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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Dole: How we know the Earth to be banana-shaped

C. HUYGENS - Monday, January 28, 2013
The tall tales of Sir Bedemir make for great rolls of laughter; not so for the one Dole told about the plantation. This is how Bloomberg reported the story (Jan 25 ) :

Dole Food Co. (DOLE) settled a lawsuit claiming the world’s biggest producer of fresh fruit and vegetables misled consumers about the environmental practices on a contractor’s banana plantation in Guatemala. Lawyers for the plaintiff, a California resident who said he wouldn’t have bought Dole’s bananas had he known the truth about the conditions at the plantation, filed a request to dismiss the case today in federal court in Los Angeles.

Yes, the news clip had Huygens scratching his head, too. Have things sunk so low that either (a) Dole is confabulating or (b) it is willing to settle for wrongful potassium enrichment? A quick look at Steel City Re's Reputational Value Metrics for Dole tell a story full of woe.

The company's reputational vital signs (top row, left) reflect uncertainty and change in this $930 million member of the Agricultural Commodities/Milling group comprising some 60 peers. A great brand by most measures, the company's CRR, a measure of reputational ranking, is only in the 25th percentile. Its RVM's, a non-financial measure of reputational value, shows a recent spike in volatility after a huge surge and retreat in the company's return on equity. These are both the metrics and behaviors of a company preparing itself for sale and seeking to clear the decks of any external sources of value-sapping risk.

One interpretation of the data is that investors have great hopes; other stakeholders less so as the indicators suggest high probability of change in reputational ranking (CRR) and the direction is slightly negative. [CORRECTION 29 Jan 17h05 EST: The Vital Signs stability indicator is at the 97th percentile suggesting LITTLE expectation of change.] Another interpretation is that Dole is placing great value on its claims of sustainability and seeks to differentiate its commodity products through superior processes. On that theory, settling the lawsuit was the first step in reputation restoration and perhaps a strategy of reputation enhancement.

The Reputational Value Metrics can only report what stakeholders are doing to create or erode value. Right now, the stronger interpretation is that they are eroding value. Nevertheless, current RVM volatility spikes (top row, right) are often associated with surprising news. Let's hope this lawsuit settlement was not all there is.




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