Davos: The World Economic Forum: Gathering Gives Chance to Burnish Images --- Coke, BP to Show Off Green Side, While More Russia

Posted January 24, 2007 in [Corporations]

Marc Champion and Betsy McKay, The Wall Street Journal, Davos, Switzerland -- The World Economic Forum's annual Davos gathering is billed as an intimate brainstorming session for business and political leaders. These days, it serves another purpose: polishing corporate and national images.

Nearly twice as many big Russian companies are coming to this Swiss ski resort this year as in 2005 or 2006, including for the first time top executives from natural-gas giant OAO Gazprom. Russian energy companies -- and Russia as a whole -- have suffered in the West, largely because of tough pricing tactics that twice shut off natural-gas and oil pipelines to Western Europe.

Meanwhile, Coca-Cola Co., blamed by critics for child obesity and draining water from poor communities, among other things, plans to showcase its efforts to improve corporate social responsibility and diversify its product portfolio. And BP PLC Chief Executive Officer John Browne, a co-chairman of the event, is expected to play a leading role in discussions on climate change -- a primary focus this year -- including a panel called "Climate Change: A Call to Action." The oil company has been harmed by an explosion at a Texas plant, a propane-trading scandal and an oil-pipeline spill in Alaska. A spokesman for BP declined to comment on Lord Browne's plans.

Veterans of the 35-year-old schmoozefest say the event has become as much about marketing and networking as exchanging ideas. With 2,400 participants and 500 media people attending -- including 24 heads of state and 800 corporate chieftains -- the intimacy of earlier years is gone.

But there are other benefits. "You get people trapped for three or four days in a Swiss mountain resort when weather is cold and most of the people are middle-aged or elderly and don't ski. . . . It's a great platform," says Martin Sorrell, CEO of marketing firm WPP Group PLC. With global CEOs, political leaders, nongovernment organizations and major media all there, "you have all the stakeholders you want to influence," he adds.

The five-star Steigenberger Hotel is renting out about 25 temporary offices to companies that want a staff at the forum, up from one or two 10 years ago. "If we had the space, we'd have customers for 100 or more offices. There's a lot of demand," says Ernst Wyrtsch, general manager at the hotel.

Russian companies attribute their big turnout this year to their increasing wealth and interest in expanding globally. Gazprom specifically is concerned about plans being floated by the European Commission to block producers of energy from also retailing it, a move that would complicate Gazprom's plans to sell its natural gas directly to European Union customers.

"We are very sensitive to the process of liberalization in the EU energy market," says a Gazprom spokesman. "We want to be part of that dialogue." The spokesman also confirms that Gazprom is negotiating a major public-relations contract with a consortium of PR firms. "We want to change the perception of Gazprom in the Western press, which is a bit negative," he says.

Oleg Deripaska, a Russian tycoon, was barred from Davos in 2001 after a racketeering suit was filed against him in the U.S. But the suit was dismissed on jurisdictional grounds in 2004, and this year he is back. Mr. Deripaska is waiting for regulatory approval of a merger that would make his company, OAO Rusal, one of the largest aluminum producers in the world.

"We're one of the world's biggest aluminum producers -- we have to be there," says Georgy Oganov, spokesman for Mr. Deripaska. "It's to get our message across and to get the feel of our industrial partners [in mining and metals] and of where business in general is heading."

In panels and at other events, Coca-Cola plans to highlight projects to improve community water supplies and reduce emissions of global-warming refrigerants; a new policy to ensure workers' rights, particularly in areas of conflict where it does business; and portfolio diversification to offer healthy drinks along with soda.

Coke's aim in Davos is to bring its efforts to a wide audience, rather than to try to outflank critics, says Tom Mattia, the company's senior vice president in charge of world-wide public affairs and communication. "For us, it really is a platform to get our voice heard, far more than it is about trying to respond to something," he says.

Davos also offers Coke the chance for its chairman and chief executive, E. Neville Isdell, along with its president and chief operating officer, Muhtar Kent, "to be viewed as executive statesmen," Mr. Mattia says. Mr. Isdell, who has regularly made the annual trek to Davos, is also a co-chairman of this year's annual meeting.

In a panel on environmental issues, Mr. Isdell will describe a new "water stewardship" strategy to improve water supplies and sanitation in poor communities in Africa and elsewhere, as well as to ensure responsible use of water at its own bottling plants. The company, which also plans to highlight some of its water work at a reception it is hosting, has invested $17 million thus far in 64 projects in 43 countries to tap wells for poor communities, clean contaminated water and other efforts.

At a breakfast meeting and then a reception it is hosting tomorrow evening, Coke also plans to unveil new "eKOfreshment" beverage coolers it has developed as part of an initiative with Greenpeace and Unilever PLC to reduce emissions of global-warming gases. The new coolers have climate-friendlier refrigerants and use as much as 35% less energy by adjusting to surrounding temperature, Coke says.

National governments also have treated Davos as an opportunity to counter unwanted perceptions.

India last year launched a massive campaign aimed at moving the country's growth story out of China's shadow. The campaign started with posters in the Zurich airport where most participants arrived. Buses in the ski resort also carried the slogan: "India -- Fastest Growing Free Market Democracy."

In 2003, leaders of Turkey's AK party, which had just won elections, also put on a big display. They wanted to counter fears in the West about the party's Islamic roots. The same year, and again in 2004, there was a big turnout of U.S. legislators and cabinet-level officials at a time when the reputation of the U.S. was in decline because of its decision to invade Iraq. This year, the U.S. government will have a handful of high-level representatives, but not as many as in 2004.

"Fundamentally, one has to recognize that when you have top leaders together as we do, it will also be a platform for such things," says Andre Schneider, chief operating officer of the World Economic Forum.

It is hard to measure the success of a Davos campaign. After 2003, Turkey's governing party became a darling of investors and made the changes needed to secure membership talks with the EU. How much Davos contributed, as opposed to actions the Turkish government took later, is unclear.

The Confederation of Indian Industry says on its Web site that its campaign in Davos last year was a success, although that is measurable mainly by media coverage. The global popularity of the U.S. hasn't recovered since the invasion of Iraq, according to annual multinational surveys.