G4 reporting: what's wrong in the financial services sector?

How do you assess the quality of a G4 report? Sustainability reports are complex things and must meet a wide range of goals, objectives, stakeholder interests in qualitative and quantitative data, style, tone and conceptual elements and more. Some reports tell a great story, some tell too great a story, some are more authentic, some are less. Some reports reflect a maturity of sustainability approach and some reflect the first stages on what promises to be quite a long journey. Some get the message across, some actually get the message through. Reviewing sustainability reports is always a challenging task and often reflects more about the reviewer than the report itself. However, there is one aspect of G4 sustainability reporting that is not open to interpretation and that is quality. By quality, I refer to the way in which the report has adhered to the G4 guidelines. Not just quality in a general sense, whether the writing is of good "quality" by whatever standards you choose to apply, or if the data is presented coherently. I mean quality in the very specific sense of the extent to which the G4 report adhered to the G4 framework it declared. More like integrity. Whether the report does what it declares to do. If a company prepares a G4 report, and declares it to be in accordance with the core or comprehensive reporting level, then I expect to see the elements of the G4 core or comprehensive reporting level guidelines reflected in that report. Anything less is poor quality. Maybe even poor integrity. 

However, in the 100 day grace period - which for our purposes can mean the first G4 report issued - we can expect G4 to be a learning process. There are some aspects of G4 that require some interpretation and judgment - and others which are crystal clear. As anyone who has read my book Understanding G4: The Concise Guide to Next Generation Sustainability Reporting will know, a G4 report starts from a different place than the old generation G3 reports. We would expect to see G4 reports look different, not just G3 reports with a G4 index. G4 is a different ball game. It is to be expected that the first G4 reporting cycle, and maybe the first few, will contain some areas of learning, misunderstanding and inappropriate adaptation, no matter whether this is for all the right reasons or for all the wrong ones. 

The GRI Materiality Matters check, I must admit, is not all that helpful. While it focuses on checking disclosures against a core set of material indicators, it only goes half way. It checks whether certain general disclosures exist, it doesn't check whether the issues that are stated to be material are actually specifically reported. That's a shame. GRI could play a much bigger role in helping advance the quality of reporting, not just the quantity. This has been a problem I have raised several times, and have always failed to understand the reluctance of GRI to do more, notwithstanding the immense role GRI has had and continues to have in driving awareness and scaling reporting to unprecedented proportions, including through legislation. The quality of reporting is not keeping pace with the scale of reporting. We are in danger of getting more sub-quality reports faster.

The good news is that G4 has taken off and is fast becoming the standard. In my view, that is definitely a step in the right direction. Since the May 2013 launch, the GRI database shows more than 150 G4 reports that have been published to date. I expect that will triple by the end of this year.

Coming back to quality, the encouraging uptake of G4 has regrettably inherited the sloppy quality of G3. I selected the financial services sector with the largest number by sector of G4 reports published to date to do a quick review of how G4 is being applied in practice by these pioneering organizations. My analysis of 7 randomly selected reports from this sector is constructive criticism, I hope, and an opportunity to demonstrate how report quality can be improved. I will focus on the way material Aspects are reported.

Let's remind ourselves what G4 material Aspects are. Material Aspects are the sustainability topics that have been determined to be most material following an evaluation and prioritization process including input from internal and external stakeholders. Organizations may identify hundreds of sustainability topics and then, after due process, select a shortlist of topics that are representative of the organization's most significant impacts.  Once prioritized, topics are aligned with predefined material Aspects, of which there are 46 in 6 categories in G4 and more in the Sector Disclosure supplements. Where there is no alignment (i.e. the organization prioritizes an issue which is not one of the predefined Aspects), G4 provides for the organization to retain the topic as material and deal with it in the report in the same way it deals with Aspects. The GRI content index shows the location of disclosures relating to material Aspects, both the DMA (Disclosures on Management Approach) and the performance indicators. Where a topic that is not an Aspect is selected, the organization must still report a DMA and performance indicators.

Simply put: We should quickly be able to see what's material (Aspects) and how these are reported (DMA and indicators). The G4 Content index should provide the "audit trail" for these material disclosures, in the prescribed format. In this way, the material Aspect is the first identifier and then all the relevant performance indicators  should be reported in support of that Aspect disclosure.

Absa (Barclays Africa)

Barclays Africa publishes an Integrated G4 report, 163 total pages, with separate downloadable G4 Content Index. There is also a Citizenship Report 2013 which declares itself to be a G3 report, Application Level B, but refers to the GRI Index online which is actually a G4 Content index. A little confusion among the ranks at Barclays Africa, it seems to me. 

The Integrated Report is declared as in accordance with G4 core level, and the material issues are identified on page 10: 

Barclays Africa defines 24 material issues (topics) in five categories. Within the report, the bank discloses against these topics using its own Balanced Scorecard approach and performance indicators. There is no alignment here with G4 material Aspects. Barclays Africa provides a G4 content index, but this is not presented in a way which enables correlation between indicators reported and material issues. The material Aspects are not correlated to issues, they are just listed (as in a G3 report).

There is no easy way to correlate these disclosures to the material issues stated, nor understand if the issues have been reported in full. The GRI content index makes reference to the Citizenship Report but no GRI-based performance indicators are included in this report. After spending quite some time going back and forth, I conclude that the Barclays Africa report does not meet the requirements of a G4 core report. That's not to say it's not a transparent report, and there is a certain logic to Barclays Africa presenting its performance using the company's own Balanced Scorecard system. Performance measures are noted in each section and data is disclosed. However, this Integrated Report declares itself to be in accordance with G4 core, and I do not believe it is.

Australian Ethical Investments Ltd

Australian Ethical published a Sustainability Report for year ending June 2013, G4 comprehensive level with a Materiality Matters GRI check. It is 61 pages. 

The company has identified nine material Aspects and these are listed as: compliance (product responsibility), product portfolio, active ownership, governance, ethics and integrity, client experience, shareholder confidence, responsible and ethical investment and climate change. You may notice that these material Aspects do not entirely align with the G4 prescribed material Aspects list, but my expectation was that the company would provide DMA and performance indicators for each nonetheless. 

Australian Ethical created a separate appendix for DMA disclosures and used the content index for performance indicators. However, in the content index, only four material issues are noted, including one which was not stated as material. Australian Ethical reports against the material Aspect Employment, but this was not noted as a material Aspect by the company.

In addition, three material issues  - compliance, product portfolio and active ownership  - are reported but the remaining five issues identified as material are not. This report reflects the company's sustainability performance in many ways and presents quite some detail. However, there remains a disconnect between what is stated as material and what is actually reported. Therefore, in my analysis, I would not confirm this report as in accordance with G4.


Banco Bradesco

Banco Bradesco of Brazil published an Annual Report 2013 which is "in accordance" with G4. It's a 130 page report in Portuguese - the English version does not seem to be available just yet. While I don't speako the lingo mucho, I was able to get the gist of this report. The first thing that struck me was that I couldn't find any declaration that this report is in accordance at core or at comprehensive level. G4-32 requires this to be stated, because if it is not, the report is not in accordance. Banco Bradesco's response to G4-32 in the G4 content index says this is disclosed but I couldn't find it. This is especially surprising as this report has been assured twice! Alongside the self-declarared in accordance, both assurers, DNV and KPMG, also declare this report as de acordo, and even, em totos os aspectos relevantes. Here are the statements. Please tell me if the language barrier is misleading me here, because if it is not, and Google Translate is doing its job, the assurers apparently are not. 

In this report, Banco Bradesco declares seven material issues and aligns them to "Aspectos GRI G4" although not all of these actually seem to align with the G4 Aspectos, as far as I can tell. I am not even sure they align with the Financial Services Sector Supplement. 

Banco Bradesco's G4 content index is G3-style - a list of indicators and a list of responses. No reference to disclosures on management approach (DMA). No linkage between the Aspects and the G4 content index.

Another one bites the dust. Apparently.

Danske Bank Group

Danske Bank published its 2013 Corporate Responsibility Report, a G4 core report of 64 pages, with a separate online only G4 content index. The report shows 19 material issues.

However, Danske Bank does not disclose performance indicators for any of these issues. None of the issues are aligned with the G4 predefined material Aspects. In fact the content index is rather a waste of time.

The DMA disclosures are one-liners that could have been written by almost any company and offer little value to the reader of this report. They are rather poorly written. The reason equal opportunity and non-discrimination is material is stated as "Attaching any significance in work-related contexts to differences in nationality, religion, sexual orientation and gender, should be avoided." Duh. Equal opportunity is a material Aspect in the Labor Practices and Decent Work category, and the required performance indicator for a G4 report is G4-LA12. "Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity." The content index refers us to pages 48 and 49 of the Corporate Responsibility Report and to the company website (where the same information is duplicated). In neither case is the information supporting G4 LA-12 reported. Some supplementary information is provided (but not referenced) in the separate Corporate Responsibility Fact Book, but even so, this does not meet the requirements of G4-LA12. Here again, Danske Bank may have done an interesting job in delivering another sustainability report full of facts and figures and interesting information, but it is not in accordance with G4 core.

I will take a quick time-out to highlight a nice touch in the Danske Bank report. It includes several dilemma pages - issues the bank faces that provide particular challenges in sustainability terms. It's a nice way of demonstrating that finding the best way forward to address complex challenges is not always so simple. All companies go through this. I like the way Danske Bank presents these dilemmas and helps us understand the issues.

 

dunia Finance

 

This 99 page 2013 Sustainability Report is a self-declared G4 core report. It is dunia's first sustainability report and should therefore be applauded. Clearly, significant efforts have gone into its production and it contains a lot of interesting and important information. However, the organization has not quite grasped the meaning of the G4 guidelines and the in accordance declaration. No material issues are stated anywhere in this report. In response to G4-19, page 5 is indicated as the disclosure location.

 

 

 

This is page 5. There are no material issues and no mention of any process for identifying material issues.

 

 

 

This is the G4 content index for performance disclosures. dunia has selected some performance indicators and notes page ranges where disclosures and DMAs can be found. There are just a few.

 

 Great intention, but this is not an in accordance G4 report. Another one not.

 

Grupo Santos Seguros

 

This was one of the very early G4 reports, the Reporte de Sustenabilidad 2012/2013, a 99 pager at G4 core level. First, there is a table of material issues and the corresponding material Aspects in G4. There are 12 material issues, and the relevant G4 Aspects are noted by material issue. Very clear presentation.

 

 

The G4 content index is presented in order of the material Aspects defined by G4, supported by selected performance indicators for each with the enfoque de gestion (DMA) identified for each material Aspect.  This makes it rather difficult to correlate actually what indicators related to what material issues.

 

 

Also, there are several material issues without performance indicators, either because the G4 content index refers to general disclosures, which are not actually performance indicators, or because there are none. For example, one of the material issues which is about programas sociales relaiconados a la prevencion y seguridad con la sphere de influencia doesn't appear to be associated with any material Aspect or performance indicator at all.

Now, the Grupos Seguros report is a massive undertaking in transparency, scope, detail and data. It aligns with G4, UNGC and ISO26000.  In fact, it makes so many links and cross-references that you lose the storyline completely and the report becomes a nightmare in navigation. In any language. In accordance with G4 - extremely borderline.... probably not in the strictest sense.

 

 

OP-Pohjola Group

Op-Pohjola Group has published a Corporate Social Responsibility report for 2013 of 60 pages in accordance with GRI G4 comprehensive level and containing the Materiality Matters check logo. Op-Pohjola has identified 23 material issues, shown in a matrix in the body of the report, and later, by G4 relevant categories (with 30 material Aspects). 

This has the advantage of not over-facing the reader with G4 jargon in the report narrative - enabling the reader to follow the flow while ensuring alignment of material issues to the G4 material Aspects. Unfortunately, however, both these versions don't match, and it is not clear in the structure of the report itself where what has been disclosed. Not only this, but the report does not include Disclosures on Management Approach in full. For example, the first and most material issue is Customer Privacy. While G4-PR8 has been reported under the heading "Product Responsibility", there is no DMA relating to privacy. The G4 content index is a list of indicators unrelated to the material Aspects presented. Therefore, in order to follow the "audit trail" of material issues to Aspects to performance indicators, you need to be somewhat of a detective. Here again, while this report does present a range of relevant sustainability information, G4 exactly it is not quite. Despite the Materiality Matters check!
 

So, what does all this tell us?

First, the companies are delighted to adopt the G4 guidelines but their behavior doesn't appear to have changed all that much. G4 is a paradigm shift. It says: decide what's most important and restructure your thinking, strategy, actions and reporting all around that. It's not just about doing what you always did and reordering the paragraphs of your sustainability report. Of the reports I have reviewed above, there is no real evidence of this shift in thinking. Instead of using the materiality driven approach, companies in this sector seem to be doing what they have always been doing and adding in a materiality matrix or list in order to tick the box. Not the kind of quality we hoped for when G4 was launched.

 

Second, there is a certain appeal in delivering a G4 report, and even in achieving the Materiality Matters check. It shows you are a leader. But what's the point of leading if you don't lead well? If you do not understand, or do not want, or cannot get organized effectively enough to deliver a G4 report in the proper way, then stick with G3 until you can. Or get a GREAT consultant, haha, just saying.

 

Third, let's be clear, all sustainability reporting is progress and this analysis does not ignore the fact that all the reports analyzed above are very impressive in many ways, and include many disclosures that are important, relevant and even material. In many cases, they may well meet stakeholder information needs and provide valuable insight into responsible and sustainable business practices. This post is not intended to  undermine such positive practice. However, there is no good way to point out opportunities to improve without highlighting opportunities to improve. 

 

And to end off on a positive note, one of the few admirable  examples I have seen of a G4 report that links material issues to performance indicators in a coherent way (aside from the ones I have supported writing :)) is Vodafone India 2012-2013 Sustainability Report.

 

 

 

This report is structured around the core material issues. See the issues and the content list >>>>

 

And the performance indicators are aligned with these issues and material Aspects, quite clearly, quite transparently, and quite cleverly.

The report design is pretty cool as well. All in all, G4, simple, straightforward and clear. Evidence of deep thinking and integral strategy. Short, compact, coherent report. It can be done. 

So, what went wrong in the financial services sector?

 

 

 

elaine cohen, CSR consultant, winning (CRRA'12) 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 at www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

Banking on Smarter Sustainability Reporting

Here I am again in the UK, looking forward to the third annual Smarter Sustainability Reporting Conference (SSR '14) in London next week. We have a fabulous line-up of speakers again this time around, so if you haven't already booked your place, NOW is the opportunity. The conference will take place on  25th February and we will be discussing all things related to the evolution of sustainability reporting with some of the best experts and practitioners around. Check out my posts about presenters from Tiffany & Co, and from The Crown Estate. 

In preparation for the conference, I checked out Lloyds Banking Group's latest report. Lloyds Banking Group is a UK-headquartered financial services group providing banking and financial services to more than 30 million personal and corporate customers through brands including Lloyds TSB, Halifax, Bank of Scotland and Scottish Widows. Lloyds Banking Group has over 92,000 employees.

With the financial services sector being the least trusted industry globally, according to Edelman's 2013 Trust Barometer, and with the UK down in the bottom third of the trust levels in the financial services league table, reporting becomes a critical tool to support business reputation, relationships, customer reach and employee engagement.

Lloyds Banking Group (LBG)'s 2012 Responsible Business Report is structured around the Group's Responsible Business Strategy which was developed in 2011. It focuses on the contribution of LGB to greater prosperity in the UK. That's going to be even more of a challenge these days, following the devastating  flooding in the south of the UK - just this month LBG announced a £250m fund to provide fee free lending for businesses and farmers, as part of a range of measures for businesses and individuals affected by the floods across Britain.

LBG's Responsible Business Strategy is set out in this way:

The priorities for LBG are clear, and the report includes specific performance targets and results for 2012 and new targets for 2013.

I was grateful for the opportunity to ask Caroline McCarthy-Stout,  Head of Strategy & Reporting at LBG, a few questions. Caroline will be presenting on "Innovative ways to outline the progress of your responsible business activities" at SSR '14.

Tell us about your professional background and how you came to be Head of Strategy & Reporting, Lloyds Banking Group. What specific experience prepared you for this role?
Caroline: I’ve worked in the field of sustainability and public affairs for several years. I started my career working in retail, managing the environmental and social management programme for B&Q across their store estate. Prior to leaving to join their parent company Kingfisher in 2005, I headed up a Community Development team and developed an award-winning 5 year Community Regeneration Strategy which, at that time, supported the UK Government agenda. I was also instrumental in producing B&Q’s first CSR report. I then joined Kingfisher to help further develop its international CR activity and build a sustainability-related public affairs function. Prior to leaving Kingfisher early 2012, I was seconded to Business in the Community to help it shape its ‘Visioning the Future – Transforming Business’ programme - this included supporting business company members in picturing, planning and building sustainable business models. I have been involved in a number of networks and forums over the years, including Cambridge University Corporate Leaders Group on Climate Change, and chaired the CSR Experts' Group for the trade association Eurocommerce in Brussels. I was recognised as a Business in the Community ‘Game Changer’ in 2011 – an honour given to individuals who have changed business behaviour and advanced CR within their companies. I joined Lloyds Banking Group to lead Responsible Business (RB) reporting, investor indices and benchmarking work and help with the RB communications strategy. I participate in the RB Committee and have had a lead role in helping to shape the Responsible Business 2020 vision.

What are current your priorities in role? And looking toward the next few years?

Caroline: As part of our 2020 vision, we are launching a ‘Helping Britain Prosper Plan’ focused on the areas where the Group can make the biggest difference and where we can bring about change for the benefit of our customers colleagues and communities across the UK. Our Helping Britain Prosper Plan is simple but ambitious. It sets out seven key commitments and over 20 independently verified ’prosper metrics’ which cover the areas where we can make the biggest difference for our customers across households, businesses and communities. It directly supports our business strategy to be the best bank for customers. People across Britain are facing some big issues - a lack of affordable housing, the challenge of finding a job or escaping the problems associated with being financially excluded, planning for later life and the difficulties of starting or running a successful business in tough times. The Helping Britain Prosper Plan is our response to some of the issues we're best placed to help our customers tackle. Our Commitments include supporting more than 80,000 first time buyers in 2014, lending over £1bn to SME’s on a net basis in 2014, having 40 percent of senior roles filled by women by 2020 and donating at least £100m to the bank’s Foundations between now and 2020. A full set of commitments will be available in our 2013 Responsible Business report. We are the first bank to measure economic and social impact in this way and a big focus for us during 2014 will be to measure and report our progress and to continue to engage our colleagues to deliver against our Plan and bring it to life within our branches and across all brands. 

The reputation of the banking industry in general has suffered over the past few years. How do you view that and how does it affect your work?

Caroline: I think it’s important to say that I would not have joined LBG if I didn’t believe in the leadership commitment to this agenda. There’s a heritage of ‘helping Britain to prosper’ spanning over 300 years and a culture within the business of wanting to do the right thing. We recognise our past mistakes, of course, and know we need to rebuild trust in our business – our Helping Britain Prosper Plan will demonstrate and measure the ways in which we are going to try and achieve this. We must be able to provide meaningful commitments and allow ourselves to be independently measured against those. I believe our Helping Britain Prosper Plan measures can help deliver a positive step-change in regaining positive public sentiment and trust in our industry.

What are the most significant challenges for you in the reporting process? 

Caroline:  Responding to the requirements of all of our many stakeholders and reporting against the things that they expect to hear from us and meeting our regulatory requirements without creating 100 page documents. Integrated reporting takes us a long way but stakeholder demands mean we have to find new, innovative and simple ways to communicate. We have an independent stakeholder panel and work with verifiers to ensure the issues we report upon are reflected in a balanced way.

Who do you expect to be the main audience for your report? 

Caroline: The main audience has traditionally been the investment community. The analysts particularly use the report to profile the business. We've worked hard to ensure our reporting attracts other stakeholders and through our independent stakeholder panel, we’ve been able to get a better insight into what information people want to receive from us. We’ve also undertaken a comprehensive materiality review, and tried hard to find innovative ways of communicating both online and in summary format. 

How do you evaluate the effectiveness of your reporting process? 

Caroline: We evaluate hits on our website and we monitor the feedback we receive. Our stakeholder panel and wider focus groups, undertaken by them, enables us to understand the report’s effectiveness. Our report is also aligned to the Global Reporting Initiative (GRI) framework. Many organisations report on a yearly basis and then put it in the drawer for the next nine months. At Lloyds, the approach is very much a strategic one and the report needs to have multi-purposes as a management tool. For example, bringing our RB report forward in line with the Annual Report and Accounts not only supports an integrated approach, but also enables up to date information and data to be used to support key investment indices such as the Dow Jones Sustainability Index. This whole approach helps us to identify gaps and drive performance. We also believe in the importance of assurance and verification, giving readers the confidence that what is being reported is true and accurate.

****

So, interesting perspectives and insights from Caroline. I am looking forward to asking her more questions next week and hope loads of CSR Reporting Blog readers will be there to do the same. In the meantime, thank you to Caroline for sharing thoughts and information to help whet our appetite ahead of the conference. Talking of appetite , wonder if Lloyds have any good ice cream companies among their clients? 

elaine cohen, CSR consultant, winning (CRRA'12) 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 at www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

Brazil rules the world

A Brazilian delegate at the GRI conference told me that she was quite embarrassed at the knockout performance of the Brazilian reporters in the GRI Readers Choice Awards 2010. Actually, it may even have been an embarrassment for the GRI as well, perhaps intimated as such by Hermann Mulder, member of the Awards Integrity Team who said the team met five times and worked to a process which was "as good as it can be". As good as it can be does not necessarily mean good. A process which delivers  four reports, all from Brazil, for six awards, out of a possible 1,100 reports which received votes, of which 105 were shortlisted, from 13 countries, must beg some questions.  Out of a total of 30,546 votes cast, Brazilians voted 22,613 times - 74% of all the votes.   The next highest voting country was the USA with 2,107 votes, then India with 1,981 votes, then Greece with 1,288 votes. All other countries cast less than 1,000 votes, with the Netherlands, home to the GRI, with a mere 57 votes!!, the lowest number of all. Data from CorporateRegister.com shows that Brazil is the 13th reporting country in terms of number of reports issued per year, with about 100 or so reports issued annuallly, way behind European and North American levels.

So how did this happen ? What magic inspired over 22,000 Brazilian votes ? 3,724 individual Brazilians were reponsible for these votes  - that's 72% of voters and an average of 6 votes per person, whereas the rest-of-the-world appear to have an average voting rate of 5 per participant. Not such a big difference, unless there are very wide variations withing the averages.  And even so, mobilizing so many voters to get online and "do it" is certainly an achievement worth recognizing. Notwithstanding, I believe it would be appropriate, in the interests of transparency, for the GRI to disclose the distribution of  average votes per person in each country. Just so that we can pronounce Brazil the reporting rulers of the world with a clear conscience in the knowledge that this was about quality reporting and not exploitation of the system by an enthusiastic few.   

Let's have a look at the winning reports:

Banco do Brasil - Relatorio Annual 2008. This is an annual combined financial and non-financial report hosted in the Investor Relations section of the bank's website. It is an html mini-site which is attractively designed and uses automated people who speak to you (in the local lingo with English subtitles) and provide you with the option of choosing your profile - employee, customer etc -for a tailored reading experience,  or going directly to  the the entire report content. The PDF download of this report is 539 pages! This is not a report, it's a library. It includes everything from a history lesson, "Napoleon sweeps the continent with its armies, dethroning monarchies and installing republics." in 1808, to all the detailed financial statements you would expect in a financial report, macroeconomics, microeconomics as well as sustainability information, with the resepective GRI indicator noted alongside each section of text. The main sustainability section is in a chapter of its own, 38 pages, though some of the Profile Disclosures are threaded throughout the report, plus around 20 pages of GRI Index.  Whilst it seems that this report cannot be faulted for transparency, I must say that it is not one of the most pleasurable reading experiences, though the English translation is unintentionally mildly amusing :) If you like numbers, this is a report for you!

Banco Bradesco Sustainability Report 2008. This report also won in the Best Assurance category in the CRRA 10 Awards. It's a GRI A+ level report of 148 pages in length. It's nicely designed and carefully written. The bank employs over 80,000 people with over 40% of women in management positions. Clearly, an enlightened organization :). In addition to the content in the body of the report, there are around 50 pages of "additional content" which zoom in on different aspects of the bank's activity and performance for those interested in greater detail - a nice touch! The report includes details of the Banco Bradesco "Cycle of Dialogue" with stakeholders and feedback received on their 2007 report. Atfter a brief look through, this seems to me to be an impressive report.

Vale Sustainability Report 2008 : This is a second report at GRI level B+ of 117 pages in length from this mining company with a mission to transform mineral resources into prosperity and sustainable development, employing over 145,000 people. The report is also clear and nicely designed and includes interesting references to indigenous communities and quilombolas and other informative stories.  The Vale report appears to cover key sustainability themes  and  includes an interesting graphic presentation of the material issues.

Natura Cosmeticos Annual Report 2008 : This is a nicely philosopical (life is a chain of relationships) report, (commitment to the truth is the route to perfecting the quality of relationships) for this 40 year old company with 5,500 employees, and is their ninth sustainability report, containing 14 pages of financial statements, out of a total 49 pages. (It is in the heart and in the eye of each one of us that change is built) It is a GRI A+ report with both financial and sustainability content assured by separate assurers. It doesn't shy away from talking about "controversial ingredients" and in general this  report is written in a frank and direct manner, adressing sensivtive issues such as layoffs , accidents and the challenges of diversity. Quite a readable report, actually.

So, all in all, four relevant and serious reports were selected. One cannot say that the awards were made to reports that were not worthy entrants. And you should not mistake my criticsm of the awards process for sour grapes because my predictions weren't entirely correct ... ahem.. even though I did pick two out of the four winning companies though not in the right categories.  Leon Kaye takes this positively in his editorial for Justmeans , saying that Brazil can "provide a teaching moment for companies around the world" . I am sure this is true. I am just not quite sure what the lesson is. Fernando Legrand also says Brasil (e India) se estaban convirtiendo en ejemplos a seguir por las empresas de Estados Unidos. Hmm. I am sure all the American reporters will like that!

Leon Kaye says the  Brazilian showstopper is  evidence of "Brazil's remarkable influence on the world economy and concern for sustainability." Is he right ? They certainly have some clout  - according to Forbes list of the biggest companies in the world, Petrobras (2008 GRI Awards winner)  is #18, Banco Bradesco  #51, Banco do Brasil  #52 and Vale  #80. And I guess I would rather they were leaders in sustainability than not. But Antonio Vives, who takes a "mirada critica" (I think this means  a critical look ?!) at CSR, oops, RSE,  is not convinced, calling the Brazilian victory a "falacia" (guess that one yourself). Let's hope that this win encourages more Brazilian companies to report, and more countries and voters to get into the compeititve spirit and make best use of the two years until the next Awards Gala to boost their sustainability leadership and RATS: Responsibility, Accountability, Transparency and Sustainability.

 

However, I would recommend changing the system for future awards. Here are some options:

 

• Hold one Readers Choice Awards for Brazil and one for the rest of the world, in the interests of diversity - a concept fundamental to sustainability.
• Announce now the results of the 2012 Awards (Brazil takes all!) and avoid all the hassle of mobilizing votes, in the interests of energy and resources savings.
• Limit votes to 3 reports per person, where no-one can vote for their own report, in the interests of the abundance mentality.  
• Make award categories for regions, and allocate a winner for each region, in the interests of  well, regions.
• Make award categories for company size, or type (for profit vs not-for profit) so that the Awards will be inclusive - another sustainability concept critical to the development of diversity.
• Invite only Brazilians to vote, but for not Brazilian reports.This could be called the Brazilian Choice Awards.
• Maintain the Awards in exactly the same format but accidentally on purpose block all Brazilian IP's. This could be the Brazilian No Choice Awards.
• Maintain the Awards in exactly the same format but call it the "Eurovision Song contest for Corporate Geeks" (name inspired by Mallen Baker's post on the same subject)

Which option do you prefer ? You can vote only if you live in Rio.   


elaine cohen is co-founder and co-CEO of Beyond Business, a leading social and environmental consulting and reporting firm. Visit our website at www.b-yond.biz/en

Listen sustainability at Barclays

Every so often you come accross a little touch in a CSR report that makes you think: "Mmmmmm, that's neat!" . So it happened with the Barclay's plc Responsible Banking Review for 2009. On the back cover of this 36 page review, Barclays note:

To request a large-print format or audio version, please email sustainability@barclays.com .

Mmmmmmmmmm, that's neat!  Their whole report in audio format ? That, for me is really going the extra mile in the interests of meeting all stakeholder needs. I haven't seen this before.

In this report,  Barclay's 10th, Group Chief Executive John Varley projects a no-nonsense view of the banking industry, its issues, its failures and its responsibilities. I like his straighforward style. He talks about the heated debate by the public about the role of banks which is "understandable" but "often clouded with hyperbole and misrepresentations" . In setting this straight, John Varley reminds us of the five core activities through which banks must contribute to society:

• providing reliable and efficient payment systems
• delivering safe storage (for deposits and savings)
• maturity transformation (converting savings into loans)
• asset management
• investment banking.

Barclays' responsible banking themes are : responsible finance, financing the future (addressing global challenges such as climate change) and citizenship (investing in communities) .  However, whilst Barclays did not take the government bailout at the end of 2008,  there was some backlash at their alternatives for raising cash to bolster their financial position.  A discussion of this topic didn't make it on the materially assessment radar reported in the Responsible Banking Review, so don't expect to read this in large-print format or listen to it in audio.

One other interesting thing about this report is The online feedback page / reader survey. The survey asks for feedback on the report in a number of areas. However, on this online form, there is no request for, or opportunity to include, your contact details. I understand that some might prefer to provide feedback anonymously, and that Barclays may not want to follow up with everyone who provides a response,  but shouldn't it be in Barclay's interests to know who  is giving them feedback and have the opportunity to follow up with those who provide it? Feedback should not be a one-way street, it should be the basis for dialogue. Simply asking for feedback without the opportunity to engage those providing it would seem to me like eating the chunky without the monkey.


 elaine cohen is the CEO of Beyond Business, a leading social and environmental consulting and reporting firm. Visit our website at www.b-yond.biz/en  

Bank secrets... not any more

An interesting thing popped into my email box from Banktrack newsservice - Banktrack is the site that tracks banks (funny, eh?) .. which means that it scrutinizes the activities of banks and their effects on people and planet, something us cr reporters would call.. indirect impacts. See, the true impact of the banking sector is not the checking accounts or the home loans or even the savings accounts that make up their current business, but the large, significant chunks of money they use to finance major energy or infrastructure projects, the arms industry, the nuclear sector and a whole host of things that negatively (or positively) impact us, the planet and future generations. The owners of these initiatives rely on banks to finance them. The banks that do so should be held accountable for these indirect impacts of their financing policies. And this is where Banktrack comes in. Anyway, back to my inbox (ugh!), a press release is what popped into it.

It goes something like this, well, exactly like this:

"Campagna per la Riforma della Banca Mundiale (Italy), Friends of the Earth (France), Netwerk Vlaanderen (Belgium), Platform (UK), SETEM (Spain) and Urgewald (Germany) expose investments in harmful practices and companies of thirteen large European banks in this new website. Despite of the banking crisis, financial institutions continue to do harmful investments in a sphere of secrecy. .......The thirteen banks have financed 11,4 billion euros in loans to the14 blacklisted companies as well as arranged and underwritten bond and share issues for a total value of 10,5 billion euros. In addition, the thirteen banks own or manage 17,7 billion euros of shares in the researched companies. "

The new website refferred to is BANK SECRETS. it's an amazing site. Amazing design. And the content is pretty impressive too . There are profiles of these 13 banks and the dubious investments they have made ...a click on Barclays shows 11 locations of negative financing, Deutsche Bank also 11, RBS 9, and BNP Paribas tops the chart with 12 locations. Another page focuses on controversial investments by sector such as coal or oils and gas, and another page invites you to send an ecard to your bank proposing that they adopt ethical financing principles, and offers you a checklist of points to help you verify just what your bank is doing with your money. Finally, the site offers a selection of ethical banks in 7 European countries which you could choose to bank with if you want your money to be used for good and not the opposite.

The Equator Principles were designed to provide voluntary regulation in this area. Over 60 major banks worldwide have joined this intiative, which was launched in 2003.The principles were revised in 2006, making them more stringent, and apply to project financing with capital costs above USD 10 million . Whilst the principles have made a major impact on project financing, there are still many inadequate applications , even amongst the signatories.

I decided to take a quick look at Citibank's CSR report for 2008. I was hoping that it would reveal some secrets. Such as the ones revealed by BankSecrets, for example, financing of EADS, the second largest european arms producer, involved in nuclear weapons production, or financing Dongfeng which supplies military equipment to Burma, strengthening the repressive Burmese junta. One of Citibank's citizenship goals is to continue to provide Equator principles leadership . I looked for a mention of Burma, Dongfeng, EADS or nuclear weapons but .. alas.... zilch. Of course, they would not tarnish their positive cr report with vivid description of the indirect impact of financing nucler weapons or supporting repressive regimes. And they didnt. to be fair, Citi does boast a good record of reponsible home-loaning and community involvement, but nothing about the hotspots of their financial lending activities. In 2008, Citi funded 10 transactions worth over 183 billion $, out of a possible 39 requested, after environmental and social risk management review. However, it is not clear whether financing was rejected due to ESR issues, or due to the fact that Citi judged they would not make enough money on the the projects. There is definitely room for more transparency in reporting by the financial sector.

To round off my foray into (un)ethical banking, i took a quick look at one of the recommended banks - GLS Bank. This bank describes itself as: "the first social and ecological bank in Germany. GLS stands for "Gemeinschaftsbank für Leihen und Schenken", which translates as "community bank for loans and gifts". The bank was founded in 1974 and it currently finances around 6.500 projects and businesses. The Bank focuses on cultural, social and ecological projects which try to tackle challenges in our society by developing creative solutions". Not only are your savings invested ethically, you can also choose which positive causes to route your money to support. Sounds neat, right ?

Now, as the threshold for project financing is $10 million, i figure that this could fund around 1.7 million Chunky Monkeys. A further calculation is that this supply, if financing is secured, could last me around 3.17 weeks.

elaine cohen is the joint CEO of BeyondBusiness, a leading reporting and social-environmental consulting firm based in Israel. Visit our website at: www.b-yond.biz/en