Friday, August 17, 2012

Nine Magic Tricks in Sustainability Reporting

In many cases, the publication of a Sustainability Report can be likened to a magic performance. I was taking a look at the website  of Max Maven, an internationally renowned magician. He is currently featuring on a TV show in which amateur magicians present their tricks in an attempt to fool the Master Magician, Max Maven. Max then has to pronounce his verdict: either the trick fooled him or it did not, because he recognized the magic technique behind the trick. Imagine what Max Maven would say about Sustainability Reporting. Would he be fooled, or would he be able to see right through the tricks used in Sustainability Reports? Or would he take Sustainability Reports at face value, believing them to be accurate representations of corporate performance and impact?

Techniques used in magic are varied and incredibly creative. The Wikipedia Magic page lists several types of magic. All the magic types and descriptions below are reproduced from that page.

Production: The magician produces something from nothing—a rabbit from an empty hat, a fan of cards from thin air, a shower of coins from an empty bucket, a dove from a pan, or the magician him or herself, appearing in a puff of smoke on an empty stage—all of these effects are productions.

In Sustainability Reporting terms, the production is the report itself. Some companies produce reports as though they are the subject of a magic trick, appearing in a puff of PR in an email alert somewhere. In other words, companies which have not pursued a sustainability program, and have no sustainability performance results of note to disclose, or simply want to get on the reporting train without actually wanting to be transparent, suddenly produce a Sustainability Report, as if by magic. We all know by now that Sustainability Reporting is part of a process, and not the first part by any means. In order to produce a Sustainability Report, you first have to produce results. A Magic Sustainability Report would not fool Max Maven. And it doesn't fool us, either. In the case of McKesson, it also didn't fool William D'Alessandro, who reviewed the McKesson Fiscal Year 2011 Corporate Citizenship Report for In this review, William says: "Taken together, the information McKesson metes out is too weak to alleviate any but the mildest stakeholder concerns about the corporation’s social and environmental affairs." Sounds like the McKesson report contained a little magic dust.

Vanish: The magician makes something disappear—a coin, a cage of doves, milk from a newspaper, an assistant from a cabinet, or even the Statue of Liberty. A vanish, being the reverse of a production, may use a similar technique, in reverse.

In Sustainability Reporting terms, the vanish is the information that the reporting company doesn't want you to know. It is the very careful omissions that the sustainability reporters stealthily slide under the reporting radar. In Kathee Rebernak's Ethical Corporation review of Shell Coorporation's 2011 Sustainability Report, she refers to several items that have vanished, for example, the lack of discussion of oil's contribution to climate change, the impacts of hydraulic fracturing (fracking) and the relative pace of biofuel production in comparison to global fuel demand. It all just vanished, as if by magic!

Transformation: The magician transforms something from one state into another—a silk handkerchief changes color, a lady turns into a tiger, an indifferent card changes to the spectator's chosen card.

In Sustainability Reporting terms, the transformation is the way sustainability reports create good performance out of bad performance, or present an exaggeratedly positive version of the truth about their sustainability results. Peter Mason, in his Ethical Corporation critique of the 2011 Sky Bigger Picture Review , writes: "More evidence of Sky giving itself an easy ride emerges in the environment section, where the review describes the company’s 10 green targets as “very challenging”. Figures in the data section suggest otherwise. Sky has set itself a target of a 20% increase in energy efficiency by 2020 on a 2008-9 baseline, yet it has already comfortably exceeded that figure – with eight years to go. It wants to cut CO2 equivalent emissions by 25% by 2020, yet had already made reductions of 19% by mid-2011."  Similarly, in my review for Ethical Corporation of the Boeing 2012 Environment Report, I made the following point: "The report says: “Boeing has reduced its environmental footprint at a time of significant business growth.” The company makes reference to “unprecedented increases in airplane production”. With mainly negative revenue growth and largely flat average aircraft delivery levels noted in this report, Boeing’s environmental goals don’t seem to be breaking the sound barrier." 

Another example of transformation can be found in Raz Godelnik's mince-no-words Triple Pundit review of Chevron's 2011 CSR Report. Raz writes: "The problem starts with the general tone of the report which is positive to an almost ridiculous degree.........Chevron didn’t manage to create a balance, providing almost only good news. too many parts of the report, the positive information is either presented in a biased way or is missing some important parts."

It certainly needs some sort of magic wand to make poor performance sound like great performance. Magic wands should not be standard-issue for sustainability reports. Sooner or later, when the magic trick is over, we end up seeing the company as it truly is.

Restoration: The magician destroys an object, then restores it back to its original state—a rope is cut, a newspaper is torn, a woman is sawn in half, a borrowed watch is smashed to pieces—then they are all restored to their original state.

In Sustainability Reporting terms, the restoration is the presentation of a comeback after a disaster, or the upside of a downside. For example, my review, published in the Sustainable Business Forum,  of  Chrysler's first Sustainability Report for 2010,  offers a frank review of how Chrysler has emerged from the past couple of years a different company, with new management, a new strategy and a strongly Italian flavor. The report expresses Chrysler's change of heart (and almost everything else), getting the message over loud and clear that, for Chrysler, it is definitely not business as usual. By 2011, the restoration magic had not completely worked and instead of reverting to its original state,  Chrysler's second report for 2011 is now called Fiat.

Teleportation: The magician causes something to move from one place to another—a borrowed ring is found inside a ball of wool, a canary inside a light bulb, an assistant from a cabinet to the back of the theatre, a coin from one hand to the other.

In Sustainability Reporting terms, teleportation is the use of fabulous case studies which transport us from the drab world of recording energy consumption and carbon emissions, to the life and soul of community involvement through the use of glorious case studies, amazing imagery and personal stories of inspired or inspiring people. Some sustainability reports are actually works of art in themselves. For example, the Kuoni Corporate Responsibility Report for 2010 takes us on a journey through the Lost Islands in the Maldives, Tuvalu, Kiribati and other exotic places.

When the magic wears off, however, the raw facts and candid discussion about sustainability impacts are still what makes the Sustainability Report a document of value.  

Escape: The magician (an assistant may participate, but the magician himself is by far the most common) is placed in a restraining device (i.e. handcuffs or a straitjacket) or a death trap, and escapes to safety. Examples include being put in a straitjacket and into an overflowing tank of water, and being tied up and placed in a car being sent through a car crusher.

In Sustainability Reporting terms, the escape is the assurance process. You invite an independent third party into your organization and, if they do their job well, they might just make you feel like you are being put through the car crusher. The escape is their Assurance Statement, because the minute they write that nothing has come to their attention that might not indicate the fact that there might not be anything that doesn't comply with the principles of materiality completeness and balance, you can breathe easy. Of course, not every assurance process is that rigorous, and not every Assurance Statement will feel like an escape, Sometimes it will just be another tick on the to-do list. But when it's done well, it adds value to the reporting company. See a good review of the Assurance Process by Joss Tantram of Terrafiniti  and also, an admission from the UPS Sustainability Communications Manager, Lynnette McIntire, writing for Triple Pundit, who confesses to enjoy the assurance process, describing it in this way: "a bunch of accountants come into your world for a rigorous review of your numbers. They require (gasp) documentation to prove your “facts.” They find those discrepancies between last year and this year. They challenge your subject matter experts on the methodology of their charts and graphs. And to be honest, they take a lot of glee in your mistakes."

Another form of escape is when the sustainability report gets a good review or wins an award. Regular reviews of sustainability reports can be found on or in the Ethical Corporation Magazine, and occasionally on other sites such as Triple Pundit or those of different sustainability bloggers. Producing a sustainability report is always a risk. Transparency always makes you vulnerable, no matter how strong your performance is. Getting a good report review is like coming out of the car crusher unscathed. My review, for the Sustainable Business Forum, of De Beers Family of Companies Report to Society for 2010 notes: "The De Beers report is a delight to read, it is intelligently structured, well-cut, polished and completely aligned with the report's title "Living up to Diamonds". Getting an award for reporting is like escaping out of the handcuffs to safety. See the winners of the annual online reporting awards, CRRA, in 2012: "The star ... was Coca Cola Enterprises Inc., U.S. who took two awards with overall Best Report and Best Carbon Disclosure categories, and a runner up in the Best Relevance Category."

Levitation: The magician defies gravity, either by making something float in the air, or with the aid of another object (suspension)—a silver ball floats around a cloth, an assistant floats in mid-air, another is suspended from a broom, a scarf dances in a sealed bottle, the magician hovers a few inches off the floor.

In Sustainability Reporting terms, the levitation is  when the report contains no context whatsoever. It just remains suspended, in air, with no anchoring points of reference. I am referring to general context, such as prior year data, regional or sector benchmarks or relevant background information about the company's role in society or sustainability objectives. Emily Hayne's Ethical Corporation Review of the John Lewis Partnership Report for 2011 makes this point: "...the report as a whole fails to tell a compelling story. Rather than setting out performance in the wider context of the issues and challenges identified, it simply lists issues, indicators and activities. Individually many of these seem impressive, but the report fails to pull them together into a meaningful long-term strategy."

Penetration: The magician makes a solid object pass through another—a set of steel rings link and unlink, a candle penetrates an arm, swords pass through an assistant in a basket, a saltshaker penetrates the table-top, a man walks through a mirror. 

In Sustainability Reporting terms, the penetration can be likened to the report within the report. For example, in HP's Corporate Citizenship Report for 2010, and entire sixteen photo account of A Day in the Life of an HP Auditor enabled us to penetrate the detailed workings of the supply chain monitoring process.

Penetration might also be linkened to the mutliple types of Sustainability Reports produced by one company. Reports which link and unlink. Separate, yet part of a whole. This might include local reporting, for example, ArcelorMittal , where global and local reporting live side by side, linked by core strategy and messages, but very different in local flavor.

Prediction: The magician predicts the choice of a spectator, or the outcome of an event under seemingly impossible circumstances—a newspaper headline is predicted, the total amount of loose change in the spectator's pocket, a picture drawn on a slate.

In Sustainability Reporting terms, the prediction is, of course, the targets, future outlook and/or what we will do next section. Many reports do not contain predictions. Many of the predictions that some reports contain are also not predictions, because the targets are so vague as to be rather meaningless or, they always remain goals and never results. David Schatsky of GreenResearch did some analysis of sustainability goals and benchmarking and found, for example, that just five of the 11 largest global oil and gas companies have announced public environmental sustainability goals. There is no magic in setting good sustainability goals. But there is magic in delivering on specific targets. The Unilever Sustainable Living Plan includes some goals which, if they are achieved, will be truly magical. In the area of Greenhouse Gases for example, one Unilever target is "By 2015 we aim to reach 200 million consumers with products and tools that will help them to reduce their greenhouse gas emissions while washing and showering. Our plan is to reach 400 million people by 2020" but, Unilever say,  "We are finding this target challenging and our progress is modest." If Unilever does eventually manage to crack this, it will be nothing short of magic and Max Maven will be duly impressed, I am sure.

This concludes my round-up of Sustainability Reporting Magic. I am sure there are many companies with a few tricks up their sleeve that I haven't covered, and many more which think that the Sustainability Report will magically transform their reputation and protect them from all evils.

The truth is that there is no magic in Sustainability Reporting. Just as Max Maven knows, behind every magic trick is an accumulation of strategy, innovation, creativity, hard work, performance development, perfecting the script and flawless delivery. Behind every magic trick is methodology. Behind every Sustainability Report should be proven practice. Nonetheless, when you do come across that Sustainability Report which appears to do the best job possible, you can't help feeling that there's a little magic in the air.

elaine cohen, CSR consultant, winning (CRRA'12) 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  (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

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