The Swiss Economy Reputation Index (SERX) calculated by commsLAB - tracking the reputation of 140 private sector companies and government-related organisations in 18 sectors – stabilised in the first quarter of 2019 after five negative quarters in a row.
A more systematic consideration of the media-mediated reputation in the investment strategy should pay off for pension funds also in times of media change, as a recent study by commsLAB and fög (University of Zurich) shows. Pension funds would therefore do well to continue to communicate via traditional channels and to take these into account in strategic decision-making.
The Swiss Economy Reputation Index (SERX), which is made up of 138 private sector companies and state-related businesses, shows on a consolidated basis how the public perception of the Swiss economy and its key sectors has developed over time.
Due to the sedimented accounting method (Sedimented Reputation Index®) and the broad valuation basis determined on a daily basis (an average of around 20,000 reputation-relevant public contributions are calculated per day on a sedimented basis), SERX is a valid indicator of the public acceptance of the Swiss economy and its central sectors.
Locational responsibility as a value-adding factor
A study by commsLAB AG and the Research Institute for the Public Sphere and Society (fög) of the University of Zurich shows that it pays off for companies to assume locational responsibility, especially in times of crisis. The study was based on media-mediated reputation data as well as economic indicators for around 130 companies in the Swiss economy. Suva is the publisher of the study.
The study deals with the perception of the Swiss economy conveyed by the media and the changed social expectations of corporate responsibility since the financial market crisis of 2007/2008. On the occasion of the «100-year anniversary», Suva supported this survey on the Swiss economy and its key sectors and companies.
Prior to the onset of the financial market crisis, the financial success of companies was the main driver of reputation. However, as the crisis progressed, locational responsibility became the focus of public attention. Activities are then rated by the public as locational responsible and valuable for society as a whole if the company uses its efficiency and competence primarily for the benefit of those locations at which it specifically operates. Measures to strengthen locational responsibility are therefore an investment in an uncertain future. They have the function of an actual crisis insurance and are indispensable for the management of long-term reputational risks in particular.
Assumption of locational responsibility pays off in several ways
The study concludes that assuming locational responsibility for individual companies and sectors pays off significantly at both the intangible (reputation effects) and tangible (economic effects) levels. Thus, companies that are perceived by the public as being locationally responsible have more power of definition and are therefore more likely to shape their positioning by bringing in their own messages. Finally, it can be shown that an investment focus on companies that are regarded as locationally responsible also pays off economically. Historical simulations for the time period from 2005 to June 2018 show that those companies that are considered to have above-average locational responsibility generate a markedly higher increase in value on the stock market.
Suva as publisher of the study
With its business model, which has always been designed to combine social and economic activities, Suva acts as a player with locational responsibility. Felix Weber, member of Suva's management board, confirms this: «Suva's commitment to human security over the past 100 years has not only made an important contribution to social peace, but has also contributed to Switzerland's economic prosperity. We are ready to fulfil these tasks in the next 100 years as well».
The idea of issues management was originally developed for the business and industrial sector. One important way to minimize an organization’s risk of becoming embroiled in scandal is to recognize that an organization’s scope of action is shaped by overarching, long-term trends and expectations from its public environment, and neglecting these can result in serious loss of reputation. If, however, an organization manages to identify public demands in time and is able to actively influence them, the organization will be able to direct its strategies towards these and to realize opportunities to build positive reputation. The task of issues management is, consequently, to systematically observe the public environment, to filter relevant issues, and to react to these through specific measures in line with the objectives of the organization. The objective is to prevent certain issues of public debate resulting in a loss of reputation and / or limitations to an organization’s scope of action. On the other hand, positive connotations of issues of public debate should be enhanced and employed, that is to say opportunities to increase reputation and different options for action should be seized.
The Swiss banking secrecy has significantly dropped in acceptance both in the national and international public awareness. This not only burdened the reputation of Switzerland's financial center, but also limited its competitiveness.
Long-Term Reputation Effects in the Global Financial Industry
The article covers the following items:
The Sedimented Reputation Index (SRI)—a novel measuring procedure for analyzing long-term reputation dynamics.
The long-term reputation trends of globally active major banks between 2002 and 2011.
The basis of the study is the reputation-relevant reporting by 24 media from the Swiss, German, UK, US, and Asia-Pacific arenas. Some 200,000 media articles were evaluated.
The SRI shows a highly significant correlation between the long-term reputation trends of the analyzed banks and a stock index of comparable composition.
Moreover, the SRI shows that socio-ethical assessments of the banking industry gained quickly in importance after 2009 and led to a massive recasting of social reputation after 2010. Concurrently, economic assessment criteria became less significant.
From social to macroeconomic responsibility. How the financial crisis has changed reputation dynamics
The financial crisis of 2008 and the follow-up crises have fundamentally changed the dynamics of reputation. The Memorizing Resonance Reputation Index (MRRI), developed by commsLab in collaboration with the University of Zurich Center for Research on the Public Sphere and Society to assess long-term reputation change, shows two major developments. On the one hand, the crises have opened a reputation gap between real and financial economy. On the other, they gave a massive boost to the concept of «economic responsibility».