Tuesday, January 5, 2021

21 Sustainability Reporting Nuggets for 2021

So, 2020 is now over (YAY!!!) and we all eagerly await a reportful 2021 that will bring us closer to peace and harmony, the eradication of COVID-19 and achievement of the 17 Sustainable Development Goals. Everyone is publishing summaries, trends and predictions, so the CSR Reporting Blog will stay clear of that. Instead, we will start off the New Year with some interesting things about Sustainability Reports that may provide inspiration or perspiration for all reporters planning their first or next cycle.  

I will draw my examples from about 100 recent reports from the U.S., UK, Japan and Germany - reports delivered to me as part of an excellent service provided by ESGSpectrum.com - a fabulous organization that provides all forms of analysis, research and a range of customized information relating to my second favorite topic - reporting! (You all know what my FIRST favorite topic is. No hints. 🍦).  

I will also include a few nuggets from my recent review of about 130+ sustainability reports from Asia - having spent quite some time over the past couple of weeks in my regular annual role as a judge in the Asia Sustainability Reporting Awards, now in its sixth year. I judge all categories (except digital reports, because I always prefer to read a PDF rather than a website, and integrated reports, because I don't like to fish for sustainability content). While judging so many reports is a big investment in time, it's also an entire education and a source of much inspiration - the dedication, effort, creativity and innovative thinking that goes into every report (yes, some more than others) always inspires me. First reports today are getting slicker than ever, SME reports are more mature, and some of the leading reports are just plain awesome - not only because of the quality of the reporting, but because of the depth and breadth of performance they reflect.

You cannot deliver a meaningful sustainability report if you have not completed meaningful thinking about your approach and started to take meaningful action, whether you have been reporting for 20 years or just one or two. I believe the value of sustainability reporting is grossly underestimated (more on that another time) and whatever the outcome of the MegaWars on ESG Disclosure (more on that  another time too),  sustainability reporting is a catalyst for performance, a platform for dialogue and an empowering process. 

Nugget #1: Make targets your target
The more reports I read, the more it astounds me how companies can produce pages of strategy, materiality assessments, stakeholder engagement and inspiring declarations about their dedication to sustainability in the CEO letter and other sections of their report and yet, there is a conspicuous lack of concrete commitments in the form of targets. A strategy with no targets has no substance. A commitment to sustainability with no specific path to deliver on those commitments has no credibility. A report that only looks back at what was done is a history book. Today's reporting must be responsive the needs of users to understand how companies will make progress, improve their impacts and contribute to a sustainable future. 



WH Smith has 15 specific targets supporting 8 broad issue categories. The nice thing about this presentation is that WH Smith defines each target and how it will be measured. Some targets are explicit - for example, "purchase 100% of electricity from renewable sources by 2021 in the UK and by 2025 internationally" while some are less so, for example, "increase the diversity of our senior management team across race and gender" (as measured by % of positions held). WH Smith does not specify a target percentage of diversity to be achieved, but this is nonetheless a clear, measurable commitment. 

Greencore's inaugural 2020 Sustainability Report also demonstrates clear commitments through a set of measurable targets.


Some companies commit to environmental targets only - which I find strange. While environmental topics are generally more readily quantifiable, social aspects are also concrete and measurable and we should expect them to be treated with the same degree of robust planning and commitment. Perhaps the new enlightenment that COVID-19 has brought will elevate people and social commitments and targets in 2021 publications.

Nugget #2: Google Translate is wonderful. But not that wonderful.
First, I have great respect for companies that translate their reports for us English speakers, and some translate into other languages as well. But, if you are going to make all that effort to provide a translation, then Google Translate just doesn't cut it. Invest in a proofer whose mother tongue is the language you are serving up to your readers. Although language bloops are amusing, sometimes even charming, they project a lack of professionalism or thoroughness. Here are some from reports I have recently looked at - I'll not mention any names.

"Commitment to infrastructure development and construction world to the outskirts and remote areas, shows that the construction business opportunity is wide open and long term.

"Input water is used for domestic and industrial purposes. For industrial purposes, the supply water has been always saved as XXX has been using Italian top-notch machines and technology which enable water consumption minimization. For domestic use, XXX has constantly propagandized all staff members about the role of water resources and water saving, at the same time, delivers water saving slogans at tapping pointsand takes measures to warn violations or acts of wasting water."

"Adapting to family culture, it is the dependence, the maintenance of stagnant manners, creating obstacles for the development momentum. Besides the defensive mentality, rudimentary thinking, afraid of risk, leading to afraid of change.

Nugget #3: Navigation tools are not optional 
With PDF's today being read primarily online, it's critical that that they are easy to navigate, especially if they are loooooong. Reports that enable you to flit around from section to section with ease are a delight; they make you feel that the report designers and reporting managers have truly considered you as a report user. Here are some great examples:

Yokogawa Electric Corporation's 2020 Sustainability Report has a fantastic top menu and home button that takes you to the contents page from wherever you are in the report. Each section landing page has its own internal menu, and each topic is hyperlinked. So within a couple of clicks in the PDF, you can get to anywhere or back to anywhere. A pleasure to use this report.  


IFM Electronics' 2019 Sustainability Report, another first report, takes a similar design approach, but this time, it's a bottom menu. Here again, the landing pages contain hyperlinks to the individual sections within the chapter. The 8-blocks icon takes you back to the Contents page. Navigating  this report is a breeze.


Viacom CBS' 2019 ESG Report goes even further. Not only is there a top menu and a hyperlinked contents page, the GRI Content Index is also hyperlinked, and each of the GRI disclosure labels within the report are hyperlinked back to the Index. Now this is a designer that understands report users and has gone the extra mile to make the content fully accessible. Great navigation does not compete with great content, but it does make you more inclined to discover the great content. This is a first report from Viacom CBS  - impressive!





Nugget #4: Great design makes a difference
And, since we are with the designers, let's go on to talk about how great design really does encourage you to discover more of the report content. This always stands out for me as I review more than a hundred reports in a short space of time for the Asia Sustainability Reporting Awards each year. Reports that are appealing from a design point of view are so much easier to review and make my judgy job much more pleasant. I won't give examples from this years' entries so as not to preempt the results but last years report winners in the design category were:

Charoen Popkand's 2018 Sustainability Report, with tasteful use of images and visuals throughout the report that make the text come alive. Side navigation makes it easy to use.





City Developments Ltd 2019 Integrated Sustainability Report takes a clean design approach, with use of color and clear charts and design formats. With hardly any imagery, this report is laid out in a way that is easy to read and navigate.




Hair O' Right's 2018 Corporate Sustainability Report is a beautiful report, reflecting the spirit and promise of the brand, using creative imagery and photos to reflect the clear link between the brand approach and sustainability themes. Easily navigable, this report that has appeal to consumers as well as professional users.




And a few nicely designed recently published reports:

Citrix Systems Sustainability Report 2019 is designed in a most engaging way, using big bold messaging and color and imagery to help the narrative make an impression. You cannot fail to notice the strong statements in this report, and reading the detail then becomes compelling. Nicely navigable, optimistically colorful, carefully crafted, this report design is a credit to Citrix.








Morgan Motor Company Sustainability Report 2020 takes your breath away, whether you are a car lover or not. The images are incredible and all closely curated to align well with the narrative and make this report a pleasure to read. This report has big pages and bold statements in a clear design language that makes reporting an art as much as a piece of disclosure.







Alstria REIT AG Sustainability Report 2019/2020 is creatively designed, using an appealing design language throughout the report - with infographics, creative charts and graphs and photos of Alstria's employees and offices. It's super navigable with hyperlinks throughout that get you from place to place easily. Alstria's prior reports are also a delight to read and use.






NTT Docomo Group 2020 Sustainability Report is well set out and easy to navigate with a detailed top menu and plenty of hyperlinks within the document. There something cultural about Japanese sustainability reporting that demands density of content - no centimeter of space on a page is ever left empty! - and the use of diagrams, charts, process flows and all forms of visuals to illustrate different concepts and programs seems to be mandatory. Some layouts are so dense that you need sunglasses just to look at them. As Japanese reports go, this one is easier on the eye, it's well laid out and nicely spaced, and uses imagery and photography throughout. 
 







Nugget #5: Yes, we want to hear from the Board
Governance has become a significant part of sustainability disclosure these days, and it goes beyond simply stating the Board structure and Committee composition. There is a growing realization that the role of Boards is pivotal to corporate purpose and sustainability strategy, and that it's time for Boards to be more present and visible in guiding sustainability performance and disclosure. No surprise then that the GRI Exposure draft for the General Disclosures includes more governance content than ever before. Reports that introduce the Board, as well as the Board involvement and processes are becoming more prominent. 

Here's a nice example from Acuity Brands' 2020 Sustainability Report. The Board is presented in its entirety, and a commentary from the Corporate Secretary explains how the board has supported sustainability programs in the reporting year.




Nugget #6: Too long is too much
No-one wants a sustainability report that is soooooooooo long, just the thought of wading through hundreds of pages is a nightmare, even if it's a downloadable PDF that's not going to be printed. A report should be a reflection of a year of activity, not your entire corporate history. I am not interested, frankly, in seeing the covers of your last 20 reports, and I am not really interested in your sustainability timeline (unless it's a first report, where we can allow a little more leeway!). What matters is how you improved your impacts in the reporting year and how you will continue going forward. So, clear out all the clutter. Make a nice home for all the non-essential, not-material, not-in-focus information on your website, and link to that. 

Clutter, for me, also includes long sections on management approach. Management approach statements are what I call evergreen content; it changes rarely from year to year. Far better to house your management approaches, policies and position statements on the website, making them accessible to anyone who needs them, and avoiding repetition of this content in every annual sustainability report. 

See this ESG Policy and Positions page on the Johnson & Johnson website (Disclosure: I am proud to count Johnson & Johnson as a client). See some more examples:
Some companies also house sustainability case studies and stories on their website  or corporate blog - see these examples from Abbott and Ansell . Such stories can also be referenced in the sustainability report without having to include the full content, thereby enabling  a shorter, more compact report.


Nugget #7:  Don't forget COVID-19. As if anyone could.
Many sustainability reports published in 2020 already included detailed sections on COVID-19 and the company's response and actions during the pandemic. In fact, hardly any reports published after April 2020 did not include a reference to the company's COVID-19 response. (I purchased a fantastic analysis of COVID-19 in sustainability reports published in 2020 from ESG Spectrum to get a sense of how early treatment of COVID-19 was developing in reporting.)




In 2020, COVID-19 responses were primarily anecdotal and covered the ways in which companies responded to lockdowns, started to Zoom and protected their employees, as well as supporting donations of PPE and other items in their communities. I suspect that reports published in 2021 will address COVID-19 from a more strategic standpoint, encompassing the learning gained in this first year of pandemic response, and new or refreshed programs being put in place to address business continuity, employee health and safety (including mental health) and virtual working, among other things. While it still may be too early to do a full materiality assessment, many companies will be able to draw some conclusions and incorporate this new COVID-impacted thinking into their 2021 planning and disclosure. 

Nugget #8: Disclosure frameworks.. take a deep breath
How many disclosure frameworks can you cram into one sustainability report? Today, companies are disclosing against several frameworks such as GRI, SASB, CDP, TCFD, SDG, UNGC, ISO26000 and/or other local reporting frameworks required by legislators such as the Hong Kong Stock Exchange, and/or sector frameworks such as IPIECA  for the oil and gas industry. And this is without even mentioning the <IR> Integrated Reporting framework that includes sustainability information as part of an investor-focused annual report. How do you decide which of these frameworks to use? The KMPG 2020 Survey of Sustainability Reporting confirmed that GRI is the most widely used framework by reporters across the world (84% of the world's largest 250 companies),  so that's a good place to start. 


As for the rest, you can prioritize them according to (1) what your stakeholders demand (2) what will most usefully help you manage your impacts and (3) what will help improve your competitive standing,  reputation and trust. 

Nugget #9: Diversity is more than gender
I am not even sure why gender equity is even a part of the diversity discourse. Gender is a topic in its own right, and dumping gender in the diversity bucket seems to me to be an insult to women everywhere. With women representing around 50% of the population in most countries, the opportunities to advance women are there for the taking. I believe the focus of gender equity is now less on the number of women in the workforce or in management. I think it's more about the number of women that are actually making a difference in the business at the highest levels in revenue generating or technical roles - not only Human Resources Managers or administrators - and its about the processes in place to ensure women are heard and counted and, of course, paid on the same scale as male counterparts in similar roles. It's interesting that the UK gender pay gap reporting law has caused global companies to share their data for UK operations only; for companies that are serious about gender equity and pay parity, I would expect them to disclose this across their global operations, not just in the UK. I think this may be a differentiating factor in future. 

But, diversity is more than gender. And I don't care how many nationalities work at your company either. It sort of stands to reason that global companies will employ a global workforce; the fact that you employ people born in different places is rather meaningless to me. Racial equity has now become an agenda item, given events of 2020, and sustainability reports have now become home to new and stronger declarations in this respect, especially in the U.S. 

Charles Russell Speechlys' first Responsible Business Report includes a page on religious and ethnic diversity. 


Estee Lauder's 2020 Citizenship and Sustainability Report commits to act on racial equity.


Avis Budget Group 2020 Sustainability Report also devotes a section to BLM: 




Nugget #10: The CEO is not a puppet
Don't let the CEO statement be a plastic PR piece. Make it count. The CEO Statement sets the tone for the entire report, some people may read only the CEO letter. Don't make it full of clichĂ©s and platitudes and inane statements about how proud everyone is and how embedded sustainability is. As a business leader, the CEO is expected to address sustainability both from a business perspective as well as from a purpose perspective. A CEO letter that talks only about sustainability strategy and aligning with GRI just doesn't ring true. And if it's true, the CEO is not doing her job. And a little personal insight goes a long way here too.  

The Brand President of Icebreaker sends a very personal and seemingly authentic message about the role its company is playing to advance sustainable fashion in Icebreaker's 2019 Transparency Report.



Nugget #11: Stock images should be left in stock
If there is anything that crushes the credibility of sustainability reports, it's stock images of plastic people in a range of plastic poses. They do not represent your company, and in that sense, they are misleading. Stock imagery, in my view, erodes the credibility of your reporting. Far better to use images of real people in your business, real operations, real business and real life. If you have no images, then use a few icons and some design elements - there are many great reports that have no photos at all - but do not sink to the depths of imagery that destroys your message. 

Here are some real-people images from recent reports


Avis Budget Group 2020 Sustainability Report

Morgan Motor Company Sustainability Report 2020


Mauser 2019 Sustainability Report

Nugget #12: Don't make your report a danger zone
If there's anything that frustrates me when reading reports it's vertical text. I can't read vertical text. It hurts my neck. Once, I tried to stand my computer screen on its end so that I could read vertical narrative, and ended up dislocating my shoulder as well. I know that Chinese and other Asian languages are written vertically, and that obviously works for reports in those languages. But if your report is in English, please do not make me stand on my head to read it. A recent example...


Nugget #13: Make materiality material
Oh, that materiality thing again. It's simple. If materiality is so material, it needs to be obvious. If you have gone to great lengths to develop a materiality matrix, or a list of material topics, then these topics need to be discussed in your report. The materiality assessment is not conducted in a vacuum. Originally, it was intended to provide the basis for disclosure - although now it's seen as a tool to develop strategy as well. But if you indicate material topics, make sure we know where to find your disclosure on material topics in your report.  

This 2019 Sustainability Report from ZF Friedrichshafen does it very clearly - by listing the material topics using GRI Standards. The report itself is mainly one long GRI Content Index with all disclosures ordered in the way they appear in the GRI Standards. This is an approach occasionally used by reporters; it's not my preferred approach (what if you have a material topic that doesn't quite fit the GRI prescribed set of topics?) but it does demonstrate rigor and makes it easy to find the disclosures in the report


Nugget #14: Ice cream is critical to sustainability reporting
Yes, stock up and make sure you consume lots of ice cream during the reporting season. How else will your report turn out to be fantastic?

Nugget #15: Your employees are your audience
Before the launch of any sustainability report, you should have an internal communication and activation plan that ensures that employees not only know your report exists, but actually take some time to dip into it, and even discuss its contents. In today's world, employees want more than a career, they want a career that helps them make a difference. Research from Glassdoor shows how prevalent this has become.


So engaging your employees with your sustainability reporting can support attraction of new employees, retention of existing ones and motivation and productivity across the organization. Employees are also your ambassadors, and the millions of touchpoints they manage each day with external stakeholders are opportunities to get your message through. It can be something as simple as "Read our latest sustainability report" in an email signature, or something more invested such as a proactive discussion with a client or NGO or supplier on what matters most. Remember that employees are also consumers, neighbors, activists and many are also investors, directly or indirectly, so the report is for them on more than one level. 

But, most importantly, employees are the ones who really know what's going on. They live your company day-in day-out. If your sustainability report presents a picture of a company they do not recognize, Houston, you have a problem. The more you engage employees in activating your report, the more value you as a company, and they as individuals, will gain from it. 

Some reports include a commentary from the Human Resources leader in the company. 

Armacell Sustainability Report 2019


Cisco CSR Impact Report 2020

I always appreciate Human Resources leaders starring in sustainability reports, because, since the publication of my book on CSR for HR, many moons ago, and the mantra I developed at that time: It is time for HR to wake up to CSR!" , not an awful lot has changed. Human Resources should be proactive partners in advancing sustainable practice; instead, many are  laggards and blockers. Noticing HR leaders in sustainability reports is always a little glimmer of optimism.

Nugget #16: Defining the process is more than saying there is a process
GRI reporters know that the Standards require not only a list of material topics, but also a description of the process through which those topics were developed. And here we have the biggest hole in sustainability reporting that was ever dug. What are the key elements of a process? What are the criteria used for decision making at each stage of the process? How are topics prioritized? What is the relative weighting given to different stakeholder voices? So many questions about process ... and very few are answered in sustainability reports. At best, the process tends to be summed up in ways that basically amount to: 
  • We mapped the universe and came up with xxx (some very high number)  total topics
  • We surveyed our stakeholders and incorporated their input
  • We had a management discussion and prioritized the topics
In most cases, we are left with no understanding of whether there was an actual process, who was involved, who influenced and how decisions were made. And yet, materiality is so pivotal to sustainability reporting. I look for companies that provide greater insight into the development of the list of material topics they are reporting against. Here are two examples:

Ferrero provides a robust description in its 2019 Sustainability Report. Ferrero uses Datamaran (the innovative software ESG and risk analytics platform) to scan the topics universe. What's nice about this process is the combination of technology to identify and validate topics, as well as internal discussion and judgement. There is a high-level description of how topics were prioritized, and that's good to see. The materiality assessment is also approved by the Audit Committee of the Board of Directors. (As a bonus, Ferrero confirms using this materiality assessment as the basis for its sustainability strategy, not only for its reporting. They must have read Nugget #13!)



Telstra's 2020 Sustainability Report also provides a detailed discussion on the way material topics were evaluated  and prioritized this year including (already!) the impact of COVID-19. The discussion also provides a perspective on the change in methodology and the differences from the previous materiality assessment. 



Nugget #17: Format makes a difference
Remember that most of the time, your report will be read on a screen and not as a printed document. Therefore, your design should be screen friendly. To me, that means that it's easy to scroll page by page, and that the font should be big enough (but not oversized) to read at 100% scale without having to keep enlarging the document. A horizontal A4 format seems to work best. 

This is a page from Kingfisher's 2019/20 Responsible Business Report at 100% on my screen. It scrolls nicely page by page, and the clever use of font sizes makes for a positive reading experience.



Nugget #18: Let them tell your story
I like to see external stakeholder voices in sustainability reports. I know how difficult it is to get external quotes and commentaries approved, and I always think that companies who manage to do that are showing the strength of trust in them and the relationships they maintain. External voices should not be gushingly flattering, but should be pertinent and insightful. Most companies will include quotes from customers or community partners or commentaries from third parties. An example is that for several years now, I have been reviewing and providing commentary to a fabulous company in the food sector - Ajinomoto of Japan. Together with those of other commentators, my commentary is published in full. I submit my independent commentary (for which I am paid, for the sake of full disclosure) and it is published in full with no edits or changes. No-one tries to influence my commentary in any way. I write what I think is a fair review and include areas that I feel could be explored in more depth in Ajinomoto's disclosure. I find it very interesting to read the commentaries of the other three or four experts that provide them in each annual report. Here are my commentaries from the 2020 Ajinomoto Sustainability Data Book.







Nugget #19: SDGs are more than goals
I know it's popular to report your alignment and support for the SDGs. Generally companies select a small number of SDGs and show how they contribute to sustainable development. There is a wide variation in how this is done, though it inevitably always involves many icons. The point here is that I think we are getting beyond the stage of simply saying that because you are a food producer, you are contributing to SDG#2, Zero Hunger, or a healthcare company contributing to SDG#3, Health and Wellbeing, or even better, because you employ women in your business, you are contributing to SDG#5, Gender Equality. More than 5 years into Agenda 2030, I think we are expecting a more considered disclosure from companies, at the level of SDG targets not goals, and at the level of specific actions being taken to advance sustainable development, beyond business as usual. Sonic Healthcare's 2020 Sustainability Report shows how it's done.




Nugget #20: Avoid reportspeak
What's the most overused meaningless catchphrase in Sustainability Reports ever? EDF Energy even put it on the cover of its Sustainability Report ten years ago.


And it's still going strong:

"I am proud of our achievements so far and optimistic about our future." Luxfer 2020 ESG Report, CEO letter

"As ENERCON’s Management we are proud of the company’s success so far. However, we acknowledge that great challenges lie ahead." Enercon Sustainability Report 2019, Management Statement 

"We are proud of what ARA has achieved over the past few years, and we have ambitious plans going forward..." ARA Sustainability Report 2019, CEO Statement


Let's not forget another old favorite that comes in several variants: Sustainability is in our DNA, or, sustainability is embedded in our company

"Sustainability is embedded in our everyday work Armacell." Armacell Sustainability Report 2019, CEO Statement

"As a global insurer and responsible investor, sustainability is part of Allianz’s DNA." Allianz Sustainability Report 2019

"Epson is well placed for all these new challenges. Sustainability is in our DNA.Epson Europe Sustainability Report 2019/2020

"Whether it’s a natural disaster or a global pandemic, being on the frontlines of serving our communities through crises is in our DNA." Lowe's 2019 Corporate Responsibility Report, CEO letter

"Environmental stewardship is embedded in the Trex DNA..." TREX ES&G Report 2019, CEO letter

"For Marimekko, sustainability is part of our DNAMarimekko 2019 Sustainability Report

Phrases like these have been used so many times that they are, frankly, a bit of a turnoff. I don't think companies have a DNA, despite practitioners that might think otherwise. I think a company's culture is only as strong as its current leadership and the process in place to sustain it. For me, talking about what's in our DNA is an invitation to prove it is not. Similarly, "we are proud of what we have achieved but there is more to do" is a waste of space. Who cares?  We know there is more to do, there is always more to do. Being proud is nice (check out how many times the word proud appears in Sustainability Reports), but I find it a little out of place. As report users, we are less interested in how proud you are and more interested in how productive you are. 

There are hundreds of other reportspeak phrases that reduce the credibility of your report. Best to avoid them.  

Nugget #21: Behind every report is a reporter
I believe that every report is an achievement and is the product of significant investment in time, resources and usually, one individual that really makes it all come together. It may be a team effort, but the reporter is the team leader. That person deserves admiration and respect. S/he is probably working under many constraints, possibly many areas of sensitivity and disagreement, maybe inadequate data collection processes and probably limited resources. Leading the development of a sustainability report is a major accomplishment, as any reporter will tell you, and requires a very unique skillset. I admire everyone who does this and I value every report both for its content and also for the efforts made to deliver it. I have learned not to dismiss any report that I find less impressive or below standard, because I believe the reporter did the best s/he could in whatever context the report was developed. Thank you to all the reporters from whom I took inspiration for this post.

I'd like to see more reporters named in reports, both as a measure of recognition and also as a way of reinforcing accountability. 

Ineos Styrolution Company goes the full Monty in its 2019 Sustainability Report by naming all those involved in the sustainability committee. 



*******


Well. That was a long post! I think I almost broke Blogger. Congratulations if you got this far. Even I almost gave up half way through.  We Me at the CSR Reporting Blog hopes there is something here that might be of use in the 2020-2021 reporting cycle to some of you out there. 

In the meantime, stay healthy, stay safe and stay optimistic!




elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Owner/Manager of Beyond Business Ltdan inspired Sustainability Strategy and Reporting firm having supported 119 client reports to date; author of three books and several chapters on Sustainability Reporting and the Human Resources connection to CSR; frequent chair and speaker at sustainability events and judge in several sustainability awards programs each year. Contact me via Twitter , LinkedIn or via Beyond Business





No comments:

Related Posts with Thumbnails