G4: It's NOT about materiality

If you attended the global GRI conference in Amsterdam, 22-24 May 2013, you probably couldn't move more than a couple of meters without hearing the word materiality. In fact, almost every single post and article that I have read that covers take-outs from the conference (at least 10 different articles from different commentators / practitioners / bloggers) has started off explaining the new G4 by describing the technical changes to G4 reporting requirements, disappearance of A,B,C, new disclosures, changes to indicators, new Boundaries, different boxes to tick, all the while making clear that materiality is at the center. And then why. Reports should be more focused, more relevant, more aligned with the most important impacts of the company. All true. Materiality will be the centerpiece of the thousands of G4 reports we will see raining down on all us stakeholders starting, probably, this year. Materiality will be so present, that pretty soon, no-one will ever remember having written a report without it. G3 will be so antiquated that companies will cringe at the thought of the primitive materiality-challenged approach to reporting which they have been doing for years. G4 and its materiality focus, will become our new map of the world, and one which will help us all understand who actually is doing what to whom, and where. When you open an In Accordance report, you will naturally gravitate to material issues. You won't have to look for them. They will hit you smack in the face. All this is good. Very good. It's real progress.  A positive transformation. It might even be a revolution.

 

BUT

 

There's just one little thing that everyone has forgotten in this euphoric rush to put the materiality-driven center of G4 on a pedestal. That little thing is called PROCESS.

 

In G4, what is even more important than materiality, is the PROCESS by which materiality was determined. G4 sets out a very clear process for determining material issues. It's the Identification, Prioritization, Validation and Review Process (See the Implementation Manual, pages 31-42.)

 

You start with a long list of relevant topics that have any sort of impact on stakeholders or the organization. This is Identification. Fit these topics into the list of pre-prepared Aspects where possible. Aspects are those issues found through the multi-stakeholder process which are most likely to be relevant to the widest range of organizations. In other words, most organizations should be able to identify at least some of these Aspects as being important to their organization. If there isn't a pre-defined Aspect, that's ok, you can create your own. But remember, Aspects and issues can occur WITHIN the organization our OUTSIDE the organization.

 

Then, you rearrange this potentially long list in order of importance, based on an assessment of the extent to which they reflect the organization’s significant economic, environmental and social impacts or substantively influence the assessments and decisions of stakeholders. This is PRIORITIZATION. 

Armed with your prioritized list, you then decide the reporting threshold. That is, how many of the Aspects and Topics are material. Not every issue will be material. You have to draw a "threshold", above which the Aspects become Material Aspects and the Topics become Material Topics. These Material ones are those you should include in your spanking new G4 report. The prioritized issues, on a matrix, might look something like this graphic from the G4 Implementation Manual. (You can use your own color scheme) :)

Mandatory disclosure G4-19 requires you to list these material issues.

Then, with your Material Issues above the threshold clearly defined, you have to VALIDATE them, that is, make sure they represent a balanced mix, that stakeholder voices have been appropriately reflected and that the range of issues is reasonably complete. Oh, and the Material Issues should be approved by the Big Bosses in your organization. Now you are ready to write your Disclosure of Management Approach for each Material Aspect or Topic, and provide performance data against the relevant indicators (one for Core, all for Comprehensive, for each material issue).

(The final phase in this process is the REVIEW phase, but this takes place after the report has been published, as a learning exercise for the next report).

Actually, this process is not entirely new. It existed in G3, but an organization was not asked to disclose the entire list of material issues identified. Standard Disclosure 4.17 did ask companies to list "key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting." but this is not quite the same as the new G4-19, in which the prioritized list of material Aspects and Topics should be reported. Relatively few companies included a materiality matrix in their G3 reports, and often, if they did, the report content was not aligned with those same material issues listed in the matrix.

So. PROCESS is important in G4. Very important. And PROCESS drives OWNERSHIP.

This is both the risk and the opportunity of G4. In its purest state, G4 demands a maturity of reporting that takes the sustainable business model seriously, both for the benefit of business and for the benefit of stakeholders. G4 demands that companies work harder in the upstream stages of reporting... engaging with stakeholders, doing deep analysis, really working on what's most important and facing up to the demands of reporting all this transparently... instead of what has tended to be the de facto approach to date, with emphasis on the downstream part of reporting, working from the indicator list backwards, and seeing how many metrics you can fill in. G4, in addition to the materiality process, offers many other choices to companies about how they report what they report, with some General Standard Disclosures allowing broad berth for a range of different reporting styles.. more on this in future posts .... while setting a minimum expectation for disclosure in some form. This, I believe, is the transformational aspect of G4, not the materiality focus per se. Subtly, G4 places a much greater burden of choice, responsibility and ownership on reporting companies. In its purest form, a G4 report cannot be written without involvement and commitment.

The risk is that companies will look to see how they can get away with the minimum, through sticking to the letter, and not the spirit, of G4. The risk is that companies will write G4 using a G3 mindset. These companies will lose the transformation that G4 can bring. They will also risk showing up as less credible as stakeholders reset expectations.

That's why I believe that ownership is the true center of G4, not materiality. Ownership will drive better business, and better reporting. Ownership is at the heart of the business transformation - and by consequence - the reporting transformation - we all seek. Companies need to own their reporting, not respond on auto-pilot to a rigid set of framework requirements. I like to call this materiality maturity. I think G4 offers great possibilities to help us all achieve materiality maturity - both report writers and report readers. As readers, we must look for process, alignment, dialog and the way companies make choices, not just the choices they make. We must look behind the boxes ticked, not just bemoan the absence of ticks, or be satisfied when there are lots of them. As readers of reports, we also need to become more mature.

Right now, perhaps as the exhilaration of the G4 launch in Amsterdam is still fresh, I am optimistic that we will all rise to the challenge. Let's change our mindset about reporting. Let's own G4. I think it's worth a try. 

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

G4: The Voice of Dissent

Who speaks for the workers? At the GRI Conference in Amsterdam 22-24 May 2013, there was one voice which was loud and clear. It was that of the ITUC - The International Trade Union Confederation - representing 175 million workers in 156 countries and territories through 315 national affiliates - in the form of Sharan Burrow, the ITUC General Secretary, and colleague also speaking at the conference, Dwight Justice.

 

Of course, the timing couldn't have been more fortuitous. The Rana Plaza death toll of over 1,100 in Bangladesh, not the first but certainly the most publicized safety tragedy in outsourced garment factories in Asia in recent years, was the burning platform, both literally and figuratively, that added an almost haunting ring of truth to Sharan Burrow's plea for integration of labor rights and social standards into the norms of business behavior.

 

Sharan Burrow, ITUC, demands worker rights at  the GRI Conference

Here's a taste of Sharan's speech to the conference:

"Notwithstanding the legitimacy of the GRI and the improvements made in the new “G4” to deliver more strategic sustainability reports that are focused on those impacts that matter most to people and the planet, the reality is that the short-term quest to maximise profit pits corporations against rights and sustainability. Despite the risk of climate catastrophe, the corporate opposition to a price on carbon or industry policy-based subsidies for start-ups in new energy – let alone the major fossil fuel giants fight against a comprehensive climate agreement – is without moral or sustainability virtue.

Yet many of the same major companies file their sustainability reports without conscience. And their approach to the workers whose labour fuels their profits is criminal. Ask any CEO if they would like their sons or daughters to work in the textile factories in Pakistan, the mines in the Congo, manufacturing plants in Central America, or as beer women in Cambodia, and they shudder. But at the same time they allow the willful perpetuation of these horrors in the supply chains of their corporations.

The model is neither humane nor sustainable. Yet many corporations promote their practice as responsible. Just check the sustainability reports of the retailers that sourced from Rana Plaza in Bangladesh. There can be no more excuses, no more deaths from fire, occupational injuries or disease, no more work-related poverty and no more denial of human and labour rights. It is time to move beyond volunteerism to compliance. If corporations don't integrate labour rights and environmental standards into their core business model, then the rule of law must be effective enough to ensure compliance.

Globalisation in the manufacturing and service industries began to accelerate sharply in the 1980s as advances in communications and transport technology enabled companies to begin exploiting the vast global workforce on a scale which was previously impossible. Firms adopted business models based on locating production in countries where labour laws are weak, virtually non-existent or poorly enforced, and thus workers are effectively blocked from organising unions and engaging in collective bargaining with employers.

The global supply chain has become the means by which international brands maximise their revenues by continuously seeking an edge on their competitors by driving production costs ever lower. While the globalised business model continues to provide vast profits for companies, it comes at a tremendous cost to working people and to the economies of many of the poorest nations. The backwash of low-wage competitiveness can now be seen in the attacks on rights and collective bargaining in Europe, and along with the anti-union orthodoxy in the US, is not just morally wrong but counterproductive to sustainability."

 

Many of Sharan's remarks, and her subsequent contribution in the panel discussion, were met with nods of acquiescence, and occasional applause, from the very large crowd in the audience. We all agree that corporations should be more accountable for their impacts in the supply chain, which are where the most significant human rights abuses take place. The real question is whether G4 will go further in driving that accountability, moreso than its predecessor, G3.

 

Of course, we cannot expect a single, voluntary reporting framework to change the world and be solely responsible for the enlightened transformation of business accountability. Sustainability is a movement which requires all stakeholders, including governments, to play a role. Nonetheless, reporting is a catalyst for performance improvement, and G4 does take reporting to a new level. With a focus on the impacts that matter, in the places they matter, G4 aims to make reporting more relevant, more process-oriented, less tick-boxy and more accessible to our global community of businesses of all sizes in all sectors.

 

G4 has strengthened the coverage of reporting in the area of labor, human rights and supply chain management with new performance indicators.

 

New G4-12 General Standard Disclosure, required at both Core and Comprehensive reporting levels (see previous post for the difference between Core and Comprehensive), asks companies to describe their supply chains, indicating the number and location of suppliers active in supporting the delivery of an organization's products. Outsourced factories in Bangladesh, and elsewhere, should be disclosed as part of the supply chain.

 

Former performance indicators LA1 and LA4, now G4-10 and G4-11, covering details about the total workforce, including employees, supervised workers and percentage of employees covered by collective agreements, are now mandatory in the G4 guidelines, as General Standard Disclosures for all companies, rather than optional performance indicators as in G3/G3.1.

 

New Specific Standard Disclosures in the area of labor include G4-LA14, G4-LA15 and G4-LA16, relating to the percentage of suppliers screened using labor practices criteria, significant actual and potential impacts for labor practices in the supply chain and actions taken, and disclosure about grievances filed against the company.

 

New Specific Standard Disclosures in the area of human rights G4 HR-10, G4-HR11 and G4-HR12, include the same set of performance indicators that refer specifically to human rights, separately from labor practices.

 

However, Specific Standard Disclosures are relevant in a G4 report only if they have been identified as material. Companies which have not prioritized material issues which relate to labor practices have no formal G4 requirement to disclose such practices in their supply chains. This creates a potential risk that companies will be rather selective about the issues they identify as material and the extent to which they will be transparent about the detail of their supply chains. The big change in G4 is the need for a structured, inclusive, documented and transparent process for identifying material issues. It's inconceivable that a company whose product lines depend on thousands of outsourced factories throughout Asia and elsewhere will not declare labor and human rights as material issues after due process. G4 requires a leap of faith that companies will apply this new reporting framework responsibly and ensure content is developed in a considered and balanced way, reflecting significant social and environmental impacts both internal to and external to the organization. 

 

G4 comes, then, with a greater emphasis on the responsibility of stakeholders to be alert to the ways in which companies use the G4 guidelines, what they prioritize and how they report. G4 is the era of, not only greater responsibility to report (companies), but greater responsibility to respond (stakeholders).  I would like to hear more from the voice of dissent, the ITUC, and from others, responding to corporate disclosure, as it happens, and not just with bold statements at GRI conference time. As G4 takes root, it is critical that we all step up our vigilance and active involvement in the reporting process. We are all stakeholders. We are all accountable. We are all the voice of dissent.

 

In the meantime, 1,600 people, nodding, in the RAI Conference Center in Amsterdam on a rainy morning in May, is a good start.

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

G4- the rubber hits the road

Today saw the launch of the newest version of the GRI Reporting Framework: G4. For those of you who are interested in reading all 360 pages of the two-part framework (Part One = Principles and Part Two = Implementation Guide), you can download the lot here. I will be delving into more detail in coming posts, to help the CSR Reporting Blog readers (many of whom I was delighted to meet here in Amsterdam) navigate the detail, but for now,  in the meantime, a very short update:

 

Core and Comprehensive

No longer will reporters be able to claim the highest GRI "accolade" of reporting at Application Level A+. Yes, Application Levels have been tossed into a canal somewhere in downtown Amsterdam. Instead, there are two new options for being "In Accordance" with G4. These are Core and Comprehensive. A quick translation, in the language we have become used to, is that Core is sort of C minus. Comprehensive is sort of A triple plus.

 

You have to consider Core and Comprehensive in the context of the reinforced emphasis on materiality. G4 says: first complete due process and define your material issues (GRI calls these Aspects). Then, disclose your general standard (profile) disclosures, and specific standard disclosures (management approach and performance indicators) only for those Material Aspects you have identified. This means, that a new G4 In Accordance Sustainability Report will consist of:

 

General Standard Disclosures

Specific Standard Disclosures for Material Aspects

 

Now, having understood that, this is where Core and Comprehensive comes in:

 

For General Standard Disclosures, there is no major difference in disclosure requirements at Core level:

 

 

As can be seen, at Core and Comprehensive are almost identical with three exceptions:

 

• Core doesn't need to report G4-2 (key risks and opportunities, like the G3 1.2),
• Core doesn't need to report G4-35 to G4-55 (governance disclosures, including most of the governance disclosures in G3)
• Core doesn't need to report G57-G58 (mechanisms for reporting ethical breaches)

For Specific Standard Disclosures, there is a major difference:

 

 

Spot it? For Core, at least one indicator per material aspect must be reported. At least ONE. That's it. If you have three material issues, you can take your pick of the indicators related to those material issues and report performance with one indicator each. If you have one material issue, you can report on just one performance indicator. For Comprehensive, you must report on the lot - all the performance indicators for the material aspects you selected.

 

Want an example? The Material Aspect covering Energy in G4 has 5 performance indicators.

As a Comprehensive reporter, you must disclose against all five indicators, if you have selected Energy as a Material Aspect. As a Core reporter, you can take your pick. In this case, therefore, as I understand it, as a Core reporter, it is quite possible that you have declared Energy as a Material Aspect, and have selected to disclose against G4-EN7 - reductions in energy requirements of products and services - and not against G4-EN3 - energy consumed within the organization.

 

Interesting? Sure! Fabulous? Not sure. Tomorrow (Thursday) at the G4 track of the GRI conference, there will be opportunities to hear more and debate the implications of Core and Comprehensive and the best of the rest of the changes in G4. I'll pick this up again in future posts.

 

During the conference today, I heard from most people I spoke to that the focus on materiality is welcome - the idea that a sustainability report should be about key impacts and not about all impacts is a good one, and most people like this. At another level, the requirement to disclose the process of selecting material issues is likely to be seen as challenging, because many companies today do not really have a structured process for this. At one level, some are welcoming the Core option as a sort of easy-way-in to G4 for new reporters, SME reporters or lazy reporters. Others are lamenting the lack of special acknowledgement for going the extra mile to become a Comprehensive reporter, which doesn't sound quite as sexy as being able to say "We got an A+".  The plus, by the way, awarded for external assurance, will also disappear in G4. Instead, reporters are required to indicate in the GRI G4 Content Index whether specific disclosures have been externally assured or not.  You can still be In Accordance if you disclose all your stuff without external assurance. No extra marks to be gained, just a warm fuzzy feeling that you went beyond minimum expectations.

 

After a very brief initial look, the new G4 documentation seems clear and well put together. A big improvement versus current G3 guidelines and much better than could have been anticipated from the Exposure Draft.  G4 is clearly the result of masses of effort by the GRI team and governance bodies and many many others. Being at the GRI 2013 conference gives you a sense of the major scale of this development and the hopes that it brings. It's certainly an achievement, and for that alone, I believe GRI deserves our congratulations! 

 

Watch this space for more updates and analysis of G4 over the next days, weeks, months and years. And for a lot more about related issues such as the relationship between sustainability reporting and integrated reporting, supply chain disclosures, value chain mapping, and other interesting insights that come up at the GRI 2013 conference, which by the way, numbers 1,600 delegates, making it a truly memorable event. 

 

It was such a busy day that I didn't even get a chance to go for ice-cream. :(

 

 

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

Dr Sustainability en route to the GRI Conference

Dr. Sustainability is back in Europe, and this time, heading to the top sustainability event of the year, the GRI Conference. It's been a while since Dr. Sustainability was here.  As we all anticipate the news, the G4 revelation, the learning, discussion, debate, networking, inspiration, innovation, information and integration, and of course, the ice cream, Dr. Sustainability shares some thoughts about what she will be looking for from the GRI conference, in response to #CSR Reporting Blog reader questions.

Dear Dr. Sustainability:  What are your thoughts as you head to the GRI conference this year?
Dear Nosey:  As I head to the GRI Conference, I will be thinking about whether this event will go down in history as the conference that makes or breaks sustainability reporting. A lot is at stake. Will G4 be applauded or will it be stoned? Will anyone throw shoes at the speakers during the G4 launch, or will they throw flowers? I have packed a spare pair of  recycled ecofriendly sneakers and an inflatable tulip just in case.

 

Dear Dr. Sustainability:  What do you think will be the highlights of this year's conference?  

Dear Spotlight: I think the plenary room has the tallest ceilings so those lights will definitely be the high ones.

 

Dear Dr. Sustainability:  Do you think it is justified to have a full conference with people travelling from all over the world generating loads of carbon emissions and consuming endless resources? Wouldn't it be better to have a virtual conference? 

Dear Greenie: Yes, I tend to agree that the environmental impact of such a conference is enormous. But the problem with virtual conferences is that the experiences and outcomes are also virtual. Have you ever tried virtually eating an ice-cream? Believe me, it's not great.

Dear Dr. Sustainability:  Which of the speakers are you most looking forward to hearing?

Dear Listener: Actually, I am most looking forward to hearing Elaine Cohen, who is an ultra-interesting speaker and always has something provocative to say. But... err...ooops... ahem... Elaine is not on the list. Maybe provocative is not so good. Perhaps I will ask for my money back.  

 

Dear Dr. Sustainability:  Will you be tweeting #GRI2013 during the conference ?

Dear Tweep: Oh, of course. I have preprogrammed my smartphone with a set of useful acronyms to help tweeting go faster during the conference. I asked the GRI to add them to the GRI Conference App, but they haven't gotten around to that yet. In case you want to do the same, here they are:

• IAHAWT: I am having a wonderful time
• TISB: This is so boring
• NIT4ABOPN: Now it's time for a bit of power networking.
• G44E: G4 Forever
• G4NW: G4 No Way
• G4WGDIH: G4 will go down in history. (Think about it :)
• WIGRISNTARQ: Why is GRI still not talking about reporting quality?
• WTFISN: Who the f*** is speaking now?
• WMUWTIO: Wake me up when this is over.
• HMMTCYSMI1C: How many more times can you say materiality in one conference?
• ITSAOIAC: Is this speaker asleep or in a coma?
• TISAIASGIC: This is so amazing. I am so glad I came.
• IIHIA1MTITIWGC: If I hear In Accordance one more time I think I will go crazy.
• YIHGC: Yes, I have gone crazy.
• DIHTR: Did I hear that right?
• WTBOATS: Will this be over any time soon?
• TITP2MATGRIC: This is the place to meet all the GRI celebs.
• IJMAGRIC: I just met a GRI celeb.
• AGASB: Anyone got a spare bicycle?
• IIDAMNIWNAN: If I do any more networking, I will need another net.
• CAMMATTU: Come and meet me at the Tweet-UP. (Wednesday May 22nd at 12:00 in the Internet corner.)
• IWNFTC: I will never forget this conference.
• IWWTWHTNGRIC: I wonder where they will hold the next GRI conference? :)
• WTIC: Where's the ice-cream?

Dear Dr. Sustainability:  Do you think that the GRI Conference will go a long way to advance integrated reporting?

Dear Integrator: Well, there will be a lot of talk about integrated reporting, I am sure.  But I am not quite sure why. After all, integrated reporting is sustainability reporting without the sustainability, as in the following formula: IIRC + GRI = SR - S. Or to put it another way, integrated reporting is to sustainability reporting what a Magimix is to fruit salad. You get a smooth, uniform, totally interlinked and easy-flowing output but try to pick out a piece of banana and you don't stand a chance.  I have bought myself a pair of earphones which filter out all the sentences in the plenary speeches which contain the word integrated. This probably means I will hear about four lines in the first four hours. 
 

Dear Dr. Sustainability: How many of the 1,500 conference delegates to you expect to meet personally? 

Dear Networker: That's the wrong question. You should ask how many of the 1,500 conference delegates expect to meet me.  Of course, if you are referring to readers of the #CSR Reporting Blog, then the answer is all of them :)

Dear Dr. Sustainability: What is your reason for attending the GRI Conference this year?

Dear Curious:  Because there wasn't one last year.

Dear Dr. Sustainability: Do you plan to ask any tough questions at the plenary sessions?
Dear Ernst: There are no tough questions. There are only tough answers. I expect all my questions will be easy. For example: Now that G4 is done and dusted, when will G5 be developed?

 
Dear Dr. Sustainability: I have heard that the GRI is restricting lunches to one sandwich each, in order to make the conference more sustainable. Do you have a view on that?
Dear Foodie: I have no problem with that. As long as they make it a Rubik's Cubewich.

Dear Dr. Sustainability: Will you be offsetting your carbon emissions for your travel to the conference?
Dear Carbonperson: No. I won't be buying offsets. I will be selling them. I plan to walk to the conference with a solar panel hat on my head which will feed into the electricity grid that serves central Amsterdam. I will supply 0.5 surplus KWH each day of the conference and more if I go walking in the breaks.  In this way, I will probably be the most carbon positive delegate at the conference. Additionally, I have a plan to capture all the hot air that is likely to be generated in hundreds of speeches and conversations during three days of the conference program and funnel it into a compressor that will provide power for an entire city in Indonesia. 

Dear Dr. Sustainability: What message would you like to give to the conference organizers?

Dear Messenger: This is my message:  Have a great conference! 

Dear Dr. Sustainability: What message would you like to give to the conference delegates?

Dear Messenger 2: This is my message:  Have a great conference!


  elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

We love Sustainability Reports!

This week, in Bucharest, I had the opportunity to deliver a Sustainability Reporting training workshop attended by Corporate Responsibility leaders in several large and leading companies in the Romanian market. The training workshop was organized by ResponsabilitateSociala.ro, who is running the exceedingly popular European CSR Lessons, taking place as I write (16-17 May 2013, and which I regrettably was not able to stay on to attend) and was hosted by GSK Romania, the first GRI-based sustainability reporter in the Romanian pharma sector,  and 2nd runner up in the CRRA'13 online reporting awards in the First Time Reports category.

 

 

My training covered a review of global trends, a taste of what might be to come on the Sustainability Reporting horizon (including some explanation and speculation about the upcoming G4), guidance in the process of developing a report and the essential indicators worth reporting on for any business, small or large. With a range of participants from different companies and sectors (energy, telecoms, food, technology, communications, pharma and beverages), we had a lively discussion and debated fascinating reporting dilemmas and questions. With the European Directive for Reporting doing the rounds with decision-makers in Brussels, Romania has a long way to go in order to develop a sustainability reporting culture, with relatively few reporters on the current landscape in that country. A few companies show leadership:

 

Siveco: An IT software and solution provider which as been reporting since 2008 and has now published four sustainability reports, the last one for the year 2011. Siveco also participates in the UN Global Compact and has published three COP's, the last one covering 2012. This privately owned IT company, employing 1,200 people, demonstrates and authentic and serious approach to sustainability and the development of digital Romania.

 

Petrom: Petrom, an integrated oil and gas company employing around 30,000 people, has come a long way in reporting. Starting with a Health Safety and Environment Report (HSE) for 1999-2000, in 2007-2008 Petrom switched to publishing online sustainability reports, with the most recent for 2011 being available as a PDF download.  The report is clearly written and contains progress against prior year targets and new targets for the coming year.

 

Cosmote: Cosmote's last report covers 2011 and is a GRI-checked Application Level B report, the company's second, though Cosmote Group, based in Greece, Cosmote Romania's parent company, has been reporting annually on sustainability performance for several years. Cosmote Romania is a large mobile telecommunications operator with a network covering 90% of Romania. Cosmote Romania's report is a serious affair, with detailed reporting against GRI indicators and specific updates on progress and new targets.

 

Heineken Romania: This second and most recent report covering 2011 is called "Brewing a Better Future" and covers similar themes to the global Heineken, though it takes less water to brew a pint of beer in Romania than it does elsewhere in the Heineken world. That's definitely worth reporting.

 

There are a few more companies who have reported in the past, but whichever way you look at it, both the extent and maturity of reporting in Romania is still in its early stages. With most of the participants in the workshop having a desire to start reporting, or take their existing reporting to the next level, I am looking forward to seeing many more reports coming out of Romania in the future.

 

However, that wasn't the point I wanted to make in this post. I don't do a lot of training, so when I do, it's quite special. Training always help you see things through the eyes of others, through the questions they ask and the comments they make. Their takeaways from the training session help you understand how you are making an impact. One of the most significant messages, for instance, that some of the group confirmed coming out of this session, was a new understanding of the way materiality fits into sustainability reporting. So many companies report without considering the real issue of their role in society and the material issues that arise from that role, and yet, that's the compelling core of reporting. We all know that materiality is going to become even more of a focus with new GRI G4 framework and organizations such as SASB that are creating a new standard for identifying and reporting on material issues. Reporting is not just about transparency. It's about relevant transparency.

The overwhelming feeling that I always come away with from such events is that, all around the world, whether it's in Romania, or Slovenia where I ran a similar event in the early part of the week, or in any of the countries I have visited to spread the Sustainability Reporting message, it all comes down to people with passion who are doing the best job they can with the tools they have available and the knowledge they have acquired. We think of reports as words on paper or on a screen. But they are people. They are a reflection of an increasingly complex business environment with ever-more challenging demands in a reporting landscape which is getting more difficult to decipher. Hopes for harmonization in reporting seem still to be a distant aspiration. The act of training groups of passionate people just brings home to me that all reports are good, all reports are an attempt to do better, all reports are worth the words they contain because each word is one that a person somewhere, doing the best job they can with the best of intentions, has put herself, or himself,  on the line to deliver.  That may sound shmaltzy, and it's sometimes difficult to get that when you read clumsily written reports, or ones that don't quite match up to expectations. But it is worth keeping in mind.

Sustainability reporting is a reflection of people, not of companies.
If you love people, then you must love sustainability reports!
In Bucharest, we all agreed on that!  

 

 

  

Elaine Cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

Is reporting bad news?

As mentioned in my previous post, the annual  CR Reporting Awards CRRA '13 Winners were announced during a special, one-day, by-invitation-only CR Perspectives conference hosted by CorporateRegister.com in late April. The conference shared the results of the CR Perspectives survey, which was completed by hundreds of people around the world and yielded some very interesting results. A full analysis of the results will be published and made freely available by the end of May on CorporateRegister.com.

I chaired the CR  Perspectives conference, which gave me the opportunity to hear and share CR Perspectives with a full-house of fascinating people from all over the world, including China. 

Paul Scott, MD of CorporateRegister.com, a fully-fledged Sustainability Reporting authority and celebrity, told me: “As CR reporting continues to evolve, CorporateRegister was very pleased to offer a forum where recent developments and the direction of reporting could be debated by an informed audience of practitioners. CR reporting developed organically, and as it matures we find various organisations attempting to steer it one way or the other. What our CR Perspectives survey has shown is that people involved in reporting make up their own minds, and we could be in for some surprises.”

CR Perspectives opened up with  Richard Howitt, MEP and European Parliament's spokesperson on Corporate Social Responsibility who spoke about the recent non-financial reporting directive which has been proposed by the European Commission, which, if adopted, will require companies of 500 employees and more to disclose information on "policies, risks and results as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the Boards of Directors." Richard is optimistic that this will go through all the necessary approvals to become law within the next six months or so - resulting in another 18,000 companies delivering sustainability reports - integrated or standalone- a big increase from the 2,500 that Richard says make some form of disclosure today. Richard talked about ethics and trust  in business as being part of the economic crisis we find ourselves in today, and that these are not only part of the crisis, but the route out of the crisis. He believes the European Directive will help Europe to catch up with progress made in other countries such as South Africa, Denmark, Brazil and more, where non-financial reporting has already been advanced in some form. Interestingly, Richard said that non-financial reporting should not be a big financial burden on companies. He quoted a figure of GBP 4,200 additional cost for each company to produce this information, less for smaller businesses. I am not quite sure how this was calculated but I wouldn't bet my last ice-cream on that one. However, Richard Howitt's perspectives were a great starter for what turned out to be a fascinating, packed day of discussion and ... well.. perspectives.

 

Paul Scott shared the results of the CR Perspectives survey and I can't resist providing a glimpse of a few of the initial results, pending the full and final version later this month. For example:

• Over 95% of respondents agreed that CR Reporting builds trust. Great news!
• Mandatory reporting or disclosure was the thing that the highest number of people agreed would lead to better uptake of reporting (I proposed that reporters receive free ice-cream, but I don't think that gained too much ground). 
• Over half of the survey respondents agreed that improved standardization would lead to better quality reporting.
• 92% of respondents believe that an annual form of reporting is the way to go, with much less support for continuous updates throughout the year
• A whopping 63% of reporters supported country-specific reporting, as opposed to regional or global. This is validation for multinationals who commendably invest so much effort in producing local reports.
• Almost all respondents believe that all stakeholders are important audiences for CR reporting, which continues to make the reporting task a complex one, trying to meet the demands of multiple stakeholder groups.
• When asked what would make reporting more credible, the highest number of respondents said: bad news! Quantified data, assurance and use of a known reporting standard also came in with quite some support.

During the day, we heard from a range of CR practitioners and experts, including Jo Franses of Coca Cola Enterprises, Rupert Thomas of Royal Dutch Shell, Verity Lawson of BAT, Shannon Shoul of Nike, Core Olsen from Novo Nordisk, Sophie Guillou of La Poste, Joss Tantram of Terrafiniti  and Lois Guthrie, of the Climate Standards Disclosure Board, who is always an interesting contributor.

 

We debated with passion some of the big issues of the day, from the level of understanding that companies have of the value of reporting in a "survival"" context, to the use of reporting to drive corporate value. Of course, the concept of box-ticking came up, as it always does when people talk about reporting, and while a certain amount of that is always required, especially if we move to more standardized formats, the focus on materiality may well drive companies to think more deeply about what really matters rather than what boxes are available to tick.  

 

On credibility, given that the most significant credibility builder is apparently bad news, the one thing that companies don't want to report, I asked the panel what bad news they include in their reports and what they consider bad news to actually mean. The consensus seemed to be that bad news includes: failure to meet targets, failure to address material issues due to significant challenges, and worsening of performance such as in the area of safety or GHG emissions. For bad news to be noticed, it also should not be hidden way and minimized to the point that it's unrecognizable as bad news. This also gave me the opportunity to tell the story of the work I did with GSK Romania in helping to prepare their first, local, CR Report, called Valuing your Trust. In my first meeting with the General Manager, Pascal Prigent, I asked: "What can we not report? What do you not want to include in this CR Report?" Pascal looked me, puzzled, as if this was a rather odd question. His response: "Nothing. You can include in the report anything that is relevant to telling our full, honest and authentic CR performance in all the necessary areas." I didn't actually find too much bad news to disclose at GSK Romania, after interviewing all the management team and tens of others, and reviewing mounds of data and information, but the open approach of leadership and willingness to be fully transparent in the interests of building trust and credibility is something that more reporters would do well to emulate.

 

Now that we have established that bad news works, perhaps we can expect to be reading lots more bad news in future reports. This may be totally depressing but at least we will trust everybody:).

 

Watch this space for more bad news!

 

 

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

Drumroll for the CRRA'13 winners!

Once again, amidst great fanfare, the annual iconic CRRA '13 Awards Winners were announced during a special, one-day, by-invitation-only CR Perspectives conference hosted by CorporateRegister.com and free to participants in the CR Perspectives survey and CRRA '13 winners and other guests. More about this in another post. CorporateRegister.com is home to the world’s most comprehensive directory of corporate non-financial reports with close to 48,000 reports from 9,900 companies across almost all the countries you can think of.

Reports from six countries took the nine first place awards, with the U.S. and Canada picking up five of the top nine places, and the UK, Denmark, Australia and South Korea picking up one each.

 

Ten countries made the top 27 places (first place and two runners up in each category) in this order: U.S. (9 top places), Canada (4 top places), UK and Korea (3 top places), and Switzerland, Romania, Denmark, Korea and Japan picking up one of the top 27 places each.

 

Interestingly, the top eight reports (across nine categories, Nike won twice) all represent different sectors, showing that it doesn't matter what you do, if you report well, you get noticed!

 

Nike was the star of the awards, with two outright first place wins, including Best Overall Report. This coveted award has been won only by three other companies in the history of CRRA - HP, Vodafone plc (three times) and Coca Cola Enterprises, Inc. Nike has not competed in CRRA in previous years, so this win is especially rewarding for the Nike team, I imagine.

Overall, CRRA '13 drew 5,739 valid votes, a slight decrease versus last year, but still a very respectable stakeholder turnout.  European votes led the pack, as did votes from corporate CR Professionals, showing that reporters are interested in reports. Who'da thunk it? However, many other stakeholder types are represented in the voting, ranging from academics to media to investors through to NGOs government agencies and, of course, consultants :). 

 

  

So, without further ado.... drumroll..... here are the winners. (NB. Links are the report profiles on the CorporateRegister.com website, so you need to be registered to view them).

Best Report

Winner: Nike Inc - FY10/11 Sustainable Business Performance Summary (U.S.)

1st Runner-up: Intel Corporation - 2011 Corporate Responsibility Report (UK)

2nd Runner-up: Coca-Cola Enterprises Inc - CR & Sustainability Report  (U.S.)

The Nike report won by a fair margin. It is a GRI-based self-declared B level report, and is meant for online reading. It's a report designed with the reader in mind, and one which is connected to the big issues of the day. If you are going to read any report in the next few months, this is a good pick. I believe I myself gave this report top marks, and was quoted in the CRRA '13 Winners Summary.

Comments on Nike's winning report- the CSR Consultant in Israel is me
(These comments came with Nike's win in the Innovation category -
there are more comments in the Best Report category)

Best First Time Report
Winner: Samsung Engineering Co Ltd - 2011 Sustainability Report (South Korea)

1st Runner-up: RockTenn - 2012 Sustainability Report (U.S.)

2nd Runner-up: GSK Romania - Corporate Responsibility Report 2011 (Romania)

 

Samsung picked up the Asian vote for this 80 page GRI B+ Level report, which, in typical Asian report style, is packed with charts and diagrams and a wealth of information. Congrats too to RockTenn, but my personal preference has to be with the report of a company who I have come to greatly admire - GSK Romania - in second runner up place. I worked on this report with GSK Romania so I know how genuine and transparent an effort this represents. 

Best Integrated Report
Winner: Novo Nordisk A/S - Annual Report 2011 (Denmark)

1st Runner-up: Vancouver City Savings Credit Union - 2011 Annual Report  (Canada)

2nd Runner-up: Takeda Pharmaceutical Co Limited - Annual Report 2012 (Japan)

 

No-one was surprised with the Novo win in this Integrated Report category. Novo have long since made integrated reporting their mark of distinction and this is another in a string of powerful reports. Integrated Reports still remain a small percentage in the sustainability reporting landscape, but on that playing field, Novo plays to win. Novo has taken the Best Integrated Report in every year this competition has been held, with the exception of CRRA '11, when entries prohibited previous winners in order to give a fair chance to other reporters.

 

Best Carbon Disclosure
Winner: Hydro Québec:Sustainability Report 2011 (Canada)

1st Runner-up: Xstrata plc - Sustainability Report 2011 (Switzerland)

2nd Runner-up: Royal Dutch Shell plc - Sustainability Report 2011 (Netherlands)

 

Hydro Quebec scored highly in my analysis of the Best Carbon reporters, so I believe this is a fair win. I was disappointed not to see Alcatel Lucent up there in the top three (they came in at 8th place), as I thought their carbon reporting stood out well above the rest.  

 

Creativity in Communications
Winner: Dell Inc - 2012 Corporate Responsibility Report (U.S.)

1st Runner-up:Coca-Cola Enterprises Inc - CR & Sustainability Report 2011/2012 (U.S.)

2nd Runner-up: International Flavors & Fragrances Inc - Sustainability Report 2011 (U.S.)

 

A hat-trick for the U.S. reporters in the creativity category. Interesting, no? Is creativity a core American competency? Dell's GRI A+ Report is certainly an impressive 100 pages, and a new approach to reporting apparently paid off. Dell said about their own report: "This year we utilized a fact sheet-based report model. We moved to this new format in order to improve the readability of our report both in report content and report structure for our audience. Through bulleted points our report offers clear, concise examples of what Dell did in FY12 to progress Dell corporate responsibility and what we will do next." Dell has competed most years since the start of the CRRA awards, but this is the first time they have won first place in any category.

 

Innovation in Reporting

Winner: Nike Inc - FY10/11 Sustainable Business Performance Summary (U.S.)

1st Runner-up: Lockheed Martin Corporation - 2011  Corporate Sustainability Report (U.S.)

2nd Runner-up: Korea Railroad Corporation - 2011 Sustainability Report (South Korea) 

 

A new category to the CRRA line up this year (replacing the Best SME category, which took a nose-dive, due to the low number of SME entries (time to take a look at my new book, Sustainability Reporting for SMEs?)) and Nike hits the spot with their worthy report, a fitting re-entry of Nike back into CRRA after an absence of several years (Nike was runner-up in CRRA '07, the first CRRA, in the Best Openness and Honesty category).

 

Relevance & Materiality
Winner: Co-operative Group Limited - Sustainability Report 2011 (UK)

1st Runner-up: SK Telecom Co Ltd - 2011 Sustainability Report (South Korea)

2nd Runner-up: Marks and Spencer plc - How We Do Business Report 2012 (UK)

 

Poor Marks and Spencer. They were glowing (deservedly) at last year's award ceremony, having taken two first place awards (Best Openness and Honesty and Best Materiality) in CRRA '12. However, the Co-Operative Group, which also won the Ethical Corporation X Factor ranking, produced a really interesting report and deserves this win.  

Openness & Honesty
Winner: Pacific Hydro Pty Limited - Annual Review & Sustainability Report 2012 (Australia)

1st Runner-up: Marks and Spencer plc - How We Do Business Report 2012 (UK)

2nd Runner-up: Export Development Canada - CSR Report 2011 (Canada)

 

Pacific Hydro, one of two Australian reports that came out in the top 23 reports (which achieved the 27 top positions, three in each category) is a worthy winner, and is no stranger to CRRA, having won the Best SME report in CRRA '11. This year, Pacific Hydro produced a clean, well-written, direct report which clearly attracted voters, who gave this report a significant win, with a big margin, well ahead of the rest of the pack.

Credibility through Assurance
Winner: Vancouver City Savings Credit Union  - 2011 Annual Report

1st Runner-up: La Trobe University - Sustainability Report 2011

2nd Runner-up: Banco Bradesco SA - Sustainability Report 2011

 

This is Vancity's first win in all the CRRA years that they entered and they succeeded with the help of Ernst & Young Canada who delivered their Assurance Statement which carries out both reasonable assurance on reporting principles and carbon emissions, and limited assurance on performance information and targets. The statement is comprehensive and detailed and includes a recommendation for improvement. A good statement (one of the few we come across) which completes a good report.  

 

The full winners report is now freely available on the CorporateRegister.com website here (login required).

 

If you are looking for inspiration as you move into  your 2013 report development and aspire to make the CRRA '14 leader board, this is a good place to start. Good luck! Congrats to all the winners!

 

 

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   or via my business website www.b-yond.biz (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)