Friday, October 24, 2008

Cradle to market in 6 months

Interesting piece that caught my eye this week in "McDonald’s USA recently recognized Smithfield Foods, a pork supplier for the McDonald’s system, with the company’s first-ever Sustainability Award. The award, which will become an annual honor, recognizes the supplier that best exemplifies the McDonald’s vision, principles and values for sustainable supply. "

Smithfield has been reporting since 2001, starting out as many companies did with environmental reporitng and then moving by 2005 to full blown corporate social responsibility.
Smithfield employes 57,000 people in the supply of 50 different types of pork, beef and turkey products, and other gourmet foods. Apologies if this offends vegetarians. I am not much of a pork fan myself, actually. My first taste of a pork pie was a surreptitious bite at an after-ballroom-dancing-class party when i was a kid. Being Jewish,that's a bit like eating two Magnums after a Diet Club weigh-in. I was so consumed with guilt that I swallowed so quickly I didnt even taste it.

Anyhow, Smithfield has a pretty good sustainability record and declares a core value to be "advance animal welfare". I took a quick peek at their latest CSR report to see how they are doing on this score. page 44. Fascinating. Did you know that the life-cycle of a pig is 6.5 months from birth to market! Except for 243 pigs who didnt make it to market due to transportation accidents along the way . Their life cycle was 6.5 months minus about 2 days, i reckon. But .. from birth to market! A pig's natural life-cycle appears to be from birth to market, not from birth to grave. (I can't help but feel a twinge of sadness here, because in Chinese Astrology i am, yes, you guessed, a PIG!) .

Smithfields say "We are the world’s largest producer of pork, with 445 hog production farms and
approximately 1,700 contract hog growers in the U.S. alone." Growing hogs - the language surprises me a teeny little ... it would soften the blow if they said raising hogs. you know, a little respect.

My favourite sentence is:
"Ensuring the health of the pigs we produce is one of our top priorities. Our staff geneticists identify animals with superior characteristics to develop breeding programs that minimize deleterious physical characteristics." I had to Webster deleterious. It means
harmful. Guess breeding harmless pigs does ensure their good health, until it is time to market, right ? However, being a feminist, i was pleased to read that Smithfield has moved to group housing of pregnant sows by phasing out individual gestation stalls at an investment of, wait for it, hundreds of millions of dollars over the next 10 years. I guess pig-gender issues are safe with Smithfield. And feminists everywhere can now enjoy porkburgers at Mcdonalds knowing that they are in good hands.

Flippancy aside, Smithfields open and transparent reporting is commendable. The long descriptions of all the measures taken at each stage of Porky's life-cycle appear to reflect genuine best practice and first class reporting. After all, Miss Piggy is a key stakeholder, right ? Oops, i said flippancy aside.

I find Smithfield to be no less impressive in their approach on other issues. Their GRI checked B report is clear, comprehensive and marred only by a lack of assurance. I would have liked to see a clearer analysis of stakeholder dialogue and material issues, but the report does relate to what i would expect to be core for a business such as Smithfield - food safety, animal welfare, food insecurity, use of antibiotics in animal treatment, health etc. I like this report.

So back to McDonalds. And their Supplier sustainability Award. Understandable that Smithfield was selected.

This all caused me to wonder how many multinationals make sustainability awards to their suppliers . And whether reporting is part of the sustainability criteria. I am aware that many globals now rate and rank suppliers in terms of value offered, service etc.. but how many rank them for sustainability ? I think i will check that out - would welcome feedback if anyone knows who does what.

Oh, and next time you're tucking into a pork sausage triple decker , please remember that if Smithfield grew it, it probably died smiling.

REPORTING AWARDS: please vote!

The corporate register reporting awards are open for voting.YEAH !!!!!.

Please go to to vote.

And a special request:
Please vote for the comme il faut report in the Best SME category.
This is a breakthrough report - first in Israel at GRI level A checked, first private company report, first fashion business report, amazing design and comprehensive content. I am NOT objective. I wrote it! But it's a great report. And i would really like to see my client win an award. This is also the only Israeli report in the competition.

The Corporate Register is the best reference point for reporting. It stores over 18,000 reports and boasts 23,500 users. There are 120 reports in ths years competition, and some of them (!) are absolutely exceptional.

This is the second Reporting Awards. Last years competition included 300 reports. To see who won, take a look here:

Please vote!
Reporting is a critical tool in the development of transparency in business. Any report is better than no report, but the awards is an ackowledgement that reporting requires more than just a desire to be transparent, it requires the existence of true csr processes in the business (otherwise there's nothing to report, right ?) and a professional and methodical approach to describing csr approach and performance. The awards offer recognition for the leaders in this field, and broader awareness for reporting companies and csr issues.
Reporting in itself is a catalyst for action, and regonition for reporters is a catalyst for reporting.

Well done to the corporate register for this initiative!

Tuesday, October 21, 2008

Quick update:

See my comments on two Ethical Corporation posts:

Interesting article by Toby Webb entitled: CSR in a recession, what may be in, what may be out

Review of online reporting formats by Kathee Rebernak entitled: New media – Online reporting’s virtues and pitfalls

As usual, i am rather argumentative. I wonder if i was born that way, or if reporting did it to me!

Report or be reported.

Ok, so i promised a post on self-declaring. Rain check till next post. Please.

Because i had this thought: report or be reported.

It is possible to consider sustainability reporting as a from of pre-empt. Because what a corporation doesn't report, someone else apparently will. This thought came as my inbox was bombarded with details of new reports, surveys and studies about the corporate responsibilty of businesses.

For example:

Interbrands 2008 Value of Brands report - a great read - with an interesting view of brand value link to sustainability.

The 2009 corporate equality index - about the way businesses address Human Rights.
Wal-mart scored a whopping 40%, losing out mainly on gender discrimination practices.
Nokia scored 50% - losing out on diversity training, LGBT equality and support and other benefits for same and opposite sex partenrs.

Nokia's 2007 CR report says " In 2007, 71% of employees participating in our annual employee survey felt that all employees of Nokia are treated as individuals regardless of age, race, gender or physical capabilities - an increase of 2% from 2006. We also conducted a survey in 2007 to find out how our policies on inclusion affect our employees' work lives. We are implementing an action plan on diversity across all business units. " If i were Mrs Nokia, I would challenge the 2009 euality index score.

So many aspects of corporations and their non-financials are under scruting today, so many surveys, so many comparisons and benchmarks, so many corporate-watch type websites, so many brand and reputation indices ... that the only way a Corporation can tell the comprehensive story about its performance and balance the spectrum of data is through the CSR report. Typically, surveys and benchmarks are focussed on specific aspects of a corporation's activity. Often, these are taken out of context and stacked up against a set of external parameters.

The CSR report is an opportunity to establish context, balance and perspective in reporting data. Clearly, the report should be authentic and tell the truth. It should include the good news and the not-so- good news . (Ok, bad news). But the ability to present all this data in CONTEXT and with PERSEPCTIVE and in line with the Corporations objectives is valuable.

Take the Nokia example above. With so many Companies achieving 100% in the equality index, many of whom i do not associate with a good human rights record, Nokia's 50% was a shocker. Wal-mart didnt surprise me all that much, but Nokia did. And as i read Nokia's CR report, I see that they are undertaking substantial work on Human Rights, Diversity and Gender. Whichever source I choose to believe, the fact is that Nokia has pre-empted a position in context on this issue which balances external reports about their conduct.

So, report or be reported. Pre-empt or be pre-empted. Proact or be proacted. (Hmm, does that work ?). This post is a pre-empt for all those who maintain that CSR reporting is just about PR.

Monday, October 20, 2008

How to almost report: the paradox of level C reporting

The GRI is a great framwork but i sometimes wonder if it has set itself up for a few own-goals.

Reporting levels A B and C are designed to give some degree of choice about the level of disclosure when reporting. I typically view "C" level as a vehicle for a first reporter, who is unsure about the risk of reporting or perhaps doesnt actually have all that much to report. "B" level is a good choice for most first timers in my view, as it ensures some degree of substance to the report without demanding the full Monty. "A" level is for seasoned reporters, but by no means out of the reach of businesses with some established csr practices.

So let's take a closer look at "C" level. Some Management Disclosures required (this is usually the easy piece) and only 10 indicators. This really is more of a declaration of policy than a report of performance. A bit like going skiing on an indoor slope with self-guiding extra-wide skis, automatic braking system and air cushion front and back.

I did a zoom-in on what look to be a really great little report by imc2. Their first self-declared "C" level report can be viewed here.

First, i will restate one of my mantras: Any report is better than no report. Any Company who chooses to report for whatever reason must be commended. So my full commends to imc2. A first report is always difficult, always full of tough choices and new considerations, sometimes politics, so getting to the stage of the press release is quite an achievement.

This being said, we cannot ignore quality. Let's take a closer look at the Imc2 report.
IMC2 is an online marketing services business, digital tools and the like. Turning over less than $100 million ("we are a private company so we do not disclose turnover"), with 523 employees based mainly in Dallas USA, it is one of the few companies i have come accross of this profile to actually go the home run with a csr report. The report is called Positive Impact report, and the Company declares its non-financial mission to be about building relationships.

The report is written in chatty style, stragtforward, no pretense, no sustaino-eco-corpo-jargon, and is a truly refreshing and pleasant read. Anecdotes about the president's boyhood charity activities, how you spend your day in the office and why the world is at environmental risk are quite entertaining and mildly informative. But its not the nitty gritty. And whilst this report is cleanly written, flows well and touches on a number of interesting and even material points (can you really trust advertisers? how can a small business make a big impact? how do you really measure all this ssustainability stuff?), the lack of hard numbers and sustantial evidence of adoptionof csr practices is very very limited. About the only quantifyable numbers in the report at those relating to employee carbon emissions. Even data which appears to be readily available, such as the results of regular employee surveys are not disclosed. Why would a Company who wants to "change the world" go so minimal on data ?

This reminds me of another almost report - the Deloitte inaugural report - "we are defined by our responsibilities" - which, whilst not pretending to be any level GRI and has no referenced standards - is a collection of PR blurbs and mildly disguised advertising copy, despite the fact that the company actually appears to do a lot of positive things. I tried to look for numbers in that report too, and the best i could come up with was the page number on each bottom footer.

Has the GRI created an almost-reporting framwork by establishing application level C? Is this actually an own goal ? For if the objective of reporting is to build trust with stakeholders, the almost-reports which beg more questions than they answer surely do not advance this aim. In some cases, they positively reduce trust. The imc2 report is so charmingly written that its hard to be critical. But at the same time, reporting should be reporting, not a policy booklet.

Another thing we see with first-time reporters is the choice of report timing. Better to go earlier despite leaving many reporting gaps (if i see "not material" more than 75 times in a GRI Index then i know that someone hasn't understood the meaning of material), or better to implement more and report later ? Hard choice. I tend to favor the former, but i see no reason not to include more data. Both imc2 and deloittes have more data than they chose to disclose, without compromising speed to report market. Why not take transparency just a little further in the first report, even if application level "C" provides a neat exemption ?

Final point - self declaration is problematic. Why ? haha.... NEXT POST. :-)

Tuesday, October 14, 2008

Small businesses: BT shows them that its good to talk

I came across this interesting article in the UK Independent , entitled "Sustainability cannot just be put aside during an economic downturn" . I fully agree that small businesses hold the keys to our future. First, large businesses are dependent on them. Second, they are the major employers in most markets. Third, their collective influence on financial markets is significant and fourth, i am one ! haha.

What is also encouraging is the slow realisation that large businesses must help small businesses in their supply chain to become more sustainable. The GRI led program of sustainability inthe supply chain was impressive and should be a model for other corporations to follow. Not only do MNE's (multinational enterprises) gain benefit from their supply chain becoming more transparent and more efficiently managed, entire markets gain benefits from improved sustainablility of a broader based of businesses and business practice. And the GRI gets more GRI reports.

Can't fail, right ? Even in a downturn. So come on, all you MNE's. Let's see more of you picking up the gauntlet.

According to the article in the Independent, British Telecom is chairing a round table to help small businesses understand how they can get sustainable. A core BT environmental benefit is the elimination of transportation emmissions and energy consumption by offering telephone and other virtual tools to enable distance communication. They didnt say if the round table is being run by video-conference. Guess not, huh ? We all have limits ...

Scoop on Ben and Jerry's social report: destined not to be read

I decided to check out Ben And Jerry's latest social report. Not only because i am an icecreamaholic, and a csrreportaholic, but because I was looking for some specific information about social misisons for a new piece I am writing for a local professional journal.

Actually their last "Social and Environmental Assessment "was for the year 2006. (Guess they still have time to upload 2007, right ?)

First off, as usual, I looked for the PDF download. Oops. none to be found. Basically, you have to read the report on-line. OK. So i go to the highlights for 2006. The "short and sweet version" is 13 page-downs long and littered with hyperlinks and several videos. Definitely not short and not so sweet, as to read this page, including checking out the links and watching the videos, would take about the time it would take to eat a 35 pints of Chunkey Monkey packaged in new bleached paperboard containers supplied by an expert in sustainable forestry practices. And in that time I could easily scan a PDF (one chunkyMonkey time-unit) . Looks to me that Ben and Jerry's dont really expect anyone to read their report. Or, it's a sly ruse to get people to eat more Chunky Monkey.

Which brings me to a couple of questions:

Who are reports meant for ? Who do the writers expect to read them ? And how do they create the report in such a way that it can be read easily ? I will blog about this some time.

How do people read reports ? Sitting down in an armchair with coffee and Cherry Garcia, for a nice long read ? Or dip in to the highlights of interest and linger over the attention-catching points? Or are they simply a reference manual - need some data on social missions so look for that specifically in the report ? I suspect that most readers are in the latter two categories. As a professional report-reader, that's about where i am. So Ben and Jerry's on line thing doesn't do it for me. I cannot quickly scan the entire report, and getting to the data is painful. Not least because each link leads to another link, which leads to another link ... you get the scoop.

I have great admiration for Ben and Jerry's business and I often quote them in things I write and lectures I give. As part of Unilever, their disclosure is restricted - I had to smile as I read that their annual revenue for 2006 was between $200 million and $500 million. I mean, how large is a scoop of sorbet ? They say they used the GRI guidelines in disclosing this detail, but I was not able to locate a GRI Index or any other reference to reporting against GRI parameters. (Note: G3 is my bible). But the report is so hard to navigate that I gave up pretty soon after that. But not before I noticed their Fair Trade Vanilla. Sounds fairly delicious.

On another note. I was amused by the extent to which some activists go in suggesting that businesses go sustainable to unsustainable proportions: People for the Ethical Treatment of Aminals is reported as requesting B&J to use breast milk in their ice cream production rather than cows milk. Well. That would certainly open up a whole new area of creativity in naming ice cream brands: Titilating French Vanilla, Mom's Natural Milky Blend, Organic Strawberry - for Suckers Only, Fair Trade Boob Flavor, Peanut Butter Cup 36B underwired, Bosom Peach and more .... I mean, are these PETA people really serious ? Or is it just a cheap PR stunt ? I wonder how many of them eat their morning cornflakes drenched in breast milk ? hmmm ?

Anyway, Ben and Jerry's - I raise my scoopful of my personal favourite coffee -flavor ice cream to you in the hope that your reporting accessibility will become as brilliant as your business concept, execution and products.

Thursday, October 9, 2008

Israel : finally waking up to sustainability reporting

After what has been a saddeningly dormant market in terms of sustainability reporting, the Israelis are now wakening up to the delights of revealing all to the public at large. Up until this year, an intermittent trickle of low-key reports characterized the market (such as the Egged Bus Company environmental report) , and the awareness of the industry. This year, 2008, albeit rather late in the year , an absolute flood of reports has revolutionized the market: FIVE reports between July and September:

comme il faut: sustainability report, GRI A checked, 85 pages
Partner Communications: sustainability report, GRI B checked, 56 pages
Strauss Group: Sustainabilityreport, GRI A checked, 126 pages
Bank Leumi : interim environmental report, non-GRI, 32 pages, HEBREW only
Motorola Israel : sustainability report, GRI-referenced, 76 pages, HEBREW only

Interesting to note that all reports are quite different in nature and represent different industry sectors – within this diverse group, 5 distinct industries are represented, and 5 different business models.

The first to break through the glass ceiling was
comme il faut – a medium-sized, privately-owned feminist fashion business with a social and environmental agenda. Their report is a masterpiece in creative design as well as professional content at a high level of disclosure, both in terms of transparency, materiality and issues for which the business has been criticized.

Next came Bank Leumi's Environmental Report, an interim report (Leumi, one of the two largest banks in Israel, was the first GRI reporter with a full sustainability report in 2006) detailing environmental advances (direct impacts) and carbon management policy – the first and only bank in Israel to develop and disclose in this field.

Third to hit the headlines was Partner Communications, with a GRI checked B level report full of superlatives and cringingly positive declarations but, sadly, lacking in measurable performance-related content. One of those reports that leaves you wondering: Is that really it ? Surely there must be some more data on the website. But then you look and find there isn’t. Partner is the second largest cellular provider in Israel marketing under the Orange brand, and a major local employer, renowned for bold marketing and innovation. We expected a beefier report.

Following on Partner's heels – Strauss Group. Strauss is an Israeli based global foods and bev business – salads, snacks, confectionery, coffee etc – traded in Israel and one of the few Israeli Companies with over $1 bn turnover worldwide, produced an interesting, professional report focusing on narratives of direct impacts with a reasonable degree of disclosure which admits to the Company being in the first stages of the sustainability learning curve but which conveniently fails to mention some of the less positive issues the Company has been associated with during the past year such as lysteria found in salads and industrial action by employees regarding their rights.

Finally, Motorola Israel , the leading Motorola subsidiary outside of the US, produced their third local report, a highly detailed account of Motorola's impressive activities in Israel as part of global Motorola Inc. This report is not a full GRI report, given reliance on the global reporting of the mother company, but it does reference GRI indicators and is the first report to have been assured in Israel.

The fact that this group of reports all appeared around the same time in 2008 is hopefully, not just a splash in the ocean or some csr bug in the air. It's the sign of a market starting to develop into a stage of maturity where transparency holds some attraction. The low degree of public engagement and activism in Israel creates little pressure for Companies to report. But the potential for good PR and reputation enhancement is now becoming a driver of corporate interest in sustainability.

Notwithstanding, a lack of deep understanding of reporting and its purpose is evident in these pioneer reports. Only the comme il faut report produced a materiality analysis and explored material themes in detail. Others were transparent to a degree but not material. The impact of cellular phones on society was not explored in any detail in the Partner report, and the issues of obesity, food safety and sustainable food supply chain were not tabled in the Strauss report. Stakeholder engagement is not clearly understood, and there is little evidence of true efforts to identify material issues for core stakeholder groups, aside from employee satisfaction surveys, which are less than adequate as a tool for measuring stakeholder concerns and aspirations.

This is more or less where the global reporting markets were around 5 years ago. A desire to be seen to be transparent, and a public shopping list of company policies and selected data was a good first step. The advent of normative frameworks such as the GRI, Global Compact, AA1000 standards and stakeholder processes have helped global Companies move from direct and broadly internally focused csr to externally focused sustainability approaches - the move from "What are we doing" to "How do we impact". This is the maturity evolution we can expect in the local Israeli market as Companies move to second and third reports.

But first, we need to see a critical mass of reporters in Israel – in many ways, any report is better than no report, and in Israel, the potential for 250 annual sustainability reports is not exaggerated.

Let's hope that 2009's reporters will abound, whilst at the same time, learn from years of reporting experience and avoid the pitfalls of the nearly -early adopters.

(For the record, as a local consultant, I was involved in writing the first Leumi social report 2006, comme il faut report 2007, and i assured the Motorola Israel 2007 report)

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