Monday, July 4, 2011

Deutsche Post, Adidas and Gazprom. Three reviews.

Three companies, three sectors, three sustainability reports, three sustainability report reviews. Every couple of months I publish a report review on Ethical Corporation. Here are the last three:

Deutsche Post DHL CR Report 2010
Here are selected paragraphs from my review of this report (you can find the rest here, online, on Ethical Corporation's website):  

Deutsche Post DHL’s 2010 online corporate responsibility report is designed like a complex logistics network navigated via a sleek online route map. It starts with a home page overview showing possible routes to a mass of information in a cleverly planned navigation hierarchy. You can start at the beginning or go directly to what interests you. Amply signposted, your journey is supported with infinite hyperlinks, in-section menus and an online mouse-over glossary for those bits of Deutsche Post DHL jargon that you might not be entirely familiar with. The complete content of this report is downloadable in a 246-page PDF or an at-a-glance overview of 21 pages. Report assurance is indicated online on each assured page. Accessibility and seamless navigability are best-practice features of this presentation, complete with an online feedback questionnaire and a promise that Deutsche Post DHL will make a €5 donation to Plant-for-the-Planet for each of the first 200 fully completed questionnaires received.

Deutsche Post DHL has 467,000 employees and operates in 220 countries. By far the most interesting aspect of its business is how the company could use its massive infrastructure and influence to transform the transportation landscape across borders and influence customers to adopt resource-efficient practices through new business models and collaborative initiatives.

Go Help is Deutsche Post DHL’s programme to address disaster relief, the new de rigueur corporate responsibility platform for logistics and technology companies, given the frequency of major natural tragedies that are occurring around the globe. Deutsche Post DHL has established disaster response teams, which have been deployed in many countries, providing local assistance in ensuring relief supplies get through. DHL has even developed an innovative form of waterproof packaging – “DHL Speedballs” – which can hold up to 25 kilograms, withstand airdrops better and stay afloat longer than other containers. They have been used in several relief efforts.

Overall, however, it is not easy to get to what really counts in this GRI B+ level report. There is no distillation of core issues raised by stakeholders about different aspects of Deutsche Post DHL’s business and no materiality prioritisation. The three pillars of the company’s strategy are surely worthwhile, but the lack of analysis of stakeholder expectations on a broader range of Deutsche Post DHL impacts and performance is an omission. Apparently materiality is the road less travelled on the Deutsche Post DHLhighway to CR transparency in an otherwise impressive report.

Here are selected paragraphs from my review of this report (you can find the rest here, online, on Ethical Corporation's website):

The title of Adidas Group’s 11th sustainability report is: In the Real World, Performance Counts. And an intensive 116 pages of performance it is. Light on design creativity but heavy on content, the Adidas report is an example of attention to detail and thoughtful preparation. Complete with analogies from the world of sport, giving the air of a disciplined approach to sustainability, this is probably the group’s best report yet.

In the world of sustainability, performance is only part of the story. What counts are impacts. Adidas rarely ventures into the world of reporting impacts that describe what has happened as a result of their performance in terms of consumer impact, supplier training and even community engagement. This report stays very much at the level of the home game with the spotlight on what’s taking place on the Adidas field, but far less on the way Adidas is driving substantive and systemic change for stakeholders.

While it’s nice to see how many warning letters outsourced suppliers have received for not complying with ethical standards, some perspective of how Adidas has managed to change the game in over 10 years of focused working with suppliers would be welcome. In addition to data, the overall KPI score aggregating audit results in Adidas’s outsourced factories’ is lower than it was in 2007. The percentage of 3C (60% KPI score) or higher scoring suppliers is lower than it has been for the past two years and the number of warning letters issued to suppliers is higher.

An ethical supply chain is one of the most material issues and Adidas discloses how the group has responded to issues raised by stakeholders, including freedom of association issues in Cambodia, workers’ rights in Bangladesh and labour standards in El Salvador. But just how Adidas justifies the massive level of resource to support a sub-compliant supply chain is something that can be explored more fully in future reports. Performance is not only conducting audits. Monitoring is not the end result. Of greater interest is the effectiveness of such training, auditing and warning-letter activity and discussion of the outcomes of such changes.

Adidas is improving sustainability performance and does a serious job with this report. However, while the group is making progress, a step change in strategy and disclosure could reasonably be expected in future reports to achieve the standard required, in Adidas’s terms, for completing a marathon rather than running a sprint.

Here are selected paragraphs from my review of this report (you can find the rest here, online, on Ethical Corporation's website):

Gazprom’s first sustainability report portrays a rather different story to the one told in Roman Kupchinsky’s 2009 paper: Gazprom’s European Web. This alleges secrecy around Gazprom’s potential control of the European energy landscape via nameplate gas companies throughout Europe as well as links to organised crime and political corruption. Clearly these are not activities Gazprom would relish disclosing in a sustainability report. The question is whether Gazprom is a puppet of the Russian political machine – the Russian government still holds a 50.002% controlling stake in the company and is represented by six members on the 11-strong board. Or, has Gazprom been able to transition into a western-style market competitor that plays by the rules of a sustainable market environment?

The world’s largest natural gas producer, Gazprom has been issuing environmental reports since 2002, nine years after its break from full government ownership to become an open joint stock company in Russia. This now is the company’s first full sustainability report, covering years 2008 and 2009. Gazprom’s main activities are the geological exploration, production, transportation, storage, processing and marketing of gas. It is a giant in the Russian economy, employing nearly 400,000 people, holding 18% of global gas reserves, operating 600,000km of pipeline and supplying nearly 70% of Russian consumers and export markets with more than 400m cubic metres of gas.

The implications of Gazprom’s transformation are not trivial by any means. Establishing a global position in a competitive capitalist market and contributing to local socio-economic stability while distancing its reputation from former Kremlin political dictates will have demanded more than the average level of leadership skills. Gazprom’s report is an impressive 104 pages with no frills and no special effects, just plain, direct disclosures. It’s a rather dry read – hardly any stories, case studies or warming community photos – but it is detailed and meticulous. An example of this attention to detail is the chronicle of a safety incident. At 10.23am on July 24 2008 in Moscow, an explosion followed by a gas blaze took place at the Petrovsk to Novopskov gas trunkline. By 11.05am the following day, Gazprom teams completed repairs and resumed gas supplies to consumers. Forty-four metres of pipe were replaced during the repairs.

The report contains a comprehensive assurance statement written by the council for non-financial reporting of the Russian Union of Industrialists and Entrepreneurs. RUIE has done as good a job as any with a four-page assurance statement including recommendations for future reporting. However, a more neutral voice on assurance might have offered greater credibility. RUIE is the mouthpiece of Russian industry associations and might be expected to provide positive assurance for the member companies it represents. Overall, Gazprom presents a comprehensive, transparent picture of its operations and offers a credible picture as a global competitor in (sustainable) energy markets. Assuming of course that there is nothing hidden between the lines.

Three companies, three sectors, three sustainability reports, three sustainability report reviews.

Ice cream, anyone ?

elaine cohen, CSR consultant, Sustainability 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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