Comrades. It's all about jobs.

One of the most memorable moments in the 5th Global GRI Conference last week was when the Minister of State for International Development (United Kingdom), The Rt Hon Desmond Swayne TD MP took to the stage and opened with the greeting: Comrades! It's all about jobs. 

That woke us all up. Minister Swain continued to elaborate, loudly, deliberately and perhaps even a little flamboyantly, in the following way, more or less. (Apologies, I may have missed a sentence or two in my transcript below)

"Let me give you my take on the Sustainable Development Goals.. or as we must now learn to call them, the Global Goals. Fundamentally these will, of course, deliver the disappearance of absolute poverty by 2030, and in doing so, will have created a more prosperous more stable and safer world. But ultimately, these goals come down to one thing: It's all about jobs. It's all about jobs in the end. A livelihood, a job - being able to put a roof over your head, putting food on the table, educating children, providing healthcare, generating the tax revenue which governments require to provide social services - it's all about jobs and if you look at the world, you will see that people are going to enormous lengths to secure a livelihood, a job or a better job. 40,000 people a day are going to the extraordinary lengths of leaving everything they are familiar with, everything they know, leaving their homes in pursuit of a job. Even if we take those who are being driven primarily by conflict, just look at that behaviour.

"Let's take Zaatari, on the verge of becoming the world's largest refugee camp, look at the conditions - they're much better than in many cities around the world with security, safety, reasonable accommodation, sanitation, clean water, food which the World Food Program provides, UNICEF will educate the children. But these people will nevertheless leave because the one thing that it cannot offer is a job opportunity. For a job, these people will risk absolutely every penny they have. It's all about jobs in the end. The world needs 600 million new jobs over the next decade if we are going to avoid a growing army of frustrated, despairing and angry young people who are unemployed or underemployed - exactly the sort of raw material, the circumstances, that generate conflict and instability which is the enemy of any kind of employment. So it's all about jobs.

"Now, I confess as a young economic student to having been enthralled with a right-wing economics professor in my University and his catchphrase was: Well, after all, there's only one thing worse than being exploited by capitalists and that's not being exploited by capitalists. HaHa. He reinforced his ignorance with another of his catchphrases: After all, surely any job has to be better than the alternative, which is daytime television! showing his clear ignorance of circumstances in the real world. If only it were so. So it is not any job, comrades. What if your job literally enslaves as many jobs do in all sorts of different forms? What if your job is breaking your health, poisoning the air or water or the land in which your community lives? What if your job literally costs you your life?It's not any job. We require inclusive growth - those kinds of jobs are actually job destroyers because what they do is generate the very sense of grievance or injustice which is the raw material for conflict which is utterly destructive of any prospect of employment.

"So we need inclusive growth. From where is it going to come? Well, my ideological prejudice will tell you that it certainly won't come from governments. Governments create the circumstances in which there can be inclusive economic growth - by providing a relatively benign investment environment, the rule of law, contract law, light-touch regulation - all those things that are essential to Global Goal number 16 and the targets that underpin it. Equally, the greatest enemy of employment can be a government where there is no rule of law, where there is arbitrary and unpredictable taxation, where there is no creation of successful enterprise, where people get jobs because they are somebody's cousin rather than because they are efficient. Any number of things, I assure you, governments can screw up and drive jobs away.

"I only know of one engine that can release initiative, enterprise and hard work of ordinary people to generate jobs and that is private-sector-led investment - the only sustainable engine of inclusive economic growth. But how do we ensure that those enterprises spend as much time addressing the impact of their enterprise as they do maximizing profit? That is where organizations such as GRI come into being. I think it's a huge compliment, a huge achievement, that just recently the Japanese Stock Exchange has made the GRI standard a mandatory requirement of membership. A huge leap forward in this vitally important set of guidelines for promoting transparency and collaboration. That's why the Department of International Development is so passionate in our support for this kind of initiative.

"May I make three suggestions for ways that we can drive this agenda forward. Firstly, with respect to new technology - let us harness new technology to make those reporting standards ever more up-to-date, ever more relevant and drive that agenda forward. Secondly, let's find ways of ensuring that this agenda - the environment, human rights and these proper concerns of enterprise are brought into the main effort, the mainstream, the core of the enterprise and not tucked away in a compliance department or in a department that ticks the boxes to show that the enterprise is meeting all its requirements. Finally, and most importantly, how do we address and engage those who are not already in this room? The reality is I'm preaching to the converted, otherwise you wouldn't have come to this conference in the first place. How do we engage those enterprises and draw them into this initiative so they too can be transparent and accountable? I know our best brains are working on it."

The message is clear. It's all about jobs. Creating and maintaining jobs, I believe Minister Swain was saying, is the core of a corporation's social impact and therefore accountability. In G4, soon to be reborn as a standard, job creation is not identified as a core material Aspect. There are references to inclusive hiring - but that's about diversity (G4-LA1). There is a reference to jobs supported in the supply chain as part of an organization's indirect economic impacts (G4-EC8). But there is nothing about creating jobs, sustainable jobs, as a core objective for corporations. Should there be? Job creation is often the outcome of successful business, rather than the driver. Companies will tell you they do not do business to employ people but that they employ people to do business. There is nothing about layoffs in the GRI framework and most companies do not tend to report layoffs. Should this be a new performance indicator? In the U.S. in 2015, Forbes reports almost half a million job cuts. I recently heard a talk on a webinar by a Manager at social enterprise Greyston Bakery, whose mission is: "Greyston is a force for personal transformation and community economic renewal. We operate a profitable business, baking high quality products with a commitment to customer satisfaction. Grounded in a philosophy that we call PathMaking, we create jobs and provide integrated programs for individuals and their families to move forward on their path to self-sufficiency." Job creation is as central to Greyston's mission as baking cookies is central to their operation. 

In any event, I thought Minister Swain got his point across very effectively, while demonstrating a sound knowledge of the issues at stake and the global environment in which we live and work. Is it all about jobs? Maybe it is, and maybe it isn't. But I could add that it's not only all about jobs. It's also about an ecosystem that enables people to get to the jobs, develop and thrive, and, ultimately, enjoy an ice cream here and there. I'd like to thank Minister Swain for one of the most powerful speeches at the GRI Conference. IMHO.

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 Twitter (@elainecohen)  or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Need help writing your first / next Sustainability Report? Contact elaine: info@b-yond.biz  

When is materiality not materiality?

Here's an issue that probably flies under everyone's materiality radar. The issue of "boredom rooms" in Japanese companies is disturbing. The story was reported in an article penned by Hiroko Tabuchi and published on 16th August in the New York Times.

Here's a short extract:

"Shusaku Tani is employed at the Sony plant here, but he doesn’t really work. For more than two years, he has come to a small room, taken a seat and then passed the time reading newspapers, browsing the Web and poring over engineering textbooks from his college days. He files a report on his activities at the end of each day. Sony, Mr. Tani’s employer of 32 years, consigned him to this room because they can’t get rid of him. Sony had eliminated his position at the Sony Sendai Technology Center, which in better times produced magnetic tapes for videos and cassettes. But Mr. Tani, 51, refused to take an early retirement offer from Sony in late 2010 — his prerogative under Japanese labor law. So there he sits in what is called the “chasing-out room.” He spends his days there, with about 40 other holdouts....... Sony said it was not doing anything wrong in placing employees in what it calls Career Design Rooms. Employees are given counseling to find new jobs in the Sony group, or at another company, it said. Sony also said that it offered workers early retirement packages that are generous by American standards: in 2010, it promised severance payments equivalent to as much as 54 months of pay. But the real point of the rooms is to make employees feel forgotten and worthless — and eventually so bored and shamed that they just quit, critics say."

 

Boredom rooms appear to be an issue which steps over the line of respecting human rights practices in the workplace.

 

Sony's 2012 CSR Report, entitled "For the Next Generation" is a 416 page giant of a report (website download), covering every possible policy and sustainability or CSR related practice. Well, almost. The report, which is GRI G3.1-indexed but not declared at any GRI reporting level,  does not contain a Materiality Matrix, so we don't know if human rights in the workplace is considered material for Sony or not. However, Sony does report on its approach to human rights (my highlights)

 

"Sony is committed to maintaining a dynamic workplace where human rights are respected and equal employment opportunities allow individuals to make the most of their capabilities. In light of the increasing diversity of human rights issues facing corporations, Sony believes a common awareness among employees is crucial to ensuring such issues are addressed appropriately. The Sony Group Code of Conduct, enacted in May 2003, contains articles related to respect for human rights and maps out policies that guide human rights-related rules and activities throughout the Sony Group. ........ These provisions are based on existing international standards, including the United Nations Universal Declaration of Human Rights."

 

Boredom rooms is an issue which only local stakeholders will be aware of. It's impossible to know about this practice at the Sony workplace unless you are an intuitive and talented investigative reporter, a local human rights employment-oriented NGO, a Trades Union employee association (about 24% of Sony employees are members of a labor union), or a Sony employee or relative of a Sony employee. It's only through genuine stakeholder engagement that this issue would surface. The questions is whether it would be prioritized by Sony as one of the most important material aspects as are required to be identified by a GRI G4 report, or whether it would be just one of a list of topics that doesn't make the materiality threshold. Either way, it sounds like it should be on the radar. 

 

This is one of the complexities of the materiality focus in G4 reporting. By selecting only the most material issues, a lot of stuff gets relegated to oblivion. An important topic raised through stakeholder feedback may not make it to the Sustainability Report, because of the materiality prioritization process. It's not too difficult to manipulate this process and carefully deselect topics which might be critically material to some but not material to all.  Is this what is needed to appease stakeholders, or is it shooting yourself in the foot? The fact that an issue doesn't make a G4 Sustainability Report doesn't mean it's not an issue.

 

We inevitably come back to the purpose and objective of the Sustainability Report. G4 talks about relevant transparency serving two purposes:  it enables stakeholders to make decisions about their relationship with the company, and it helps the business focus on potential sustainability risks and take appropriate safeguards. G4 is intended to be about good process which helps drive better sustainability impacts by addressing both these aspects. By casting a wide net in understanding sustainability topics, a company has a more robust tool to manage risk and increase stakeholder trust. The issue of restructuring in a labor environment which makes releasing employees almost impossible, so that "creative" solutions such as boredom rooms need to be devised, may not have been deemed material by Sony, if it ever made the list of relevant topics in the first place. But if this subject gains greater exposure, it might end up closer to the materiality threshold than Sony leadership might have envisaged. 

 

This issue also highlights the challenge posed by clarifying the Material Aspect Boundary required by G4. In Disclosure G4-20, the requirement is to define the entities of the organization for which an issue is material. As the article states, in Western countries, it is easier to release employees when jobs are no longer available. In Japan, apparently, the labor environment make this more difficult. Therefore, the materiality of this topic relates to the Japanese market, where Sony employs 37.5% of its workforce, but not to Western markets. A good G4 report would need to reflect this, if the issue is material. But, if the issue relates to only part of the workforce, maybe it will be seen as less important than other issues which relate to the entire workforce. Here we come back to the fact that materiality is defined in a relative way and this influences what a company chooses to disclose. It's not simple.

 

Materiality, as the basis for a G4 Report, may be the only sensible choice. Relevant transparency is what most of us want. But relevant is relative. Important is relative. Materiality is relative. Creating the right balance between what's relatively relevant and what's relatively irrelevant is no easy choice, and needs an analytical brain, an open and inclusive mindset and a rather large helping of integrity. Incidentally, for a fabulous analysis of the differences between materiality definitions and points of focus in three different reporting frameworks - IIRC, SASB and GRI - see a paper from BSR from Dunstan Hope and Guy Morgan >> Navigating the Materiality Muddle.

 

In many ways, one of the materiality tests we could apply is the three-part self-inquiry we often teach in ethics training:

 

• If my kids (boss, husband, wife, Board of Directors, Greenpeace, anyone important) found out, would this be a problem?
• If this story ran on CNN (or in the New York times), would this be a problem?
• Can I sleep at night?

Would boredom rooms pass this test?


elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: A 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)

Local Reporting: How ArcelorMittal Does It

ArcelorMittal is the world’s leading steel and mining company, with 100 million tonnes of annual production capacity and 260,000 employees across 60 countries and annual sales of $78 billion. I tried to imagine what 100 million tonnes of steel looks like. But I scored a blank. All I know is that 100 million tons of ice cream would look a whole lot nicer :). But I do have an idea of what 2,000 tonnes look like - yes, you guessed it -   the ArcelorMittal Orbit.

The ArcelorMittal Orbit is a sculpture and public viewing platform was designed by Anish Kapoor and Cecil Balmond. It is 114.5 meters tall, and is the UK’s tallest sculpture, 22 meters taller than the Statue of Liberty. The Orbit  is planned to become a new visitor attraction with views of up to 20 miles, encompassing the entire Olympic Park and London’s skyline, and is now all spanking, shining new, waiting for the Games to start. Visitors will be able to take a trip up the structure in a lift and then walk down the spiral staircase of 455 steps. Read more about the Orbit and see more photos at the Orbit website.

ArcelorMittal is no stranger to Sustainability Reporting and produces an annual report of the Company's sustainability activities both at a global level and also at several of the company's locations around the world. Going with the tagline Safe Sustainable Steel, the ArcelorMittal's 2010 Sustainability Report is a 49 page GRI Level C+ report with external assurance. After the opening section which talks about strategy, business profile and core stakeholders, the report has four core sections which have become the template framework for the local reports around the world: Investing in People, Making Steel More Sustainable, Enriching our Communities and Transparent Governance.

In 2010, ArcelorMittal spent $347million in environmental technology modernization to support reducing carbon emissions, launched a new Human Rights policy and became the fifth steel company to be included in the Dow Jones Sustainability Index.

I counted 12 local reports for 2010, in addition to the global effort, and most are produced both in the local language and in English. While there is a common outline structure and some overlap of content, and an orange-tangerine color supporting the basic design of most reports,  the local reports are independent and distinctive representations of local performance at impressively high quality. Of the local reports I could read (i.e. those in English), I noted a very clear set of personalities coming through.

Argentina's report is called "Transforming Tomorrow" and is a GRI Level B Report of 80 pages with strong sections on employee health and community involvement and a feedback form at the end. It contains some interesting perspectives from local journalists, and a nice interview with the External Affairs Manager who says: "Making the Sustainability Report allows us to outline a new way of stakeholder engagement involving all the areas, working to identify common points of interest and setting goals for each of them."

Brazil's Report is called "Looking forward to Tomorrow's Steel"  and is a 71 page GRI Level B report and contains interesting persepctives on the Brazilian steelmaking industry, details of an Organizational Climate Survey covering over 19,000 employees in the LATAM region, and a strong emphasis on employee health and safety. Biodiversity features strongly in this report, with  interesting detail of how biodiversity is affected in all parts of the LATAM region managed through the Brazil subsidiary.

India's Report (covering 2009) is a 40 page, non-GRI first report for this country, and full of the Indian flavors and spices that make this report highly Indian, and truly distinctive. It doesn't follow the 2010 template structure, instead focusing on social impact and community engagement, providing detailed context about the poverty, lack of literacy and chronic health issues in the tribal communities where ArcelorMittal is active, and the nature of the company's efforts to alleviate these problems.

Mexico's Report is a 12 pager and somewhat more compact than the rest of the local issues, with no GRI framework, but it contains plenty of Mexican faces and some local flavor. It follows the four topic template with meticulous care: 2 pages per topic (one page on Governance).

Poland's Report is a 41 page report, the first for this subsidiary, not GRI, with some great photos and many quotations from local Managers. Its focus is the significant impact the Polish business of ArcelorMittal has on the local steel industry, as the largest steelmaker in Poland.

The South African Report, entitled "Bold Spirit"  is the only report which is not a standalone, and is included in the 216 page Annual Report for ArcelorMittal in South Africa. It includes a GRI Index for the sustainability content but no application level. It does not follow the sustainability report template  and is less attractive as a sustainability report, but it includes a great section on the role of steel in society and description of the different impacts.

The USA Report is a 23 pager, not GRI, and follows the global template quite closely, with a clean design and short case studies interspersed with the narrattive. It includes a nice section of Key Performance Indicators and progress made against these to date.

It is quite impressive that ArcelorMittal has so much to say in key countries of operation and makes the effort to deliver meaningful report to all local stakeholders. Despite the different lengths, frameworks and approaches of ArcelorMittal local company reports, the local reports are, in my view, highly relevant and highly valuable. What would be an improvement for future years accross all reports is a materiality analysis, and greater disclosure of the feedback of stakeholders and how this has been incorporated intho the ArcelorMittal sustainability strategy.

I asked Meera Pau Mehta, ArcelorMittal Corporate Responsibility Program Manager,  who has responsibility for implementation of the Human Rights Policy and  the development of the Corporate Responsibility Report, what the payoff is for ArcelorMittal in producing so many reports. She said, quite simply, "Accountability and driving performance".

Meera said that "The global report is led by the group corporate responsibility team. Local reports are compiled by the local Corporate Responsibility teams, with support from the corporate team. The Group report addresses global issues, and those that are relevant to our global stakeholder groups. To keep the Group report succinct, we cannot include all the topics that are important to different local stakeholder groups. This is where local reports really make a difference – they address the topics that are most important to local stakeholders, and in the local language."

Meera added: "I love the variety of my role: I can be working on topics ranging from human rights to reporting to supplier capacity building. I have a great opportunity to shape our response to these important topics. "

Hear more from Meera at the Smart Sustainability Reporting Conference on 15th May, where she will be talking about "Increasing transparency and driving performance: from global to local corporate responsibility reporting". I am looking forward to it! (If you haven't registered yet, contact me for a discount code!)

 

elaine cohen, CSR consultant, winning Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices  Contact me via www.twitter.com/elainecohen   on Twitter or via my business website www.b-yond.biz/en  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

39 CSR reporting keywords

The Business Civic Leadership Center of the US Chamber of Commerce is celebrating its 10 year anniversary, and has put together a series of interesting videos in their TEN campaign  linking the number 10 with core CSR themes. The 10 most common words they selected got me thinking a little. The 10 most common words in CSR today according to the BCLC  are

1.  Sustainability

2.  Stakeholders
3.  Green
4.  Value Add
5.  Core competencies
6    Best Practices
7.   Leverage
8.   DNA
9.  Philanthropy
10. Accountability

Now, you might find some of these a little surprising, as I did, so I thought I would do a little check of my own. I analysed 12 CSR recently published CSR reports (listed on CorporateRegister.com) for a selection of 39 keywords, including the 10 that the BCLC selected. With interesting results.

These 39 keywords appeared a total of 12,648 times. Here are the additional 29 words I looked at:

**award ** biodiversity ** carbon ** climate ** community ** consumption ** customer ** dialogue ** diversity ** emissions ** energy ** engage(ment) ** environment ** employees ** ethics ** feedback ** governance ** impact ** leadership ** materiality ** offset ** partnership ** recycle ** risk ** target ** volunteer ** waste ** water ** women **


My analysis  of the top ten words are:

1.  Environment (1,288 times, 10% 0f total)
2.  Sustainability  (1,194 times, 9 % of total)
3.  Employees (989 times, 8% of total)
4.  Customers (875 times, 8% of total)
5.  Energy (806 times, 7% of total)
6.  Community (651 times, 5% of total)
7.  Impact (545 times, 4% of total)
8.  Waste (510 times, 4% of total)
9.  Emissions (486 times, 4% of total)
10. Water (450 times, 4% of total)

Clearly the environmental agenda is dominating CSR report content, though employees and customers, and, pleasingly, impact, are up there with the waste, water and emissions.

The BCLC ranking in my analysis works out like this:

Rank 2.  Sustainability (Hurray! we agree on one word!)

Rank 14.  Stakeholders
Rank 17.  Green
Rank 34.  Value Add
Rank 39.  Core competencies
Rank 36    Best Practices
Rank 38.   Leverage
Rank 37.   DNA
Rank 35.  Philanthropy
Rank 33. Accountability


Most of the top ten words the BCLC selected rank jut nowhere in twelve 2010 published reports, appearing less than 50 times each in a total of 1054 keywords per report on average. Wonder how the BCLC made their selection.

My analysis yielded some disappointments : "women"  appeared only 161 times (rank 23) and materiality appeared only 61 times (rank 31) and "leadership appeared only 152 times (rank 24). Stakeholders were mentioned  only 366 times, less than 3% of the overall total keyword usage.


Within the numbers, there are some interesting facts:


The top 25% (10) words account for 61% of all mentions of the 39 keywords. That's kind of Pareto-ish, right ?

Ten of the twelve reports analysed had environment as their most used word amongst the keywords

Two reports had no mention of "dialogue", 6 reports had no mention of "materiality" and one report had no mention of "customers" 

But apart from  a little fun in crunching the numbers, what does this tell us about the status of sustainability reporting? Can the focus of the organization be correlated to the frequency of keywords used?  Can we tell from an organization such as The Cooperative Group, whose top 5 keywords are sustainability, customer, employees, community and diversity, that they are more social-centric in their approach to CSR versus Ball Corporation whose top keywords are enviro-centric  sustainability, energy, employees, water and recycle ?  What about the approach to sustainability of BAE Systems who is the only one of the 12 companies who has "leadership" in the top 5 keywords? or Provident Financial, where the keyword "customer"  accounted for 32% of this Company's keyword usage, more than any other report of those analysed ? And what does it tell us that Kinross used the keyword community  for 16% of its total keyword usage, double that of any other report?

So maybe there's a case for keyword analysis of CSR reports, which reveals more about where the Company is placing its focus than the actual commentary? Of course, my analysis is a little rough and ready and relies on a consistency of language which is not always available - many companies refer to employees as colleagues, associates, team members or other such encouraging terms, so a search for employees might not reveal the true picture. But, on the whole, maybe CSR reporting keywords are a predictor of a Company's CSR mindset.

However, if you want to prove my analysis is totally screwy, all you need to do, when you are writing your next report is add this sentence at the start of each section:


Our award for best practices in biodiversity, relies on our DNA and  core competencies related to the management of carbon emissions, energy, waste and water, which we recycle, in order to provide value add for customers, whom we engage in dialogue about the climate and the environment, because they are stakeholders, and we target to get their feedback, which is in line with our governance and ethics principles, and our desire to be a green company with high impact and leverage in matters of high materiality, in order to mitigate risk and offset high consumption, so that our community can benefit from greater diversity, and sustainability, and our employees can volunteer in philanthropy activities in partnership with our leadership, which is composed mainly of WOMEN, because we value accountability.

NB: for info, the 12 reports I analysed are:

** USG corporation  **  Tamro Group ** Kinross Gold ** Provident Financial ** Barilla Group ** The Co-operative Group ** Network Rail ** Johnson Matthey ** Ball Corporation ** Premier Farnell ** AEP **

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Contact me via www.twitter.com/elainecohen  on Twitter or via my business website www.b-yond.biz/en  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm). Author of: CSR for HR: A necessary partnership for advancing responsible business practices