Geopolitical Risk Takes Centre Stage as 58% of Global Executives Say Home Country is a Critical Stakeholder
17th November 2021, 5:03 pm
93% of Executives in Germany, Sweden and the UK Believe it is Important for Multinational Companies to Make Decisions that Consider the Company’s Home Country Interests
72% of Executives Surveyed in Europe Say Their Company is More Reactive than Proactive When it Comes to Geopolitical Risk
November 17th 2021 – Nearly six in 10 multinational business executives (58%) say their company’s home country is a “very” important stakeholder to their business, second only to customers (63%) and equivalent to shareholders, according to Home Country as Stakeholder: The Rising Geopolitical Risk for Business Leaders, a first of its kind study from the Geopolitical Strategy & Risk Group at leading global communications firm Weber Shandwick. Among European executives surveyed, 50% rate their company’s home country a top two “very” important stakeholder, on par with shareholders (50%) and customers (55%).
The global survey conducted by Weber Shandwick, in partnership with KRC Research, asked 1,217 senior executives in 12 countries, including Germany, Sweden and the UK, about their perceptions of the relationship between a multinational company and its home country, defined as where a company is headquartered, along with the reputational risks and opportunities.
Among executives surveyed in Europe, the study reveals that nearly all (93%) believe it is important – 50% say “very” important – for multinational companies to make business decisions that consider the company’s home country interests. In each of the European markets surveyed, home country rates as a top three “very” important stakeholder for business, including second in Germany and third in both Sweden and the UK.
“Home country is no longer an unspoken stakeholder,” said Michelle Giuda, Executive Vice President of Geopolitical Strategy & Risk at Weber Shandwick. “As corporate leaders reset their strategies for a new geopolitical and post-COVID era, they are considering how they deliver and communicate value to their home country stakeholder. Executives are saying corporate responsibility includes national responsibility, and leaders must plan accordingly.”
What Comes First – Bottom Line or National Interest?
The survey uncovers a striking business challenge. Eight in 10 executives across Europe (81%) agree that, regardless of national interests, a company has a responsibility to do what is in its own best interest to succeed. Yet, many executives also agree (78%) that in some instances, national security or national economic interests should be prioritised over the company’s bottom line.
Despite rating their company’s home country a top three “very” important stakeholder, Swedish, German and UK executives, respectively, are most likely among all markets surveyed to index toward placing company interests first while Chinese and Indian executives are most likely to index toward prioritising country interests first.
“Business leaders have been speaking up on domestic issues with increased fervour,” said Gail Heimann, CEO of Weber Shandwick. “Now the rising importance of home country and competing national priorities and values is compelling leaders to prepare to raise their voices on international issues and challenging them to choose when to put the company or country first. Our study underscores how central this tension is to our clients’ strategies.”
Executives Prepare to take a More Public Position on Geopolitical Issues Despite Concern over Risks, Lack of Preparedness
The vast majority of European executives (80%) agree their companies should be prepared to take a more public position on geopolitical issues over the next five years.
Preparation is imperative since nearly four in 10 (38%) of European executives also report that they expect their vulnerability to geopolitical risks to grow, and many are not prepared: 72% say their company is more reactive than proactive when it comes to geopolitical risk, and 61% say their company’s Board of Directors and senior leaders are not well prepared for geopolitical risk.
“We are increasingly seeing the challenges that companies are facing when it comes to geopolitical risk, yet the large majority of European executives surveyed report not being prepared to protect their companies from these emerging issues,” said Greg Prager, Chair of Weber Shandwick’s EMEA Corporate Practice. “As Europe orients toward a new future, we are focused on helping our clients build the agility, readiness and resilience necessary to protect their reputation, and deliver on their organisation’s value – and values – wherever they operate.”
The list of issues on which executives could potentially be required to speak out is long and complex. Among several geopolitical issues of concern facing multinational companies, European executives surveyed are most likely to say they are “very” concerned about cyber-attacks (50%), pandemic/public health crises (45%) and data privacy (44%) while (38%) say their company is “very” concerned regarding disinformation about their company.
Principles for Building Reputation Resilience Amid the Rise of the Home Country Stakeholder
Weber Shandwick’s Geopolitical Strategy & Risk Group recommends the following guidelines to build reputation resilience amid the rise of the home country stakeholder:
- Know what your national stakeholders expect. Gather the right intelligence to understand how constituencies within your company’s home country expect your industry, company and its leaders to advance or protect the national interest. Incorporate relevant questions into existing surveys or implement new, ongoing polling for comprehensive insights that inform both global and local messaging.
- Anticipate if, how and when you will take a public position on geopolitical issues. Leverage data analytics as well as subject matter expertise for line of sight into emerging geopolitical issues and narratives across the markets and information space in which you operate. Create a framework to assess the issues on which you have a mandate to speak out publicly and plan for when and how it is appropriate to do so.
- Assess your company versus home country priorities and business risks. Establish a cross-region, whole enterprise taskforce with internal and external advisors as a governance mechanism to regularly anticipate the issues that create tension between company and home country priorities. This includes examining the company’s exposure in key markets as geopolitical issues arise, and the potential business cost of speaking out or taking action.
- Anchor your actions and message in your values. Forty-three per cent of executives in Europe “strongly” agree that their company’s core values align with their home country’s national values. Proactively demonstrate how these shared or complementary values guide company decision-making and public positions on critical geopolitical issues to best advance or defend your position.
- Communicate your national – and international – impact. Showcase ways in which your company is advancing the interests of its home country, in addition to its own financial interests and the company’s value-add in all markets of operation. Be mindful of how this impacts the perception of your company across its global and local footprint. Communications should highlight shared interests and values where possible, while recognising and managing differences, disagreements and potential conflicts. Diplomacy is required.
- Be mindful of your employees. Employee retention and talent recruitment can be at risk as geopolitical tensions arise. Seven in 10 European executives (72%) agree that increasing tensions between countries could negatively impact the commitment of employees outside of the company’s home country. Work closely with your C-suite officers and local HR heads to consider concerns of non-home country employees.
For more information and to review the full Home Country as Stakeholder report, click here: https://webershandwick.co.uk/announcements/new-research-finds-home-country-is-a-top-three-business-stakeholder/
 Survey conducted in Brazil, Canada, China, Germany, India, Japan, Mexico, Singapore, South Korea, Sweden, United Kingdom and United States
Latest on current issues from ICAEW’s hubs including a range of the latest information, guidance and webinars relating to these issues.