The first in my G4 game-changer series... randomly selected from G4 reporters in 2014, here is the Fiat Group. As game-changers go, Fiat seems to be making progress. For some background to game-changers, see this post.
Fiat Group
Sustainability Report 2013 : G4 Comprehensive, 197 pages
Sustainability Report 2012: G3.1, A+, 296 pages
Sustainability Report 2011: G3.1, A+, 268 pages
The first thing you might notice about the 2013 Fiat report is that it is around 100 pages shorter than the two prior reports. Bad news for graphic designers but great news for those who predicted that G4 would lead to compactness. However, despite the fewer pages, Fiat identified more material issues in 2013 (23) than in 2012 (18) (material issues were not specified in 2011). Not only that, Fiat actually fully reported more general disclosures and more performance indicators in 2013 than in both prior reports. (2011 and 2012: 42 general disclosures, 2013: 55 general disclosures. 2011 and 2012: 83 performance indicators, 2013: 88 performance indicators). Fiat reports on everything in the framework, material or otherwise.
Material issues - drives the report or just for show?
In this report by Fiat Group, there does seem to be a shift towards more considered reporting of material issues. The materiality matrix has substantially changed from 2012 to 2013.
In 2012, there were fewer issues and the issues were rather broad-based: corporate governance, climate change, public policy engagement etc. The issues were not sector specific, and could apply to any industry anywhere. In 2013, while there are more issues, they are more sector specific, more closely related to Fiat's core business and more narrowly defined, in a way that enables more detailed focus and defined management approach. Vehicle safety and vehicle quality for example, are two issues that feature in 2013 that were not present in 2012. Additionally, the prioritization of issues has changed significantly in 2013. Of the top five issues, only two were restated in 2013 - customer satisfaction and research and innovation - but both have changed position. Customer satisfaction was number one in 2012 ... it has dropped a couple of notches in 2013. Research and innovation has been bumped up a little.
This change in materiality seems positive. The new matrix seems more relevant and focused on the issues that affect Fiat and Fiat's stakeholders. The structure of the Fiat report has changed to reflect the new material focus. In the two prior reports, Fiat reported in three sections: economic, environmental and social. In the G4 report, there is a series of chapters that break the report into smaller, more specific sections, for instance, there is a section on employee health and safety, and sub-sections on vehicle safety and vehicle quality. There appears to be evidence of an attempt to align the report structure with the stated material issues, although, with 23 issues, this makes for a rather crowded, and slightly fragmented, report.
Focus - focused and relevant or ticking the boxes?
Integrity- shapes up or misleads?
To be in accordance as a G4 comprehensive report, Fiat should identify the material Aspects that have governed the selection of specific standard disclosures (including performance indicators). This is sort of achieved in a sort of indirect way in the Fiat report. The material issues are listed in the materiality matrix. At this point, these issues are not directly correlated to the GRI table of material Aspects, as is required by G4. They are reported as a set of company-defined issues. General disclosure G4-19 requires the reporting company to "List all the material Aspects identified in the process for defining report content". However, Fiat Group does not do this in a direct way and in my view, does not therefore respond precisely to G4-19.
On the other hand, each page of the Fiat report includes a disclosure-label reference to the relevant GRI G4 performance indicator which is part of a material Aspect. So, for example, in the narrative that discusses vehicle safety, the indicator labelled is G4-PR1 (Report the percentage of significant product and service categories for which health and safety impacts are assessed for improvement). This is part of the material Aspect: Customer Health and Safety. (I managed to work this out all by myself :) So while this does not totally strictly meet the requirements of G4, there is a sort of audit trail from material issue to Aspect to indicator. But.
The but is that, more importantly, perhaps, using the same example, the PR1 indicator label is referenced on ten separate pages in the report. I looked at all ten and was not able to find any specific response to the indicator, although there are several pages of narrative about vehicle safety and a whole load of technical stuff about the Euro NCAP 5-star rating, structural crashworthiness, Anthropomorphic Test Dummies, traction and chassis control systems, side-thorax airbags, hood deformation and more things I prefer not to think about. So, not only is the Aspect missing, but also a clear response to the performance indicator.
I find this quite puzzling as this report received GRI's Materiality Matters Check icon, which means that the GRI was charged with checking that the information required by materiality disclosures is present in the report. The Materiality Matters check does not assess the quality of the disclosures, it assesses their presence in the report.
G4-19 is not disclosed. Material Aspects are not stated. So how did this report pass the Materiality Matters check?
Even more puzzling, or perhaps we should be accustomed to this by now, this report was externally assured, and the assurers confirmed that this report meets the G4 comprehensive in accordance requirements.
How can this be confirmed if material disclosures are not reported as declared?
While I fully respect reporters that choose not to report GRI, G3, G4 or any G, I do find it disappointing when reporters declare they have reported in accordance with something and then they do not. And if two sets of checkers cannot identify this discrepancy, then there is something structurally wrong with the skills and expertise that are deployed throughout the entire reporting process. Whether it is a matter of skill, intention, understanding or born-on-Mars, the report's declaration that it meets the requirements of G4 comprehensive level is misleading in this specific example. I didn't look for more examples.
Impact - what we did or what difference we made?
When it all boils down to what's most important, we could probably argue that the real game-changer of G4 is that is should be about impacts (material impacts) and not (only) about actions. A report that drones on about we did this and we did that is (a) boring (b) boring and (c) irrelevant. A report that relates the activity to the impact the company is having in society is (a) relevant (b) more credible and (c) more meaningful for stakeholders.
Unfortunately, one of the things that was not entirely fixed in G4 was the dissonance between a report that should be about impacts and a set of indicators which are about performance. Unfortunately, too many G4 indicators require counting up what we did (hours we trained or communicated, assessments we made, initiatives we undertook). This doesn't really help us know if all these actions actually delivered a desired outcome for society, or the beginnings of one. Fiat, in this report, has followed this direction and reports extensively about its activities but far less about its overall impact. I'd like to have seen more impact-based disclosures, maybe even a few representative case studies. For example, in the vehicle safety section, the most material issue, there is a ton of detail about how Fiat is making cars safer. But there is no information about the outcome of this activity. The report says "The Group is strongly committed to its efforts to ensure safety for all road users. This commitment is grounded in the respect for human life which is reflected in all of the Group’s activities." But actually, there is nothing in the narrative about whether road users are actually safer as a result of Fiat's efforts. I would have found a case study or some reference to numbers or severity of accidents in Fiat cars to be far more convincing than line after line of safety awards for different car models and safety ratings achieved.
Game-changer - does or doesn't? In this report by Fiat Group, there does seem to be a shift towards more considered reporting of material issues. The materiality matrix has substantially changed from 2012 to 2013.
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| 2012 |
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| 2013 |
This change in materiality seems positive. The new matrix seems more relevant and focused on the issues that affect Fiat and Fiat's stakeholders. The structure of the Fiat report has changed to reflect the new material focus. In the two prior reports, Fiat reported in three sections: economic, environmental and social. In the G4 report, there is a series of chapters that break the report into smaller, more specific sections, for instance, there is a section on employee health and safety, and sub-sections on vehicle safety and vehicle quality. There appears to be evidence of an attempt to align the report structure with the stated material issues, although, with 23 issues, this makes for a rather crowded, and slightly fragmented, report.
Focus - focused and relevant or ticking the boxes?
At comprehensive level, all performance indicators should be reported for each material Aspect in this report. With 23 material issues... that's quite a lot. Also, one issue, for example, human rights across the value chain, can cover 12 different human rights indicators across ten different material Aspects. In this report, Fiat identifies six other issues that came up in stakeholder engagement that are covered in the online report, but not in the main print report. So, although some of the material issues are broad enough to encompass a broad span of indicators, it seems that Fiat has been a little selective and not just ticked all the boxes indiscriminately, even though everything is reported in one way or another.
Engagement - process or lip-service?
It's very easy to fudge stakeholder engagement to give the impression that a great deal of interaction has taken place when in fact, not much actually has. In the Fiat report, there is evidence of several targeted stakeholder intervention opportunities that have shaped Fiat's thinking.
In addition, Fiat has published a set of Stakeholder Engagement Guidelines. This is good practice, and I suspect that stakeholder engagement policies are now becoming quite trendy.
Therefore, in this report, the game on stakeholder engagement does appear to have changed. In the prior report, engagement initiatives reported were primarily incident-based, with less emphasis on ongoing dialogue and process. In 2013, more detail is provided.
To be in accordance as a G4 comprehensive report, Fiat should identify the material Aspects that have governed the selection of specific standard disclosures (including performance indicators). This is sort of achieved in a sort of indirect way in the Fiat report. The material issues are listed in the materiality matrix. At this point, these issues are not directly correlated to the GRI table of material Aspects, as is required by G4. They are reported as a set of company-defined issues. General disclosure G4-19 requires the reporting company to "List all the material Aspects identified in the process for defining report content". However, Fiat Group does not do this in a direct way and in my view, does not therefore respond precisely to G4-19.
On the other hand, each page of the Fiat report includes a disclosure-label reference to the relevant GRI G4 performance indicator which is part of a material Aspect. So, for example, in the narrative that discusses vehicle safety, the indicator labelled is G4-PR1 (Report the percentage of significant product and service categories for which health and safety impacts are assessed for improvement). This is part of the material Aspect: Customer Health and Safety. (I managed to work this out all by myself :) So while this does not totally strictly meet the requirements of G4, there is a sort of audit trail from material issue to Aspect to indicator. But.
The but is that, more importantly, perhaps, using the same example, the PR1 indicator label is referenced on ten separate pages in the report. I looked at all ten and was not able to find any specific response to the indicator, although there are several pages of narrative about vehicle safety and a whole load of technical stuff about the Euro NCAP 5-star rating, structural crashworthiness, Anthropomorphic Test Dummies, traction and chassis control systems, side-thorax airbags, hood deformation and more things I prefer not to think about. So, not only is the Aspect missing, but also a clear response to the performance indicator.
I find this quite puzzling as this report received GRI's Materiality Matters Check icon, which means that the GRI was charged with checking that the information required by materiality disclosures is present in the report. The Materiality Matters check does not assess the quality of the disclosures, it assesses their presence in the report.
G4-19 is not disclosed. Material Aspects are not stated. So how did this report pass the Materiality Matters check?
Even more puzzling, or perhaps we should be accustomed to this by now, this report was externally assured, and the assurers confirmed that this report meets the G4 comprehensive in accordance requirements.
While I fully respect reporters that choose not to report GRI, G3, G4 or any G, I do find it disappointing when reporters declare they have reported in accordance with something and then they do not. And if two sets of checkers cannot identify this discrepancy, then there is something structurally wrong with the skills and expertise that are deployed throughout the entire reporting process. Whether it is a matter of skill, intention, understanding or born-on-Mars, the report's declaration that it meets the requirements of G4 comprehensive level is misleading in this specific example. I didn't look for more examples.
Impact - what we did or what difference we made?
When it all boils down to what's most important, we could probably argue that the real game-changer of G4 is that is should be about impacts (material impacts) and not (only) about actions. A report that drones on about we did this and we did that is (a) boring (b) boring and (c) irrelevant. A report that relates the activity to the impact the company is having in society is (a) relevant (b) more credible and (c) more meaningful for stakeholders.
Unfortunately, one of the things that was not entirely fixed in G4 was the dissonance between a report that should be about impacts and a set of indicators which are about performance. Unfortunately, too many G4 indicators require counting up what we did (hours we trained or communicated, assessments we made, initiatives we undertook). This doesn't really help us know if all these actions actually delivered a desired outcome for society, or the beginnings of one. Fiat, in this report, has followed this direction and reports extensively about its activities but far less about its overall impact. I'd like to have seen more impact-based disclosures, maybe even a few representative case studies. For example, in the vehicle safety section, the most material issue, there is a ton of detail about how Fiat is making cars safer. But there is no information about the outcome of this activity. The report says "The Group is strongly committed to its efforts to ensure safety for all road users. This commitment is grounded in the respect for human life which is reflected in all of the Group’s activities." But actually, there is nothing in the narrative about whether road users are actually safer as a result of Fiat's efforts. I would have found a case study or some reference to numbers or severity of accidents in Fiat cars to be far more convincing than line after line of safety awards for different car models and safety ratings achieved.
I think the Fiat report is driving (safely) in the right direction. There are signs that the company has made an attempt to move in the direction of G4. The rather techno-babbly and over-wordy language make for tough reading, and the immense detail tends to detract from the core material focus. There is an opportunity to change the game more decisively with Fiat's next report.
I give this report a 58% game-changer rating.
I give this report a 58% game-changer rating.
Material issues - 65%
Focus - 70%
Stakeholder Engagement - 60%
Integrity - 50%
Impacts - 45%
Stay tuned for more game-changer analyses.
elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise guide to Next Generation Sustainability Reporting AND Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via www.twitter.com/elainecohen or via my business website www.b-yond.biz (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)
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