Monday, December 15, 2014

USA:9 first-time G4 reports

And here we are, in the U.S. Following my post on 16 first-time G4 reporters in Belgium, that may have been a surprise to some of you, here is a more modest collection of first-time G4 reporters coming out of the U.S. Here follows a selection of 9 U.S reports - all first time reports and all in accordance with G4 (core or comprehensive). This is out of a total of more than 50 G4 reports published in the U.S. in 2014, according to the GRI Sustainability Disclosure database

AMN Healthcare: AMN Healthcare is a leader in healthcare workforce solutions, and the largest healthcare staffing company in the U.S., employing almost 2,000 people. 17 material issues are defined and the company reports against 18 performance indicators. Materiality, for the purposes of this inaugural report, AMN says, is limited to areas directly under operational control. This means, I guess, that AMN is looking at its people and services and how they are managed, as a first stage, rather than the outcomes of the contribution that AMN makes in healthcare quality across the U.S. The report opens with a good overview of the trends in the industry - identifying both the risks and opportunities. Material issues are explained and the company's approach is described. However, there is a little disconnect between what's material and the performance measures that support the management approach - for example - business loyalty is a material issue and relates to customer retention. However, AMN does not offer a metric specifically related to this. Similarly, there is a shortage of relevant context in some areas, for example, AMN claims ongoing improvement in health claims as proof that the company's approach to health and wellness is working. This is really great. Some sense of context - how this level of claims stacks up against the sector or other companies would help us understand whether this is good performance relative to industry practice and norms. Overall, though, this is a credible first-report from AMN that demonstrates positive practice and intention. 

Axalta Coating Systems: Axalta provides paints and coatings to a range of industrial customers. The company's liquid and powder coating brands are sold in more than 130 countries, produced in 35 manufacturing centers on six continents and supported by seven research and development centers. Axalta employs more than 12,000 people. The report is a 74 pager, with slight marketing overtones, and a separate GRI Content Index downloadable from Axalta's sustainability website. Interestingly, the list of Axalta's 11 most material issues appears right at the end of the report, on page 70, although the company maintains that these issues "informed the structure and content" of the report. By and large, this seems to have worked, although there are issues for which Axalta has not yet formulated a position or organized itself to collect data. Axalta reports against 31 performance indicators although the link between performance indicators and material impacts is not entirely clear at all times. Axalta admits what is a frequent dilema for G4 reporting companies: material aspects that do not have "pre-defined GRI indicators". In these cases, Axalta has described its approach. In future, Axalta could develop a company metric to support managing and reporting performance on these issues. Overall, another credible report.  

Cigna: Cigna is a global health service company with products and services provided through a range of subsidiary companies. Cigna's products include healthcare services and insurance. Cigna operates in 30 countries with 80 million customer relationships throughout the world and 35,000 employees worldwide. Cigna's first report is an 88 pager (including 13 pages of GRI Content Index). Cigna has selected 17 Material Aspects from the GRI table of Aspects, and reports against 24 performance indicators. However, in the process describing stakeholder engagement and materiality assessment, the four issues that appear to be most significant to internal and external stakeholders are four sub-areas relating to healthcare. These issues appear as the focus of Cigna's charitable and foundation-supported activities but do not seem to link directly to the core business approach of Cigna. One of these, for example, is health equity. This is well discussed in the Cigna report - good contextual information and a detailed description of how Cigna is adressing this issue through its core business. Health equity, however, is not really counted as a material impact or as a performance indicator. I think this is one of the inherent problems as companies try to fit their reporting into the G4 framework - there are some issues that just don't fit and companies need to find their own way of reflecting these issues effectively. In this case, it seems that Cigna has a great understanding of what's important, good focus and a strategic approach. The G4 framework could be used more effectively to help reflect this. 

Indianapolis Airport Authority (IAA): This is a solid first report from the Indianapolis Airport Authority which is a municipal corporation established in 1962. The IAA operates in central Indiana with main offices in Indianapolis. Including the Indianapolis International Airport, the IAA currently owns, develops, and operates six airports in the Indianapolis area, employing approximately 450 people. For the second consecutive year and third time overall, the Indianapolis International Airport (IND) was recognized as the best airport in North America by Airports Council International. IND was also named best airport in North America for 2012 and 2010 and has been ranked in the top three airports in North America in every year since. Hopefully, the focus on sustainability has supported IND's positioning here :). The report is a simple word-format compilation of 70 pages. Material issues are not specifically listed, but the GRI Content Index references 24 material Aspects are 41 performance indicators. The material Aspects are picked from the GRI predefined table of Aspects and the report narrative does not prioritize these issues. The content for the report was selected using an internal survey of employees. For the future, IAA offers to include broader stakeholder input based on responses to a SurveyMonkey survey which is available online. However, the survey is elementary, listing the full G4 Aspect list, with no real background or explanation. I doubt responses to this survey will be of any real value to IAA. On the other hand, I do feel that the IAA deserves recognition for making efforts toward greater transparency and engagement. This is a genuine and credible, if a little clumsy, attempt at reporting that does not really exploit the opportunity of G4. However, I am sure that, with the right leadership and processes, IAA will mature into a better reporter, based on deeper embedding of sustainability practices and realization of the value this brings. 

Murphy Warehouse Company: Murphy is a full-service supply chain logistics business based in Minnesota and employing around 180 people. It's a family-owned business that was founded in 1904 with "a horse and a wagon" and is currently managed by President and CEO, Richard T. Murphy Jr who is a fourth generation Murphy family member. The company, and its report, oozes genuine family values and spirit and the accomplishments of this small-sized enterprise in the area of sustainability are impressive, in a way which appears to truly reflect a business approach and not just a nice-to-have. In fact, Murphy is one of the few first-time G4 reports that I have come across so far that actually defines a focused set of materially important issues and a set of  targets.

On the other hand, Murphy's use of the G4 framework is rather ingenuous and, although the report itself is a great 20 page review of performance and activities, largely focusing on the identified material impacts of this business, there are inconsistencies in the use of G4. For example, the separate 12-page GRI Content Index lists every single core disclosure, DMA and performance indicator, but in several cases, inadequate responses are provided. Murphy maintains that the report was externally assured but no assurance statement is available and it is not clear exactly what was assured and how. The GRI Content Index omits the obligatory "assurance" column so this is rather obtuse. The link between material impacts and G4 disclosures is not always quite clear, for example, "Materials and Resources" is noted as a material impact. A Disclosure on Management Approach statement appears in the report. But responses to the two possible performance indicators relating to this material impact - G4-EN1 and EN2- are "Murphy does not report on this indicator. Murphy is a service company that does not manufacture a product."  Go figure. Overall, however, I like the Murphy report and I believe the company's sustainable approach. The use of G4 has not really added value, possibly because the framework was not fully understood. An SME reporter such as this could deliver a fine report without complicating life by attempting to be "in accordance" and no one would object. On the other hand, using the G4 framework does imply familiarity with it and adherence in a more consistent way. 

Newfield Exploration Company: Newfield Exploration Company (NYSE:NFX) is an independent energy company headquartered in Texas. Newfield is engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. The company is 25 years old and employs around 1,500 people. Newfield's inaugural report is both a positive example of the use of G4 and an example of the limitations of the framework. This is one of the first G4 first-time reports I have seen that actually presents a list of material impacts that was not created by box-ticking the G4 predefined list. It includes material Aspects such as: Community Safety, Well Integrity, Induced Seismicity, Hydraulic Fracturing and Community Relations, that are not G4 standardized Aspects.

Newfield notes: "Our materiality assessment identified significant topics that do not fully align with a GRI Aspect. ... We fully report on these topics; however, GRI indicators are unavailable and omissions are not applicable." This is a good approach by Newfield and shows serious consideration of the G4 framework. On the other hand, however, the company has not provided performance indicators for these material Aspects, as even if they are not predefined G4 Aspects, stating them as material requires a performance indicator that tracks what the company is doing to manage the issue.

In other respects, this is a methodically written and clear report that applied the G4 framework well. 18 material impacts are defined, and Newfield reports against 22 performance indicators (some partially, includes indicators from the Oil and Gas Sector Disclosures), as well as additional indicators that confirm to the Oil and Gas Industry Guidance on Voluntary Sustainability Reporting developed by IPIECA (the global oil and gas industry association for environmental and social issues), API (American Petroleum Institute)  and IOGP (International Association of Oil & Gas Producers, formerly known as OGP). Newfield also maintains an external advisory group made up of 7 expert stakeholders. This advisory group wrote a commentary for the report, including recommendations, something I find to be good practice. Newfield's report is a good example of the use of G4 for a first-timer, and appears to be in line with the spirit of G4 and not just the letter.

Simple Green (Sunshine Makers, Inc.): Simple Green is the brand of Sunshine Makers, a privately-owned family company founded over 39 ago by the father of Bruce FaBrizio who runs the company today. The company developed a biodegradable, not-toxic, non-flammable, non-abrasive cleaning formula and now sells environmentally friendly cleaning products in 41 countries, manufactured in 11 facilities worldwide. Sunshine Makers employs 59 people directly and works with a network of partners for distribution. Sunshine Makers also founded EGBAR (“Everything’s Gonna Be All Right”), a non-profit foundation for environmental education and community improvement projects.

Simple Green's Value Chain
Simple Green's report is impressive. It's nicely designed, well-structured and reflects a strong sense of sustainability culture and practice, not specifically created in order to write a report, but something that has flown out of the spirit of the founding family and extends throughout the entire value chain. It does not shy away from admitting areas of activity that the company has not yet managed to address, and transparently reports outcomes of a more structured stakeholder engagement process conducted for the first time in 2013.

Simple Green identifies 14 material topics and reports against 34 performance indicators. The company makes it clear how it selected the material content for this inaugural report in a way which I find to be transparent and credible: "The content of this report was defined by multiple elements. They included (1) availability of data for the reporting period, (2) our current understanding of our value chain, (3) discussion with our stakeholders, (4) surveys of our stakeholders, (5) an aspect-impact analysis and (6) a materiality assessment."

The report contains targets for environmental impacts and is assured for all general and some performance indicators. All in all, a very professional, interesting and mature first report. As you can probably see from the number of photos I clipped from the report, I liked this one best of all the U.S. first timers. 

Whitewave Foods: The WhiteWave Foods Company "is working to change the way the world eats for the better." Prior to 2013, WhiteWave Foods was a wholly-owned subsidiary of Dean Foods but from July 2013 the company became completely independent.  White Wave brands in the U.S. includes Silk® plant-based foods and beverages, International Delight® and LAND O’LAKES® coffee creamers and beverages, and Horizon Organic® premium dairy products. In Europe, Alpro® and Provamel®, offer plant-based nutrition food and beverage products. The company employs almost 2,000 people. 

This 58 page report defines 17 material topics and reports against 24 performance indicators from G4 and from the Food and Beverage Sector Disclosures. One of the nice things about this report is the clear connection between material topics and the performance indicators that support them. It's absolutely clear that what's material is measured. This is the spirit of G4 and hardly any of the first-time G4 reporters I have seen have done this explicitly. It makes like much easier and clearer for report users. 

Aside from this, the report provides a good overview of how WhiteWave is operating responsibly and advancing organic and plant-based food products to support healthy lifestyles. What I am missing, though, in this report, is a sense of whether this is actually changing markets and consumer perceptions and behaviors. Despite a nice value chain graphic.....

... this report stays largely at the front end ... when it gets to consumer use and impacts on consumers, I find the WhiteWave report less informative. WhiteWave writes: "Today, nutritious dairy alternatives made from soy, almonds, coconut, rice and hazelnuts are a huge and growing category, embraced by millions for their health and sustainability benefits." I'd have welcomed a little more context here .. How rapidly is the market growing? What are the challenges of providing such alternatives to mainstream consumers? Is this a niche market and if so, why? What are the scientific health benefits of WhiteWave's alternative food products and what impact could this have on health and wellbeing in society? etc. This is the real sustainability story of WhiteWave and I am wondering why changing consumer perceptions and practices in relation to healthy eating and the value of alternative food products is not material for WhiteWave. As it stands, however, the company tells a great story in a well-put-together first-time G4 report. 

UniGroup, Inc.: UniGroup is a $1.6 billion transportation company headquartered in Missouri. UniGroup and its subsidiaries provide services under a range of brands including United Van Lines, Mayflower Transit, United Containers, Mayflower Containers, UniGroup Logistics, UniGroup Relocation and more. The group has 903 employees in the U.S.  

UniGroup's report is a simple no-frills word-format 35 pager with a really REALLY detailed materiality matrix that was developed internally by company staff. It contains more issues that I was able to count without getting lost, with 19 issues in the top-right (most important to everyone) quadrant.  I always wonder how companies manage to plot issues on such a matrix with such detail and whether the relative positioning of issues in such a granular way is actually helpful to anyone.  
In any case, the top three issues stand out as being emissions, customer privacy and customer health and safety. In the case of customer health and privacy, the report barely refers to this - the disclosure is all about driver safety. In the case of customer privacy, there is a short paragraph but no reponse to the performance indicator as required. In the case of emissions, the DMA is "UniGroup recognizes that the environmental impact of the emissions from those vehicles operating under our authority is material" but no data is reported against Scope 1 or Scope 2 emissions, though Scope 3 emissions are recorded, though I suspect that might actually be Scope 1 emissions (fuel). 

Here we have an example of a really good effort on materiality mapping, but a disconnect in the way the report is constructed and a gap in adherence to the G4 framework. Rather than jump to G4 core, this company might have been better starting with a simpler report that reflects what it is doing, rather than trying to accommodate a more advanced approach that is driven by materiality developed through due process. The report is a good first dive into transparency and it is clear that much work and thought has gone into its production, and indeed, it projects a positive disposition towards sustainability and certain achievements in performance. I think, however, that UniGroup might have benefited from a little guidance in the preparation of this report. 


So there we have it.... 9 first-time G4 reports, all rather different and all rather unique. All challenges and all achievements. My overall impression, though, is that the use of G4 is still evolving. Rather than helping guide the way companies report, there is still a lot of "report first and then force-fit G4". I am optimistic that this will change.... second round reports, I am sure, will be a different ball-game.

In the meantime, though, we continue on our journey. Next up....

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 Twitter (@elainecohen)  or via my business website   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Check out our G4 Report Expert Analysis Service - for published G4 reports or pre-publication - write to Elaine at to help make your G4 reporting  even better.

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