In Good Spirit: Smarter Reporting at Diageo

This second post in my series leading up to the Smarter Sustainability Reporting Conference in London on 5th February 2013 (read about Smarter Reporting at L'Oreal here) is all about Diageo, Smarter Reporting and Responsible Drinking. This is perhaps particularly relevant during the current season which usually sees a significant hike in drinking-related road accidents and fatalities.

 

 Recently, I took the opportunity to chat with Carolyn Panzer, Director of Corporate Social Responsibility for Diageo plc. Carolyn is responsible developing and overseeing the strategy for community investment, external reporting, and alcohol in society - including, responsible drinking initiatives, responsible marketing and innovation, and alcohol policy. Carolyn is also the Chairperson of the Distilled Spirits Council's Code Review Board and has nearly 30 years of experience in the beverage alcohol industry, working across industry sectors in both the US and UK.

Carolyn will be talking about: "Participating in indices and rankings - how does this contribute to reporting best practice?" at the February conference.

 

"The reporting process helps me enormously. It makes us think about our data more and understand our impacts. Smarter Reporting for me is embedding the reporting process in the business - making everybody accountable. Actually, our people really appreciate hearing our story and participating."

 

"For me, one of the most challenging things about my role is that Diageo is a big company and keeping on top of everything that is going on in the business, keeping up-to-date with internal and external developments and having the headspace to keep on track, is a major exercise in time-management. This can occasionally make me feel vulnerable, I feel I should know everything about everything, but obviously that's not possible. My secret for keeping on top is to encourage others to know more detail. Not only does this help me, it empowers the organization to own sustainability. I don't make it easy for the business. I help them take accountability and own their role in advancing our sustainability and responsible drinking programs. This is now paying huge dividends."

Diageo is the world's leading premium drinks business with beverage alcohol brands across spirits, beer and wine including Johnnie Walker  and Bushmills whiskies, Smirnoff  Vodka, Baileys, Captain Morgan, Guinness and more. Headquartered in the UK, Diageo trades in 180 countries and employs around 24,000 people with net sales of almost GBP10 billion. Diageo manufactures and supplies its brands its brands in 43 distilleries, 16 breweries, 13 wineries, 19 packaging and blending operations, 9 warehouses and 8 other sites.

 

Diageo 2012 Report

Diageo has a long history of CSR Reporting and the company's latest report was published earlier this year: Diageo Sustainability and Responsibility Report 2012, Celebrating life, today and tomorrow. This is a GRI Application Level B+ Report, with a UN Global cross-reference. This year saw a shift in Diageo's reporting. Carolyn explains:

 

"This year's report has a lot more engagement - we pushed people to align more closely with GRI indicators. We also we did better on the materiality piece. We conducted a market pilot study and now we plan to take that forward and expand it. We ran three workshops on materiality. Also, we tried to use more everyday language and less "corporate-speak", and, in the presentation of the report, we tried to make it layered. We recognize that not one size fits all and that different stakeholders look for different things, so we opted for a five-minute-read approach as a short summary option for people who don't want to get into all the details. You can you go in and read different sections at a general level or dig deeper for more detail." 

This can be seen from the Diageo business case for sustainability rationale, which is readable and comprehensible for all lay readers.

The Diageo report this year demonstrated good performance achievements against a range of key metrics against several multi-year quantitative targets within the context of a well-laid out strategy. For example, water efficiency improved by 7.2% in 2012, on track to meet a 30% objective by 2015 against a 2007 baseline. Average packaging weight has reduced by 1.6%, on track to meet a 10% target over the same period, bringing the cumulative total to 4.8% reduction. Lost-time accident frequency rate reduced by 43% in 2012, overachieving a 40% target for 2010-2012 by 17%, showing good progress in embedding a safe working culture.  However, by far the most material issue for Diageo relates to the role of alcohol in society and Diageo's responsibilities to address alcohol misuse. Diageo's report states: "In all [stakeholder] workshops, addressing alcohol abuse and promoting responsible drinking was consistently the most important issue for stakeholders as well to us as a company."

 

A couple of months ago, Carolyn Panzer addressed a groundbreaking meeting of the International Center for Alcohol Policies in which the CEOs of 13 of the world’s leading beer, wine, and spirits producers announced a collective commitment to 10 targeted actions in five areas over the next five years, in order to reduce harmful use of alcohol.  

 

I asked Carolyn Panzer about how Diageo assesses the impact of its multiple activities in this area:

"Alcohol problems are not new and there have been many initiatives to address these. You can count thousands of initiatives by the alcohol industry, but the real question is what is effective? Where do you focus your resources to achieve the biggest impact? We want to tackle the issue of problem drinkers. Raising taxes on alcohol, for example, is not necessarily effective for problem users as there will always be a way around this."

A case in point is the situation in Keyna where it was estimated that about 50% of alcohol consumed was in the illicit sector. This was problematic, as such products were often made with harmful ingredients which caused illness or even death. Diageo redesigned its entire supply chain to create a new product made from locally sourced ingredients using innovative technology representing a first in the industry and significantly reducing costs for local supply of a safe, quality beer beverage called Senator Keg, costing one fifth the price of Diageo's mainstream beer. Since its launch, the brand has gained 40% of the Kenyan beer market. It's well worth reading this case study in Business Today about the Senator Keg story. This is a fabulous example of how Diageo can support changes in consumer behavior around alcohol. This is the true value of how an alcohol company can work with consumers and local organizations to understand specific issues and behavior patterns and help create breakthrough change which adds value to society and, of course, to the business.


In the area of problem drinking, Carolyn continues: "There are some things that we know work. First, screening and brief intervention demonstrates proven efficacy with problem drinkers. Screening individuals through a set of ten questions and engaging them in a conversation about risks helps people reduce problem drinking. We have provided grants to support this kind of activity. Second, high visibility enforcement of the law on drink-driving is effective. Not every country, for example, has a maximum drink-driving limit. We work to support introduction of legislation in this area in countries where this is not present. However, even where there is a legal limit, highly visible enforcement is key. For example, in Mexico City, we ran a campaign in support of the local law enforcement authorities, in which we contributed 50,000 breathalyzer kits. Drink-driving reduced by 30%. There is an important continuum that you need to follow to achieve change. We need to ensure the right regulations  as well as build general awareness. In the U.S., we spend 20% of our broadcasting spending on responsible drinking messages. We always try to work in partnership with other organizations and groups to ensure we have the best understanding of the issues and the best expertise on board to move forward."

Finally, all Diageo employees have a role to play in advancing responsible drinking behavior. Carolyn says: "We are always trying to connect our people with our CSR story, and we ensure they are involved and informed of our initiatives in this area. For example, over the Holiday Season, we campaign our employees with the need for extra vigilance and their role as responsible drinking ambassadors."

As it is still the Holiday Season, this is great advice for all the CSR Reporting Blog Readers. I am not much of a drinker myself, actually. Personally, I am more concerned with ice-cream rather than alcohol. If ever there are laws which limit ice-cream consumption prior to driving, I may have a bit of a problem.

Happy New Year, everyone!

Looking forward to seeing you at the Smarter Sustainability Reporting Conference in February 2013. Don't forget to drop me a line for your registration discount code!
 

 

 

elaine cohen, CSR consultant, winning (CRRA'12) 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  (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

Lilly: Sustainability Report Cone Award

This is the third in my series of Sustainability Report Cone Awards.  The second was SGS - net 2 cones. The first was Intuit - also net 2 cones. This time, Lilly, the drug people. Can they beat net 2 cones?

(Note: All cone pictures were sources from Ice Cream Cone ClipArt)

Lilly 2010 Corporate Responsibility Report

About the Company:

Tenth largest pharmaceutical company in the world.
HQ in U.S.
$23 billion revenue.
38,300 employees.
Manufacturing plants in 13 countries.
NYSE listed.  

About the report:

PDF 103 pages.
GRI Application Level B.
Not externally assured.
UNGC COP included.

Ice Cream Cones Awarded:

Lilly reports on Motor Vehicle Collision Rate. There are just a few companies which do this. I think road safety is a very important measure and would like to see all companies reporting on this. Corporations can have a significant impact on global and local road safety, as I mentioned in an article some time ago.

                                      

Another nice touch in the Lilly report is the reference to the corporation's support for its key local community, the State in which the company HQ is located, Indiana, U.S., and where Lilly is one of the largest employers. Supporting the local community strengthens Lilly's home base and demonstrates commitment to local employees and causes. Local stakeholders will appreciate this focus.

Lilly's Data Summary of environmental performance is a well-laid-out table, showing progress made over four years 2007-2010. Evidence of progress is well presented, showing both absolute measures and intensity measures - for example, absolute waste generation has decreased from 398,000 tons in 2007 to 228,000 tons in 2010, with a corresponding reduction in waste intensity of tons per $ million revenue from 20.3 to 9.88.


Lilly, similar to many companies in the past couple of years, has taken measures to restructure the workforce and layoff people. No report can be complete without reference to the extent of such restructuring  and the way it has been conducted. Lilly addresses this in the report, providing numbers and describing processes to support employees through the transition.



Lilly's report is well constructed in terms of public policy and declarations of corporate approach. The report covers everything from counterfeit drugs to government regulation to differential pricing, Medicare, price controls, role of generics and more. Lilly make it clear where they stand as a business on some very core issues which affect the relationship between business and society. While action is more important than words, public declaration of policy is a first step to ensuring that aligned action follows.

I must also comment on the excellent Workplace Section in this report. Lilly includes 12 pages onworkplace practices, quoting excerpts from "J.K. Lilly Jr.'s 1916 Report on the subject of employment", which apparently has stood the test of time, good coverage of leadership and development programs including core diversity training and a course for helping employees examine the trust disparity among people of different backgrounds, and the new employee community program, Connecting Hearts Abroad, which enables 200 employees to volunteer for two weeks in ten countries around the world, and a new internal social networking site. Interesting progress, albeit that I would have liked to see more impact data, on employee turnover and retention, for example, or on actual gender diversity results. 

Ice Cream Cones Dewarded:

One of the key Big Pharma social impact areas is Access to Medicines. Lilly offers detailed reporting on the way they approach Access to Medicines, focusing on what Lilly is doing and how much money they are allocating to make important drugs more available to those who are deprived of equitable access. Much attention is given, for example, to the Lilly award-winning MDR-TB Partnership - formed in 2003 with the WHO to combat Multi-Drug-Resistant Tuberculosis. This is well explained, including background and context of the health issues relating to MDR-TB and challenges in making relevant drugs more accessible and treatment more effective. Lilly cites achievements in awareness campaigns, drugs provided and  healthcare professionals trained - a great story and truly valuable program. What works less well for me, however, is that nowhere  in the pages devoted to this case study is the actual measure of access to these drugs mentioned, nor the effectiveness of the drug in curing people. Awareness is critical but awareness alone does not solve world problems. I wonder how awareness translates into effective outcomes. I would love to see how this program has changed lives, how many people are now treated who were not before. With 9 years of action under the MDR-TB Partnership's belt, I love to know if this is effective use of Lilly's massive investment and the extent of actual social impact. Developing a good measure of program effectiveness is not an easy task by any means, and perhaps my expectations are unreasonably high, but  more about outcomes as a result of action would make this story come alive for me.

Materiality is covered off  superficially for Lilly. There is a list of 5 key issues which are generic enough to be fairly meaningless - such as "The development and production of safe and effective medicines". This is not just a material issue - it seems more like a mission statement. The core, specific material issues for this company are not highlighted. For example, what happens to all those medicines that people receive and are never used ? Lilly has a small section about Product End-of-Life but doesn't really demonstrate real action in this area. This is not identified as a specific material issue.

 

 

Lilly does not externally assure the company's report. For a global business such as Lilly, in a complex business such as pharma, external verification would be a welcome addition to the overall credibility of this report.  No matter how stringent internal reporting standards are, external verification demonstrates a more serious commitment and well, you never know, may even enable inconsistencies, if they exist, to be discovered and corrected. Now, what truly sustainable company would not be interested in this?

Overall Ice Cream Cone Status:

Lilly nets three cones and is therefore in the lead in the Cone Award League Table for 2012. Congratulations! There is no maximum to the number of cones that can be awarded or dewarded, so there is still room for more than three net cones. Watch this space for more Sustainability Report Cone Awards. Who will get to net 4 Cones ?

elaine cohen, CSR Consultant, 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  (Beyond Business, an inspired CSR consulting and Sustainability Reporting firm)

Road Safety is a Sustainability Issue

I was driving home from my Friday morning shopping yesterday, listening to the radio. The news told of a 25 year old girl who, at 0715 am, was crossing a busy road on a pedestrian crossing and was struck by a jeep, thrown around 20 meters and killed instantly by an oncoming car. Doesn't that make you angry? Senseless loss of life because some driver was too rushed or too careless too distracted to notice a young woman in front of his windscreen. Some young girl whose family is now burdened with a tragedy that will change them forever. A young girl who had yet to make her mark on the world. Who knows how she could have touched our lives?

This young girl is not alone. She is joined by over a million people who lose their lives every year on the world's roads. Around 50 million others are, arguably, the lucky ones, that is, those who are injured in road traffic accidents but hold onto their lives. However, many of these injuries leave them permanently disabled or cause them to lose their ability to work, communicate, support their family, smile, laugh or dance. 

Road Safety is a business issue. Road Safety is a Sustainability issue. Road Safety is an Issue. Period.

More people lose their lives in traffic accidents each year, many just like the senseless murder of a 25 year old above, completely avoidable, than those affected by other disasters which make major headlines. 1,836 people died in Hurricane Katrina . 3,000 people died in the September 11 attacks. Up to 21,000 people died or are unaccounted for after the 2011 Japan earthquake.  316,000 people died in the Haiti Earthquake of 2010. 1,300,000 people die every year in road traffic accidents. This figure is taken from the Global Status of Road Safety report published by the World Health Organization in 2009. The number is possibly higher, by now, in 2011. If current trends continue, road crashes are predicted to become the fifth leading cause of death by 2030. A 2006 paper calls road traffic accidents: The Neglected Epidemic.

I recently published an article on CSRwire.com entitled "Are CSR Managers complicit in 1.3 million deaths per year?" In this article, I make the case for road safety as a corporate responsibility and sustainability issue. Here's why:

It is the responsibility of companies to ensure the safety of their employees. In terms of road safety, this refers both to employees who are professional drivers for a company, employees who drive a company car or their own car to and from work and employees who are pedestrians. It is the responsibility of companies to ensure that all its employees both understand and act in a way which is safe for themselves and all other road users.

It is the responsibility of companies to do no harm in society. Employees, whether drivers or pedestrians, can cause road accidents. These accidents impact on society resulting in a tragic consequences for individuals, families and sometimes entire communities. Employers must take responsibility to do everything reasonably possible to ensure that their employees, on the job or off, are not creating unnecessary and costly damage to society through unsafe behavior on the road.

Equally, to what extent do cellphone companies share responsibility for the new phenomenon of distracted driving due to cell-phone use in cars? A WHO report published in 2011 addresses the growing risk to drivers and the public of increasing use of cellular phones while driving (both hand-held and hands-free). Are cellular companies part of the problem or should they be part of the solution? A quick look at the Vodafone 2010 Materiality Matrix shows that cellphone use while driving is not on the materiality radar.

However, 12 of Vodafone's 21 employee or contractor deaths in fatal work accidents in 2010/2011 were due to road traffic accidents. In addition, 16 members of the public died as a result of road traffic incidents involving either Vodafone’s or contractors’ vehicles or drivers. There is no reference to whether distracted driving due to cellphone use may have contributed to the deaths of these 28 people, but if I were Vodafone's CSR or HR Manager, I would be pulling out all stops to find out.

It makes eonomic sense for companies to invest in road safety. The overal economic burden of road traffic accidents is estimated at over $500 billion per year. Just think how this amount of money could be deployed to alleviate poverty, support sustainable development or improve the lives of people (who in turn become managers, employees, consumers and suppliers of businesses). But if that sounds a little too indirect, think of the fact that it costs three times as much as someone's annual salary to replace them, or the fact that loss of key employees could lead to loss of business continuity and loss of sales, or the fact that insurance premiums are higher when accident rates are higher, or the fact that significant amounts of management time are expended on dealing with the aftermaths of road traffic accidents affecting employees. Why would a business choose to ignore these costs? Wouldn't an investment in instilling a road safety culture be the more sensible (and moral) option?

Environmental damage due to road traffic accidents is significant. Crashes lead to greater pollution through fuel spills, release of different toxic chemicals into the air and may also affect local road infrastructures and biodiversity. Often, trucks carrying hazardous or harmful chemicals can cause significant environmental destruction. For example, earlier this month, a tank wagon carrying silicon tetrachloride, a strong acid, broke down on the 316 national highway in Gansu province China. The chemical leaked from the vehicle, producing large amounts of white mist after it reacted with rain. The diffused emissions damaged power supply equipment on the nearby line that runs parallel to the highway.

In addition, as a result of accidents, whole cars or parts require replacement which generates additional use of resources. Not to mention the additional resources used in ambulances, police, hospital care and so on. Has anyone calculated the environmental impact of road accidents? I believe that improving road safety would also be a great contribution to environmental stewardship.
 
Not paying attention to road safety of employees is, I believe, a liability for companies and an abrogation of responsibility. It could even be viewed as complicity in the perpetuation of high numbers of accidents and deaths. Like the Vodafone example above, very few companies refer to road safety in their Sustainability Reports and it is almost never listed as a material issue for the business to address.

A positive example to follow is Elbit Systems, a global defense electronics manufacturer. In Elbit Systems' 2010 Sustainability Report, the company describes its actions to embed a road safety culture. This includes participation in a government-led scheme to reduce road accidents with an ongoing Drive Differently at Work campaign. As part of this program, employees undergo road safety and awareness courses and each company vehicle carries a sticker with a hotline number that other motorists can use to complain about Elbit drivers. Recently, Elbit started installing “Green Boxes” in company cars. Like an airplane’s “black box,” this device tracks the driver’s speed, acceleration, zigzagging, brake usage etc., enabling managers to scrutinize employee driving practices for preventive training and also post-accident analysis. In a pilot program, Elbit installed "Green Boxes" in 100 company vehicles and found that the technology quickly proved its worth. Elbit has also installed a high-tech driving simulator, at great expense, for road safety training, similar to flight simulator training for pilots. Simulator training is both fun and highly effective, having been proven to reduce accident rates by up to 45 percent.

This approach by Elbit is a serious demonstration of the responsibility the company accepts for the thousands of its employees who drive company cars as well as the actions of those employees which may affect pedestrians.

In a recent chat with Darrel Rowledge, who has been working in the area of Road Accident Prevention for over 12 years, he told me that research shows that the most significant cause of accidents are "unexpected dangers", the things that happen while you are driving that you are unprepared for - people walking out into the road, rural collisions with wildlife, lost loads, fog, smoke and other unexpected events which cause accidents of varying degrees of severity. Dr Rowledge has devised a collaborative system which communicates advance warning to drivers - simulations using this system have proven to be effective in preventing collisions. 

However, technology alone will not suffice. Road Safety is the result of comprehensive attention to safety factors such as the state of roads, signage, speed regulations, vehicle safety features, car maintenance and more, requiring concerted efforts by all stakeholders including governments, car and parts manufacturers, companies and people. When it all comes down to it, however, it's the individual behind the wheel that makes the split-second decision between safety and disaster. A study by Barbara Charbotel in France showed that "road crashes during the course of work are the primary cause of occupational fatalities in most industrialized countries. They represent 20–25 percent of fatal work accidents in the United States  and 30 percent in Canada , and they are associated with significant human and economic costs. In France, nearly 40 percent of fatal work accidents are road crashes."  In the light of this, surely the time has come for CSR and Human Resources Managers in companies to ensure that they are doing everything they can to contribute to a safer world while protecting their business interests. I say it is their responsibility to do so.  

Finally, if you want to hear more about safety in general and road safety in particular, join me in a webinar  (29th September) and download a free ebook on the subject (including an article by me).

Whether you are commuting to or from work, driving around with your family or simply taking the car to the nearest ice-cream parlor, safe driving!

Disclosure: Elbit Systems is my client and I worked on the company's 2010 Sustainability Report.

elaine cohen, CSR consultant, 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)