Thursday, August 28, 2014

Ahlstrom: G4 game-changer?

Did Ahlstrom, a Finnish fiber-based materials company with 3,500 employees, change the game with its first G4 report? This post continues my analysis of what changed with G4, this time using Ahlstrom reports over three years.

For an overview of what all this means, see this post.
For a G4 game-changer analysis of Fiat Group, see this post.


Ahlstrom Sustainability 2013: G4 core, 40 pages
Ahlstrom Sustainability 2012: G3, B+, 60 pages
Ahlstrom Sustainability 2011: G3.1, B, 54 pages

Materiality - drives the report or just for show 
Just by looking at the cover of the 2013 Ahlstrom Report, versus the 2012 and 2011 reports, you can already notice the change in approach. This is also reflected in the change in the structure of the reports. 2011 and 2012 had a four part structure: Company, products, performance culture and supply chain. The 2013 report has a series of chapters, each dealing with a separate issue correlating more or less to the material issues identified. 

Ahlstrom's 2013 report includes 35 G4 core General Disclosures and 31 fully reported Performance Indicators, versus 25 fully reported Performance Indicators in 2012. Once again, more indicators, fewer pages. In addition to the GRI content index, Ahlstrom includes a correlation of material issues identified to G4 Performance Indicators which certainly helps understanding the report. However, only a few of the indicators are correlated to G4 Performance Indicators and some are not even reported. For example, employee-well-being is a material issue but it is not correlated with any G4 Aspect and is is not mentioned anywhere in the report - no disclosure and no indicator. Eco-design approach is a top ranking material issue - but it is not correlated to a G4 Aspect or Performance Indicator and the two-page review of progress in this area does not indicate how Ahlstrom will measure ongoing performance. 

Ahlstrom's 2011 report contained a materiality matrix but the 2012 report did not. In fact, the 2012 report did not mention materiality even once. The Ahlstrom 2013 report includes a brand new materiality matrix which is quite different to the one published in 2011, and identifies 16 material issues.

Comparing the content of the report to the material issues - we can see a correlation. 

Examples of correlation of 2013 report contents to stated material issues

Although, as mentioned, there is some dissonance between materiality and content, I believe it is a departure from prior reports and has a hint of game-changing. 

Focus - focused and relevant or ticking the boxes
Ahlstrom has been selective in the content of this report and the indicators reported. The correlation of indicators to material issues is not exact, but in general, the report chapters match the material issues mentioned. I would have preferred to see, however, fewer material issues and greater reporting depth. Ethics, for example, is the number one material issue this time around. It has one page in this 40 page report, and most of the narrative is an exact word for word copy-paste of what was reported in 2012. Amazingly the exact same number of grievances were reported in 2012 as were reporting in 2013. How incredible is that ?! Aside from some additional anti-corruption training in 2013, there is nothing in this report to suggest any additional material focus on ethics. 

Water, on the other hand, gets much more detailed treatment in the 2013 report, with more information about withdrawal sources and water effluent composition. Water as a single material issue was not even mentioned in the Ahlstrom 2011 materiality matrix, demonstrating a shift in thinking and attempt to measure and improve. Ahlstrom advises that a focus area for 2014 will be to determine the best water metrics for measuring and improving performance.

Engagement - process or lip-service
Ahlstrom has an interesting definition of  stakeholders. "A stakeholder is anyone who is interested in what the company is doing." Really? Ahlstrom does not describe stakeholder engagement with anyone who is interested in what the company is doing, but specifically with six stakeholder groups: customers, employees, suppliers, shareholders, academia, society and industry peers. Once again, the examples of dialogue and feedback received were very similar to that reported in 2013, though some additional and different detail was provided. There is no evidence of additional deep-dive stakeholder engagement process, but nonetheless, a comprehensive overview is provided that includes details of a range of stakeholder interactions. Not game-changing, but reasonably good game.

Integrity - shapes up or misleads
As mentioned, in this report, there is a lack of accurate correlation of material issues with G4 material Aspects. However, my random check of indicators enabled me to quickly find disclosures through the GRI Content index. So while this report is not fully in accordance with G4 core level in the strictest sense, reporting integrity seems to be applied.

As an aside, unrelated to G4, this report does something almost no other report does. It publishes right up front a list of areas for improvement. Now, you don't have to look for the bad news. That saves a lot of time :)

Impact - what we did or what difference we made
Ahlstrom makes references to different kinds of impacts. For example, money donated via the company foundation "has been very successfully used in a 3-year UNICEF WASH (Water Sanitation and Hygiene) project in India, where close to 20 million schoolchildren, especially girls, have been helped". One case study shows how 30% of energy savings can be made using a new type of filtration media product (although it doesn't say whether the product has actually been used). Another makes reference to economic impacts:

(Wonder how Ahlstrom knows that people pay their taxes and act as active neighbors ?!)

Ahlstrom presents a full page on the company's impacts on global sustainability "Our sustainability promise is to make products for a clean and healthy environment, minimizing our own impacts, and communicating about the sustainability benefits of our products in a clear way", but actually, there are very few examples of how Ahlstrom realizes this promise in this report. Most of the narrative is about responsible and ethical business behavior and not actual sustainability impacts (with the exception of direct environmental impacts, as is the case with most reports). I believe there is a great story here which G4 could help Ahlstrom tell, but in this report, the great story remains just below the surface. 

Game-changer - does or doesn't?  
Overall, there appears to be a decision at Ahlstrom to apply G4 in the best way possible, and to restructure reporting to meet the new G4 framework. My sense is that Ahlstrom does this in practice, to some extent, and with genuine intent. There are lots of positives in this report. Still, I don't feel that Ahlstrom has really exploited the full potential of G4 to drive clarity, focus and impact. Maybe the report's title "Acting Responsibly" should give us a hint of how the company approaches reporting. Funnily enough, the 2011 and 2012 reports did not have titles other than "Sustainability Report".

I give this report a 54% game-changer rating.

Material issues - 65%
Focus  - 55%
Stakeholder Engagement -  45%
Integrity -  65%
Doing or impacting - 40%

Stay tuned for more game-changer analyses.

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via   or via my business website   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

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