Sunday, April 5, 2015

Ajinomoto: Courageous reporting practice

I have always admired the Ajinomoto company of Japan, and back in 2010, I published a review of Ajinomoto's 2009 report. This time, five years later, I returned to Ajinomoto, at the company's request, to review the most recent 2014 Sustainability Report covering fiscal 2013 activities and prepare a commentary for publication. And it was a great pleasure to do so. (I have fond memories of visiting the Ajinomoto offices and factories in Tokyo back in the 1990s at a time when I had never even heard the terms Corporate Social Responsibility and Sustainability. The strong positive impressions of the way Ajinomoto works and warm hospitality of the totally wonderful people I met there remain with me today).  

Ajinomoto is no stranger to Sustainability Reporting. Ajinomoto started publishing an annual Environmental Report in 2001 and then in 2004, published a first CSR Report, demonstrating a commitment to a broader concept of CSR, beyond the scope of environmental stewardship alone. Through 2004 - 2011, Ajinomoto published two reports in tandem, until in 2012, the group made the transition to publishing one Sustainability Report encompassing the full spectrum of disclosures. The 2014 Sustainability Report is the third full Sustainability Report. 

This current report tells a strong story of Ajinomoto's contribution to healthy eating and healthy living. Ajinomoto has a well-defined approach to sustainability that has two broad elements: sustainable contribution and responsible behavior.

My commentary is on page 141:

Here it is in full:

In today’s world, it is not enough to simply be a food or food-ingredient producer. Leading companies view their contribution to society more holistically by identifying and managing the impacts they generate throughout their entire value chain. Such companies, for example, strive to educate consumers and help them adopt healthier and more sustainable lifestyles. In addition, leading companies aspire to conduct their business in an ethical and responsible way. Ajinomoto’s 2014 Sustainability Report addresses both of these aspects of sustainable business. The first part of the report represents Ajinomoto’s three broad areas of contribution: promoting healthy living, conserving food resources and advancing global sustainability. The second part of the report describes Ajinomoto’s responsible practices using the ISO26000 as a framework approach. 

Overall, this is a comprehensive report that covers all the issues we might expect a food company to address, including nutrition and lifestyle, the use of technology and science to improve resource efficiency, sustainable agriculture and land-use, governance, compliance, human rights and employee engagement, health and safety. In all areas, Ajinomoto demonstrates a strong understanding of what’s at stake and what, as a food company, it can and should contribute. Evidence of stakeholder dialogue adds credibility to Ajinomoto’s selection of areas where the company can add value. 

Some of Ajinomoto’s activities are particularly impressive. The company’s investment in externally assured lifecycle carbon footprinting across seven key seasoning ingredients demonstrates advanced commitment to understanding and improving resource efficiency throughout the value chain. Ajinomoto’s approach to circular resource use – using by-products of amino-acid production as fertilizer for crop sources for amino-acids - is an example of sustainable practice. Demonstrating the environmental benefits of amino-acids in feed for livestock supports sustainable agriculture. Innovations in sustainable packaging, including the use of biomass plastic, are leading edge. The extensive engagements in a range of countries to improve nutrition in the Ajinomoto International Cooperation Network for Nutrition and Health (AIN) program show a real commitment to adding value to society. 

One of the challenges of sustainable business is measuring the impacts of company activities and their effects on people, society and the environment. It is not enough to focus on, and report, what you are doing. The real measure of progress is what changes as a result of what you do. In this context, I believe Ajinomoto could go further in identifying and measuring the outcomes of its activities and reporting these outcomes to stakeholders. For example, Ajinomoto relates stories of how the company provides new food alternatives for consumers in Brazil and Pakistan and advances material and infant nutrition in Ghana. These initiatives are commendable but the real question is: how are they actually improving lives and to what extent? Reporting evidence of change as a result of these initiatives would help us appreciate Ajinomoto’s efforts and understand the true value of the company’s contribution to improving healthy lifestyles. 

Similarly, Ajinomoto’s work in sustainable sourcing of skipjack tuna, palm oil, paper and coffee beans is described in the report and Ajinomoto’s initiatives here are impressive. However, reporting actual consumption of these resources and the percentage of each that is sourced sustainably would help clarify the extent of Ajinomoto’s progress. 

While Ajinomoto provides a comprehensive report, it is long. This is partly due to the inclusion of extensive background narrative for the issues Ajinomoto addresses in the report. An understanding of relevant context is important, but it is performance and outcomes that stakeholders need to understand. In future reporting, I believe this narrative could be significantly reduced in a much shorter report that focuses on what matters. Similarly, the report describes policies and approaches in detail, sometimes excessively, without following through on performance. For example, Ajinomoto notes an intention to "promote more women to management positions". Women employees account for just 27% of Ajinomoto’s global workforce and 15% of managers. For a company whose products are largely targeted at women, there is an opportunity to reinforce Ajinomoto’s commitment to women (and therefore society as a whole) by outlining clear plans of action with goals and targets. Another example relates to employee safety. Ajinomoto’s safety data shows that safety of workers outside Japan is far less positive than in Japan. With 65% of Ajinomoto’s permanent workforce outside Japan, reporting a specific plan to address safety at a global level would seem imperative. I would recommend Ajinomoto to consider this in its next report. 

Alongside this, few truly long-term aspirations are presented. Sustainable business goes beyond a three year management plan, and sustainable change takes longer to achieve, especially in a company as dynamic and complex as Ajinomoto. I recommend Ajinomoto to develop a core set of targets to 2020 that can be used to drive, measure and report future progress. Ajinomoto has been around for 105 years. Ajinomoto’s commitment to sustainable business and transparency gives me confidence that the company will be around for at least another 105 years. Therefore, a longer planning and target-setting horizon would be welcome.

The practice of asking independent experts from around the world to review and comment on a Sustainability Report is quite widespread among Asian reporters. While an external commentary is not exactly "engagement" in the fullest sense of the word (and does not replace ongoing stakeholder engagement), there is something rather courageous about asking independent experts to review and comment on a Sustainability Report, and then publishing their independent commentaries in full. I can confirm that Ajinomoto published my comments with no editing, and did not try to influence me in any way about what to write or what to focus on. The only limitation I was given was a word-count. 

I was also happy to read three additional expert commentaries in the same 2014 Ajinomoto report.
  • Deborah Leipziger, Professor at Hult International Business School and a Senior Fellow at the Lewis Institute at Babson College.
  • Mark Feldman, Managing Director of Cause Consulting.
  • Dr. Wong Lai Yong, Founder of First Penguin and social responsibility and human resources development consultant.

All three experts provided a truly interesting and diverse range of insights that are well worth reading. Ajinomoto's openness in requesting and publishing such commentaries is to be admired, though, one hopes, that these will not remain at the level of words on pages. Each expert articulated different pieces of very practical advice to assist Ajinomoto in its ongoing reporting journey. The hope is that this advice and guidance will be carefully analyzed within the Ajinomoto reporting team and company management, and that, where relevant, suggestions may be adopted to help make Ajinomoto's next report even more relevant and useful to stakeholders.

I look forward to seeing the next Ajinomoto Sustainability Report. In the meantime, Ajinomoto's current report provides, in the words of Dr Wong Lai Yong, "a strong example that Ajinomoto is willing to walk the talk." 

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).  Need help writing YOUR Sustainability Report? Contact elaine:   

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