Sunday, May 29, 2011

The Third Israel Sustainabilty Transparency Index 2011

You cannot have sustainability without transparency. It's like chunky and monkey. Or lap and top. Or CSR and HR. Or air and conditioner. Or foot and print. Transparency is both a window to a company's sustainability performance and impacts and also a driver of those performance and impacts. Companies who believe they can "do the right thing" and not tell anyone about it are in a Middle Ages mindset and will not be able to compete effectively over time in the current business climate. Transparency brings tremendous opportunities to engage with stakeholders in dialog which can support the identification of new business opportunities and mitigate risk. Am I preaching ? Perhaps. But in my home market, Israel, this is apparently what is needed, because for the third year in a row, Israeli companies FAIL at transparency. My company, Beyond Business, established the Israeli Transparency Index three years ago, with the objective of monitoring the level of transparency of the top 100 publicly traded companies on the Tel Aviv Stock Exchange. Back then, in 2009, the average transparency level of these top 100 companies, with a collective market capitalization of over $150 billion, was 31%. A year later, it was 33%. And now, in 2011, it is 35%. That's pretty dismal for a supposedly advanced market such as ours. Download the full report here.

There are some leading lights. The top three companies who have raised the Index for the past three years are:

Bank Hapoalim (with a hat trick of first place, achieving 99% transparency in 2011)
Bank Leumi (achieving 95% transparency in 2011)
Strauss Group (achieving 88% transparency in 2011)

The Top Ten are shown below.

Only these 10 companies (10%) achieve transparency levels of over 50%, and eight companies (8%) have no transparency AT ALL, as they have no website and produce no sustainability reports.

By design, our Transparency Index rewards the presence of a Sustainability Report which we believe to be one of the leading tools for establishing both transparency processes in the business and required transparency to external stakeholders. Of the full 200 points available for Transparency in the Index analysis methodology, a high transparency report such as one meeting the Global Reporting Initiative Application level A earns 100 points, whereas an Application level B report earns 80 points. Lower transparency reports, whether written according to the GRI framework or otherwise, earn lower points according to the level of transparency of their content. Therefore, it is no surprise that higher scores for transparency are significantly influenced by the presence of a Sustainability Report on the Company website, or similar transparent communication such as a Communication on Progress to the United Nations Global Compact, or an extensive CSR disclosure in an Annual Report. This is because we believe that reporting adds a rigor to transparency that is not present in general website disclosures. Consequently, Companies who lead in the Transparency Index are generally those who published Sustainability or Corporate Responsibility reports.

In the 2011 Index, a total of 14 companies reported in one form or another, up from 12 in 2010 and 5 in 2009. 2011 figures include three companies which achieved full points for a Sustainability Report at GRI level A, four Companies which received partial points for a Sustainability Report at GRI level B, and 7 Companies which received partial points for lower level transparency reports.

The Index methodology scores 4 dimensions: reporting, content, navigation and accessibility. The methodology requires no interpretation or personal judgment and the full scoring for each of the 22 data points is fully transparent (would you expect any less of a transparency index?). We devised this methodology in this way specifically to avoid issues of objectivity. If it's there, you get points. If not, you don't.   

It was encouraging this year, after we had announced that we would be analyzing websites during the month of March 2011, that several companies called us up to ask what they need to do to improve their transparency levels. Slowly but surely, we may be seeing transparency moving into corporate awareness as another dimension of competitive market conditions in the new sustainable era.
As we do each year, we awarded the Top Ten Transparent companies with a certificate at our annual Sustainability Reporting Conference.

In the meantime, here's hoping that the Israel Transparency Results for 2012 will show some improvement. Does no harm to be optimistic, right?

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

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