Reputation governance

In an ever-more competitive macroeconomic environment, the new behaviour of stakeholders dictates the evolution of the dynamics of how businesses must relate to them. We have transformed from a consumer economy to a reputation-based economy, where stakeholders’ expectations go beyond the quality of the product and financial performance.

The performance of the Company is measured in terms of produced and shared value, ethics and transparency, and care for sustainable environmental and social management. It suffices to note that 5 points of improvement in the perceived environmental, social and governance performance of a firm corresponds to a 9% increase in consumer support – according to the result of the Reputation Institute’s 2013 Global CSR RepTrak® 100 Study, a survey of more than 55,000 consumers in 15 countries.

This is why environmental, social and governance issues, in the Italian example according the Reputation Institute, the wish to trust determines the desire of 42% of people to admire and support a business.

In this sort of context, traditional communication no longer has the expected effectiveness. What the stakeholders say about the Company is more important that what the Company says about itself.

This new way of critically evaluating the performance of a Company influences the purchasing process, its stock performance, its appeal to new talent and the acceptance of industrial sites in local communities, just to mention a few. High reputation and good performance are (and will increasingly be) inextricably interrelated. Pirelli, aware that its own success as a company will also depend not only on its own work, but also on the support that the Company will receive from stakeholders, has been able to intercept these dynamics and equip itself for this new phase, among the first multinational companies to set up its own organisation dedicated specifically to reputation governance.

Pirelli has established and is introducing specific procedures to improve its own reputation, using a precise measurement system and working on alignment of the intangible activities with the strategic drivers set out in the Industrial Plan, with the drivers that have the greatest impact on its reputation and considering the diversity between geographical areas and markets.

The Company is also working on the construction of a system for protection and mitigation of reputational risks, as mentioned in the previous section.