The complicated, interconnected blogosphere

Imagine knowing exactly what your friends think of you and say about you to others, and seeing who in your social network has the most influence over the opinions that frame these conversations. Thanks to the emergence of Web 2.0, which gives people and communities internet addresses with all the functionality to allow to them to interact as a community, and the chatter on websites and blogs, people are communicating and posting opinions in the virtual world like never before. Sites like Facebook and Friendster are altering social networks and fabrics.The same is true within the corporate realm, where issues such as reputation, competition and stock price dominate the concerns of CEOs. Indeed, much online discussion is occurring about companies and their performance. This is particularly true as it relates to corporate social responsibility (CSR) and sustainability.

Social status is important to most people, and we often define ourselves through the mirror of others’ opinions. The same is true of companies, and in the case of a publicly traded corporation, the direction of stock prices is increasingly determined by investors’ feelings about the company behind it. No matter what the financial fundamentals say about a company, investor perception of risk and reward have a big impact on returns. This fact is increasingly being backed up by evidence from the academic and consulting communities, and explains why so many companies are trying hard to position themselves are responsible.

So how to evaluate the collective opinions of stakeholders about companies? It is easier to quantify and analyze what a company is telling you, and what the government may measure in terms of emissions into air and water, than to judge the collective social opinion of corporate behaviour and reputation.

Traditionally we have relied on mass media, corporate sustainability reports and a limited number of SRI rating firms to shape a company’s corporate social responsibility (CSR) profile. But the rise of Web 2.0 and the increased connectivity and social networking it offers is changing the nature of corporate risk analysis, and in turn the ways in which opinions on company behaviour, both good and bad, are shared and influence markets.

The inherently communitarian aspect to the Web 2.0 is blurring the line between stakeholders and shareholders like never before.

Stuart Lister, a stakeholder engagement specialist with the environmental consulting firm Gartner Lee, says, “To meaningfully engage stakeholders you of course need to first understand who they are and what they're saying.”