-18
17
7
15-24
-4
25-34
0
35-44
1
45-54
1
55-64
3
65
Class
AB
1
ABC1
0
C2DE
3
Base All General Public 2006
17
Industry Favourability
Change 04-06
Q How favourable or unfavourable are you towards.
. .
Fav
Unfav
-
-
Retail
11
6
Food
-8
Pharmaceuticals
5
-2
Telecoms electronics
4
Car Manufacturing
-9
6
Defence and aerospace
-19
11
-
-
Media
Nuclear Power
3
-1
-5
7
Petrol Oil
3
2
Chemical
Base All general public 2006
18
Key Groups - Regions
Change 02-04
Net Favourability
Government office region
Wales
18
North East
2
Scotland
11
Eastern
0
East Midlands
2
Yorkshire/Humberside
2
South East
2
London
7
South West
-7
North West
-1
West Midlands
-9
Merseyside
-9
Base All General Public 2006
19
Key Groups
Net Favourability
Change 04-06
Family/friends workin industry
1
Live near chemicalfactory
3
Socio-political activists
2
Women with childrenin household
4
Household with childrenaged 5-10
1
Base All General Public 2006
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The Communications Opportunity
It would be nice to hear what they are doing for
the environment Frodsham
What were breathing in and what the effect is on
us Redcar
If that Bin Laden set up a bomb down there the
whole caboodle would go up Frodsham
I would like to see them put something back into
the town West Runcorn
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Key Findings - 1

• The industry's reputation continues to
  strengthen, though relatively slowly
• Young peoples views have improved, but there
  remains a problem with the views of women
• Neighbours and those with working links are the
  most positive supporters
• Attitudes show improvement in recognition of many
  positives of the industry and further fall in
  demand for more regulation. But a majority still
  call for this and the industry is, on balance,
  distrusted
• Disappointing weakening in belief that the
  industry is working harder to control pollution

22
Key Findings - 2

• However, public feels more strongly than ever
  that the positives of the industry outweigh the
  negatives
• Some continued awareness of NGO campaigns but no
  evidence they are having any widespread effects.
  REACH has made no impression
• No change in the proportion who have ever
  boycotted a chemical product because of personal
  risks, or in the nature of the products involved

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Implications

• Compared to some industries, the chemical
  industrys reputation is showing stability and
  slow, steady strengthening
• It seems increasingly likely that the public is
  viewing the industry more and more as a
  necessary evil
• Biggest problems remain in vulnerability to
  events and media stories, and the failure to
  engage and win over the female half of the
  population

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Blasts rock Billingham chemical plant
1 June 2006, post survey
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The changing face of profit
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How MPs judge a companyMori 2006
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Where next the national agenda

• Continued and improve local activity vital
• But reputation worst where there is no industry
• Need
• Good news stories
• Focus on key groups
• High profile speakers
• Working together
• Well constructed messages

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Why Women?
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Enhancing our Reputation

• Shifting focus of concern from plant/process to
  product to both!
• Butkey opportunity to fill campaign vaccuum
  after politics of REACH
• Standing up for Science!
• CIA commitment to new, focused and proactive
  approach
• Core, clear and simple messages matched to
  prioritised audiences
• Commitment and alignment of all membership, not
  just CIA executive

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What can we do?
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Get the message right
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Need More Good News
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Good new stories from 2007 CIA Awards

• Flat roof energy losses cut by a fifth Dow
• ALL operators achieve NVQ level 2 Warwick
• Record safety achievement goes hand in hand with
  50 million investment GSK
• Natural Step endorse PVC producer Hydro
• Energy saving equivalent to 500 homes achieved
  AstraZeneca
• Employee involvement cuts maintenance budget by
  26 - Syngenta
• Products that help environment earn J-M CIA
  company of the year

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Summary

• Signs that reputation is slowly improving
• Especially around chemical sites
• Will take time to change the national picture
  significantly
• Focus on key groups
• Promote the good work we do
• Energy saving, health products, mobile phones,
  sports equipment, safe drinking water etc.
• Work together
• Be prepared to engage
• Ensure we comply with regulation and no
  incidents.

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The chemical industry meeting needs and
expectations