I published a review of PepsiCo's report - guess what happened next ....

Over the years I have written many reviews of Sustainability Reports for different publications, in addition to the comments and observations I make here on my blog. My most recent report review was published in the October edition of Ethical Corporation Magazine and it was all about food and bev giant PepsiCo's 2014 Performance with Purpose Report. As Ethical Corp. is a subscription-based publication, I won't share the entire review here. However, I will share two interesting things, one insight that particularly impressed me in the Performance with Purpose Report, and one after the review was published. 

The insight

I'll reproduce a short section from the published review:

"A very positive feature of PepsiCo’s reporting is the linkage between sustainability performance to business growth and profitability. Most companies keep financial and non-financial messaging conveniently separate and it is rare to find an economic expression of sustainability benefits in standalone sustainability reports. PepsiCo’s press release leads with a highlight of financial benefits: “Environmental sustainability programs, including efforts to use less packaging and energy, have saved the company more than $375m since 2010.” 

Throughout the report, these references are specific: in 2014, PepsiCo recycled and reused 90% of waste with estimated savings of $3.5m compared with 2009; decreased absolute water use by one billion liters, generating $17m in cost savings; removed over 89m pounds of packaging materials resulting in $48m of cost savings and improved energy efficiency delivering energy cost savings of more than $83m. This is good for the financial community who use sustainability reports, and for PepsiCo stakeholders who are interested in impacts on society, and it also serves as an encouragement to other companies, demonstrating that sustainable practice can also be profitable practice. 

In other areas, PepsiCo incudes outcome-type statements that show the impacts of performance which are less easily quantifiable in money terms. For example, in 2014, PepsiCo India supported water-saving programmes that benefited more than 50,000 people."

I think you get the picture. Sustainability helps a business make a positive contribution to society AND do business. While it's great to declare how we are doing on energy savings and other sustainability-type metrics because we value our future on the planet, positive economic value realized from sustainability activities is nothing to be ashamed of. The opportunity to link sustainability impacts in the business to the sustainability impacts of the business is still not considered deeply by most companies. Just because a report is a Sustainability Report doesn't mean it cannot mention money. In fact, it should. Only a handful of companies get this. Marks and Spencer has for years demonstrated the economic contribution of Plan A in a clever way.

BT also makes an explicit link between business and economic benefits of sustainble practice. In BT's Better Future Report for 2015, the company confirms that global portfolio revenue from products and services contributing towards BT's goal to help customers reduce carbon emissions by three times more than the carbon impact of BT's business was GBP 3.4 billion in 2014-5 FY.  And there is of course the Kering Environmental Profit and Loss model that turns everything into money to the point where just reading the report may well generate economic impact. UPS also makes an impressive connection between environmental and economic efficiencies in UPS's 2014 Sustainability Report.

The more we accept that it's OK - in fact, it's imperative - that sustainability benefits equal business benefits as well as social and environmental benefits, the more we will see these sort of linkages in Sustainability Reports and also in Annual Reports. I have often said that you should write a Sustainability Report with a financial hat on and you should write an Annual Report with a sustainability hat on. That's assuming you wear a hat when you're writing. PepsiCo, in the 2014 report, has made great progress in making this connection.

What happened next 

No less interesting than the linkage of integrated sustainability to business performance is what happened after my review was published in Ethical Corporation. I received an email from Camille Aylmer, Sustainability Communications Director at PepsiCo, who wrote: "......we really appreciate the careful attention you gave to reading through our materials....There was some great feedback in the article that has created a lively discussion internally. I’d love to grab 15 minutes with you by phone to discuss some of these items....." 

Now, while my review included praise for PepsiCo's best practice in creating aforementioned linkage, it also included a few criticisms and recommendations. (So you all know me by now, it's rare that I don't have something challenging to say)  (even though my intentions are positive!). Yesterday, I chatted with Camille and was impressed by her questions. She wanted to know about my approach in reviewing the report, whether I had looked at prior reports, what stood out for me as I reviewed the report, why I had highlighted certain aspects. I genuinely felt she wanted to learn about what was important to me, and that this might help PepsiCo in developing strategy and reporting going forward.

I am one of mbillions of PepsiCo stakeholders and my teeny weeny voice is hardly the loudest, coherentest, intelligentest or importantest among all the experts that I imagine PepsiCo engages with on sustainability matters. But the fact that Camille took the time to track me down (ok, that's not hard), and have a really positive conversation with me (that's harder) earns her and PepsiCo top marks (and ice cream) from me.

I was happy to respond to Camille and share my thinking. I was delighted to know that someone actually reads my report reviews (apart from the Ethical Corporation editor) and that maybe they do a little good. Kudos to PepsiCo for reporting and for not being too big to take note.

Oh, and while you're here, take a look at PepsiCo's 2014 Report. Give feedback. They listen. 

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  

Ajinomoto: Courageous reporting practice

I have always admired the Ajinomoto company of Japan, and back in 2010, I published a review of Ajinomoto's 2009 report. This time, five years later, I returned to Ajinomoto, at the company's request, to review the most recent 2014 Sustainability Report covering fiscal 2013 activities and prepare a commentary for publication. And it was a great pleasure to do so. (I have fond memories of visiting the Ajinomoto offices and factories in Tokyo back in the 1990s at a time when I had never even heard the terms Corporate Social Responsibility and Sustainability. The strong positive impressions of the way Ajinomoto works and warm hospitality of the totally wonderful people I met there remain with me today).  

Ajinomoto is no stranger to Sustainability Reporting. Ajinomoto started publishing an annual Environmental Report in 2001 and then in 2004, published a first CSR Report, demonstrating a commitment to a broader concept of CSR, beyond the scope of environmental stewardship alone. Through 2004 - 2011, Ajinomoto published two reports in tandem, until in 2012, the group made the transition to publishing one Sustainability Report encompassing the full spectrum of disclosures. The 2014 Sustainability Report is the third full Sustainability Report. 

This current report tells a strong story of Ajinomoto's contribution to healthy eating and healthy living. Ajinomoto has a well-defined approach to sustainability that has two broad elements: sustainable contribution and responsible behavior.

My commentary is on page 141:

Here it is in full:

"

In today’s world, it is not enough to simply be a food or food-ingredient producer. Leading companies view their contribution to society more holistically by identifying and managing the impacts they generate throughout their entire value chain. Such companies, for example, strive to educate consumers and help them adopt healthier and more sustainable lifestyles. In addition, leading companies aspire to conduct their business in an ethical and responsible way. Ajinomoto’s 2014 Sustainability Report addresses both of these aspects of sustainable business. The first part of the report represents Ajinomoto’s three broad areas of contribution: promoting healthy living, conserving food resources and advancing global sustainability. The second part of the report describes Ajinomoto’s responsible practices using the ISO26000 as a framework approach. 

Overall, this is a comprehensive report that covers all the issues we might expect a food company to address, including nutrition and lifestyle, the use of technology and science to improve resource efficiency, sustainable agriculture and land-use, governance, compliance, human rights and employee engagement, health and safety. In all areas, Ajinomoto demonstrates a strong understanding of what’s at stake and what, as a food company, it can and should contribute. Evidence of stakeholder dialogue adds credibility to Ajinomoto’s selection of areas where the company can add value. 

Some of Ajinomoto’s activities are particularly impressive. The company’s investment in externally assured lifecycle carbon footprinting across seven key seasoning ingredients demonstrates advanced commitment to understanding and improving resource efficiency throughout the value chain. Ajinomoto’s approach to circular resource use – using by-products of amino-acid production as fertilizer for crop sources for amino-acids - is an example of sustainable practice. Demonstrating the environmental benefits of amino-acids in feed for livestock supports sustainable agriculture. Innovations in sustainable packaging, including the use of biomass plastic, are leading edge. The extensive engagements in a range of countries to improve nutrition in the Ajinomoto International Cooperation Network for Nutrition and Health (AIN) program show a real commitment to adding value to society. 

One of the challenges of sustainable business is measuring the impacts of company activities and their effects on people, society and the environment. It is not enough to focus on, and report, what you are doing. The real measure of progress is what changes as a result of what you do. In this context, I believe Ajinomoto could go further in identifying and measuring the outcomes of its activities and reporting these outcomes to stakeholders. For example, Ajinomoto relates stories of how the company provides new food alternatives for consumers in Brazil and Pakistan and advances material and infant nutrition in Ghana. These initiatives are commendable but the real question is: how are they actually improving lives and to what extent? Reporting evidence of change as a result of these initiatives would help us appreciate Ajinomoto’s efforts and understand the true value of the company’s contribution to improving healthy lifestyles. 

Similarly, Ajinomoto’s work in sustainable sourcing of skipjack tuna, palm oil, paper and coffee beans is described in the report and Ajinomoto’s initiatives here are impressive. However, reporting actual consumption of these resources and the percentage of each that is sourced sustainably would help clarify the extent of Ajinomoto’s progress. 

While Ajinomoto provides a comprehensive report, it is long. This is partly due to the inclusion of extensive background narrative for the issues Ajinomoto addresses in the report. An understanding of relevant context is important, but it is performance and outcomes that stakeholders need to understand. In future reporting, I believe this narrative could be significantly reduced in a much shorter report that focuses on what matters. Similarly, the report describes policies and approaches in detail, sometimes excessively, without following through on performance. For example, Ajinomoto notes an intention to "promote more women to management positions". Women employees account for just 27% of Ajinomoto’s global workforce and 15% of managers. For a company whose products are largely targeted at women, there is an opportunity to reinforce Ajinomoto’s commitment to women (and therefore society as a whole) by outlining clear plans of action with goals and targets. Another example relates to employee safety. Ajinomoto’s safety data shows that safety of workers outside Japan is far less positive than in Japan. With 65% of Ajinomoto’s permanent workforce outside Japan, reporting a specific plan to address safety at a global level would seem imperative. I would recommend Ajinomoto to consider this in its next report. 

Alongside this, few truly long-term aspirations are presented. Sustainable business goes beyond a three year management plan, and sustainable change takes longer to achieve, especially in a company as dynamic and complex as Ajinomoto. I recommend Ajinomoto to develop a core set of targets to 2020 that can be used to drive, measure and report future progress. Ajinomoto has been around for 105 years. Ajinomoto’s commitment to sustainable business and transparency gives me confidence that the company will be around for at least another 105 years. Therefore, a longer planning and target-setting horizon would be welcome.

"

The practice of asking independent experts from around the world to review and comment on a Sustainability Report is quite widespread among Asian reporters. While an external commentary is not exactly "engagement" in the fullest sense of the word (and does not replace ongoing stakeholder engagement), there is something rather courageous about asking independent experts to review and comment on a Sustainability Report, and then publishing their independent commentaries in full. I can confirm that Ajinomoto published my comments with no editing, and did not try to influence me in any way about what to write or what to focus on. The only limitation I was given was a word-count. 

I was also happy to read three additional expert commentaries in the same 2014 Ajinomoto report.

• Deborah Leipziger, Professor at Hult International Business School and a Senior Fellow at the Lewis Institute at Babson College.
• Mark Feldman, Managing Director of Cause Consulting.
• Dr. Wong Lai Yong, Founder of First Penguin and social responsibility and human resources development consultant.

All three experts provided a truly interesting and diverse range of insights that are well worth reading. Ajinomoto's openness in requesting and publishing such commentaries is to be admired, though, one hopes, that these will not remain at the level of words on pages. Each expert articulated different pieces of very practical advice to assist Ajinomoto in its ongoing reporting journey. The hope is that this advice and guidance will be carefully analyzed within the Ajinomoto reporting team and company management, and that, where relevant, suggestions may be adopted to help make Ajinomoto's next report even more relevant and useful to stakeholders.

I look forward to seeing the next Ajinomoto Sustainability Report. In the meantime, Ajinomoto's current report provides, in the words of Dr Wong Lai Yong, "a strong example that Ajinomoto is willing to walk the talk." 

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 Sustainability Report? Contact elaine: info@b-yond.biz   

USA:9 first-time G4 reports

And here we are, in the U.S. Following my post on 16 first-time G4 reporters in Belgium, that may have been a surprise to some of you, here is a more modest collection of first-time G4 reporters coming out of the U.S. Here follows a selection of 9 U.S reports - all first time reports and all in accordance with G4 (core or comprehensive). This is out of a total of more than 50 G4 reports published in the U.S. in 2014, according to the GRI Sustainability Disclosure database. 

AMN Healthcare: AMN Healthcare is a leader in healthcare workforce solutions, and the largest healthcare staffing company in the U.S., employing almost 2,000 people. 17 material issues are defined and the company reports against 18 performance indicators. Materiality, for the purposes of this inaugural report, AMN says, is limited to areas directly under operational control. This means, I guess, that AMN is looking at its people and services and how they are managed, as a first stage, rather than the outcomes of the contribution that AMN makes in healthcare quality across the U.S. The report opens with a good overview of the trends in the industry - identifying both the risks and opportunities. Material issues are explained and the company's approach is described. However, there is a little disconnect between what's material and the performance measures that support the management approach - for example - business loyalty is a material issue and relates to customer retention. However, AMN does not offer a metric specifically related to this. Similarly, there is a shortage of relevant context in some areas, for example, AMN claims ongoing improvement in health claims as proof that the company's approach to health and wellness is working. This is really great. Some sense of context - how this level of claims stacks up against the sector or other companies would help us understand whether this is good performance relative to industry practice and norms. Overall, though, this is a credible first-report from AMN that demonstrates positive practice and intention. 

Axalta Coating Systems: Axalta provides paints and coatings to a range of industrial customers. The company's liquid and powder coating brands are sold in more than 130 countries, produced in 35 manufacturing centers on six continents and supported by seven research and development centers. Axalta employs more than 12,000 people. The report is a 74 pager, with slight marketing overtones, and a separate GRI Content Index downloadable from Axalta's sustainability website. Interestingly, the list of Axalta's 11 most material issues appears right at the end of the report, on page 70, although the company maintains that these issues "informed the structure and content" of the report. By and large, this seems to have worked, although there are issues for which Axalta has not yet formulated a position or organized itself to collect data. Axalta reports against 31 performance indicators although the link between performance indicators and material impacts is not entirely clear at all times. Axalta admits what is a frequent dilema for G4 reporting companies: material aspects that do not have "pre-defined GRI indicators". In these cases, Axalta has described its approach. In future, Axalta could develop a company metric to support managing and reporting performance on these issues. Overall, another credible report.  

Cigna: Cigna is a global health service company with products and services provided through a range of subsidiary companies. Cigna's products include healthcare services and insurance. Cigna operates in 30 countries with 80 million customer relationships throughout the world and 35,000 employees worldwide. Cigna's first report is an 88 pager (including 13 pages of GRI Content Index). Cigna has selected 17 Material Aspects from the GRI table of Aspects, and reports against 24 performance indicators. However, in the process describing stakeholder engagement and materiality assessment, the four issues that appear to be most significant to internal and external stakeholders are four sub-areas relating to healthcare. These issues appear as the focus of Cigna's charitable and foundation-supported activities but do not seem to link directly to the core business approach of Cigna. One of these, for example, is health equity. This is well discussed in the Cigna report - good contextual information and a detailed description of how Cigna is adressing this issue through its core business. Health equity, however, is not really counted as a material impact or as a performance indicator. I think this is one of the inherent problems as companies try to fit their reporting into the G4 framework - there are some issues that just don't fit and companies need to find their own way of reflecting these issues effectively. In this case, it seems that Cigna has a great understanding of what's important, good focus and a strategic approach. The G4 framework could be used more effectively to help reflect this. 

Indianapolis Airport Authority (IAA): This is a solid first report from the Indianapolis Airport Authority which is a municipal corporation established in 1962. The IAA operates in central Indiana with main offices in Indianapolis. Including the Indianapolis International Airport, the IAA currently owns, develops, and operates six airports in the Indianapolis area, employing approximately 450 people. For the second consecutive year and third time overall, the Indianapolis International Airport (IND) was recognized as the best airport in North America by Airports Council International. IND was also named best airport in North America for 2012 and 2010 and has been ranked in the top three airports in North America in every year since. Hopefully, the focus on sustainability has supported IND's positioning here :). The report is a simple word-format compilation of 70 pages. Material issues are not specifically listed, but the GRI Content Index references 24 material Aspects are 41 performance indicators. The material Aspects are picked from the GRI predefined table of Aspects and the report narrative does not prioritize these issues. The content for the report was selected using an internal survey of employees. For the future, IAA offers to include broader stakeholder input based on responses to a SurveyMonkey survey which is available online. However, the survey is elementary, listing the full G4 Aspect list, with no real background or explanation. I doubt responses to this survey will be of any real value to IAA. On the other hand, I do feel that the IAA deserves recognition for making efforts toward greater transparency and engagement. This is a genuine and credible, if a little clumsy, attempt at reporting that does not really exploit the opportunity of G4. However, I am sure that, with the right leadership and processes, IAA will mature into a better reporter, based on deeper embedding of sustainability practices and realization of the value this brings. 

Murphy Warehouse Company: Murphy is a full-service supply chain logistics business based in Minnesota and employing around 180 people. It's a family-owned business that was founded in 1904 with "a horse and a wagon" and is currently managed by President and CEO, Richard T. Murphy Jr who is a fourth generation Murphy family member. The company, and its report, oozes genuine family values and spirit and the accomplishments of this small-sized enterprise in the area of sustainability are impressive, in a way which appears to truly reflect a business approach and not just a nice-to-have. In fact, Murphy is one of the few first-time G4 reports that I have come across so far that actually defines a focused set of materially important issues and a set of  targets.

On the other hand, Murphy's use of the G4 framework is rather ingenuous and, although the report itself is a great 20 page review of performance and activities, largely focusing on the identified material impacts of this business, there are inconsistencies in the use of G4. For example, the separate 12-page GRI Content Index lists every single core disclosure, DMA and performance indicator, but in several cases, inadequate responses are provided. Murphy maintains that the report was externally assured but no assurance statement is available and it is not clear exactly what was assured and how. The GRI Content Index omits the obligatory "assurance" column so this is rather obtuse. The link between material impacts and G4 disclosures is not always quite clear, for example, "Materials and Resources" is noted as a material impact. A Disclosure on Management Approach statement appears in the report. But responses to the two possible performance indicators relating to this material impact - G4-EN1 and EN2- are "Murphy does not report on this indicator. Murphy is a service company that does not manufacture a product."  Go figure. Overall, however, I like the Murphy report and I believe the company's sustainable approach. The use of G4 has not really added value, possibly because the framework was not fully understood. An SME reporter such as this could deliver a fine report without complicating life by attempting to be "in accordance" and no one would object. On the other hand, using the G4 framework does imply familiarity with it and adherence in a more consistent way. 

Newfield Exploration Company: Newfield Exploration Company (NYSE:NFX) is an independent energy company headquartered in Texas. Newfield is engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. The company is 25 years old and employs around 1,500 people. Newfield's inaugural report is both a positive example of the use of G4 and an example of the limitations of the framework. This is one of the first G4 first-time reports I have seen that actually presents a list of material impacts that was not created by box-ticking the G4 predefined list. It includes material Aspects such as: Community Safety, Well Integrity, Induced Seismicity, Hydraulic Fracturing and Community Relations, that are not G4 standardized Aspects.

Newfield notes: "Our materiality assessment identified significant topics that do not fully align with a GRI Aspect. ... We fully report on these topics; however, GRI indicators are unavailable and omissions are not applicable." This is a good approach by Newfield and shows serious consideration of the G4 framework. On the other hand, however, the company has not provided performance indicators for these material Aspects, as even if they are not predefined G4 Aspects, stating them as material requires a performance indicator that tracks what the company is doing to manage the issue.

In other respects, this is a methodically written and clear report that applied the G4 framework well. 18 material impacts are defined, and Newfield reports against 22 performance indicators (some partially, includes indicators from the Oil and Gas Sector Disclosures), as well as additional indicators that confirm to the Oil and Gas Industry Guidance on Voluntary Sustainability Reporting developed by IPIECA (the global oil and gas industry association for environmental and social issues), API (American Petroleum Institute)  and IOGP (International Association of Oil & Gas Producers, formerly known as OGP). Newfield also maintains an external advisory group made up of 7 expert stakeholders. This advisory group wrote a commentary for the report, including recommendations, something I find to be good practice. Newfield's report is a good example of the use of G4 for a first-timer, and appears to be in line with the spirit of G4 and not just the letter.

Simple Green (Sunshine Makers, Inc.): Simple Green is the brand of Sunshine Makers, a privately-owned family company founded over 39 ago by the father of Bruce FaBrizio who runs the company today. The company developed a biodegradable, not-toxic, non-flammable, non-abrasive cleaning formula and now sells environmentally friendly cleaning products in 41 countries, manufactured in 11 facilities worldwide. Sunshine Makers employs 59 people directly and works with a network of partners for distribution. Sunshine Makers also founded EGBAR (“Everything’s Gonna Be All Right”), a non-profit foundation for environmental education and community improvement projects.

Simple Green's Value Chain

Simple Green's report is impressive. It's nicely designed, well-structured and reflects a strong sense of sustainability culture and practice, not specifically created in order to write a report, but something that has flown out of the spirit of the founding family and extends throughout the entire value chain. It does not shy away from admitting areas of activity that the company has not yet managed to address, and transparently reports outcomes of a more structured stakeholder engagement process conducted for the first time in 2013.

Simple Green identifies 14 material topics and reports against 34 performance indicators. The company makes it clear how it selected the material content for this inaugural report in a way which I find to be transparent and credible: "The content of this report was defined by multiple elements. They included (1) availability of data for the reporting period, (2) our current understanding of our value chain, (3) discussion with our stakeholders, (4) surveys of our stakeholders, (5) an aspect-impact analysis and (6) a materiality assessment."

The report contains targets for environmental impacts and is assured for all general and some performance indicators. All in all, a very professional, interesting and mature first report. As you can probably see from the number of photos I clipped from the report, I liked this one best of all the U.S. first timers. 

Whitewave Foods: The WhiteWave Foods Company "is working to change the way the world eats for the better." Prior to 2013, WhiteWave Foods was a wholly-owned subsidiary of Dean Foods but from July 2013 the company became completely independent.  White Wave brands in the U.S. includes Silk® plant-based foods and beverages, International Delight® and LAND O’LAKES® coffee creamers and beverages, and Horizon Organic® premium dairy products. In Europe, Alpro® and Provamel®, offer plant-based nutrition food and beverage products. The company employs almost 2,000 people. 

This 58 page report defines 17 material topics and reports against 24 performance indicators from G4 and from the Food and Beverage Sector Disclosures. One of the nice things about this report is the clear connection between material topics and the performance indicators that support them. It's absolutely clear that what's material is measured. This is the spirit of G4 and hardly any of the first-time G4 reporters I have seen have done this explicitly. It makes like much easier and clearer for report users. 

Aside from this, the report provides a good overview of how WhiteWave is operating responsibly and advancing organic and plant-based food products to support healthy lifestyles. What I am missing, though, in this report, is a sense of whether this is actually changing markets and consumer perceptions and behaviors. Despite a nice value chain graphic.....

... this report stays largely at the front end ... when it gets to consumer use and impacts on consumers, I find the WhiteWave report less informative. WhiteWave writes: "Today, nutritious dairy alternatives made from soy, almonds, coconut, rice and hazelnuts are a huge and growing category, embraced by millions for their health and sustainability benefits." I'd have welcomed a little more context here .. How rapidly is the market growing? What are the challenges of providing such alternatives to mainstream consumers? Is this a niche market and if so, why? What are the scientific health benefits of WhiteWave's alternative food products and what impact could this have on health and wellbeing in society? etc. This is the real sustainability story of WhiteWave and I am wondering why changing consumer perceptions and practices in relation to healthy eating and the value of alternative food products is not material for WhiteWave. As it stands, however, the company tells a great story in a well-put-together first-time G4 report. 

UniGroup, Inc.: UniGroup is a $1.6 billion transportation company headquartered in Missouri. UniGroup and its subsidiaries provide services under a range of brands including United Van Lines, Mayflower Transit, United Containers, Mayflower Containers, UniGroup Logistics, UniGroup Relocation and more. The group has 903 employees in the U.S.  

UniGroup's report is a simple no-frills word-format 35 pager with a really REALLY detailed materiality matrix that was developed internally by company staff. It contains more issues that I was able to count without getting lost, with 19 issues in the top-right (most important to everyone) quadrant.  I always wonder how companies manage to plot issues on such a matrix with such detail and whether the relative positioning of issues in such a granular way is actually helpful to anyone.  

In any case, the top three issues stand out as being emissions, customer privacy and customer health and safety. In the case of customer health and privacy, the report barely refers to this - the disclosure is all about driver safety. In the case of customer privacy, there is a short paragraph but no reponse to the performance indicator as required. In the case of emissions, the DMA is "UniGroup recognizes that the environmental impact of the emissions from those vehicles operating under our authority is material" but no data is reported against Scope 1 or Scope 2 emissions, though Scope 3 emissions are recorded, though I suspect that might actually be Scope 1 emissions (fuel). 

Here we have an example of a really good effort on materiality mapping, but a disconnect in the way the report is constructed and a gap in adherence to the G4 framework. Rather than jump to G4 core, this company might have been better starting with a simpler report that reflects what it is doing, rather than trying to accommodate a more advanced approach that is driven by materiality developed through due process. The report is a good first dive into transparency and it is clear that much work and thought has gone into its production, and indeed, it projects a positive disposition towards sustainability and certain achievements in performance. I think, however, that UniGroup might have benefited from a little guidance in the preparation of this report. 

**************

So there we have it.... 9 first-time G4 reports, all rather different and all rather unique. All challenges and all achievements. My overall impression, though, is that the use of G4 is still evolving. Rather than helping guide the way companies report, there is still a lot of "report first and then force-fit G4". I am optimistic that this will change.... second round reports, I am sure, will be a different ball-game.

In the meantime, though, we continue on our journey. Next up....

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).  Check out our G4 Report Expert Analysis Service - for published G4 reports or pre-publication - write to Elaine at info@b-yond.biz to help make your G4 reporting  even better.

Stakeholder engagement is here to stay

Stakeholder 1: I love being a stakeholder. It's so engaging.
Stakeholder 2: Yes, I agree. I love to engage.
Stakeholder 1: So, who are you engaging with these days then?
Stakeholder 2: Well, anyone who asks, really. I'm not that fussy.
Stakeholder 1: Yes, me too. I am a pro-engagement stakeholder.
Stakeholder 3: Hi guys. How's the stakeholder engagement thing going these days? I am making a killing.
Stakeholder 1: What do you mean?
Stakeholder 3: Well, I am getting invited to offer my expert opinion for a range of companies and they pay me loads of money just to tell them what I think. That's what they call engagement these days. It doesn't matter if  I use their products or services. They just want me to reply to their questions.
Stakeholder 2: But how do you give an opinion if you don't use their products?
Stakeholder 3: That's easy. I just tell them what they want to hear.
Stakeholder 1:  How do you know that?
Stakeholder 3: It's what everyone says, you know, climate change is important, treating employees well is important, ethics and integrity is important, human rights are super-important. It's not rocket science, you know. I say the same things to every company.
Stakeholder 2: But why do they ask you? I have been around far longer than you and hardly anyone asks me.
Stakeholder 3: Well, maybe you told them the truth.
Stakeholder 1:  You also have to remember that all stakeholders were not created equal. Stakeholder 3 is a real thought-leader. He has written a book. He speaks at conferences. People think he knows about companies even if he doesn't. They think it's good to have his name in the Sustainability Report.
Stakeholder 3: (blushing) Yes, not all stakeholders are equal. I admit that I enjoy all the fuss and attention. My kids stopped listening to me a long time ago. Now at least, someone is asking what I think.
Stakeholder 2: Well, I don't agree with this. I think companies shouldn't pick and choose their stakeholders. They should engage with ALL stakeholders and not discriminate.
Stakeholder 1:  And how exactly do you propose that a company does that? Some companies have millions of stakeholders.
Stakeholder 2: SurveyMonkey.
Stakeholder 3: Oh dear. If everyone starts using SurveyMonkey, I'll need to go back to teaching at the university in order to make a living.
Stakeholder 1: Oh, I am sure it's not that bad. There will always companies be that prefer to have big names in lights.
Stakeholder 3:  (blushing again) Maybe you are right. I love the lights.
Stakeholder 2:  I am thinking of sectorizing myself. You know, adding Sector Expect Stakeholder to my resume. So that companies that want a sector expert will know to come to me.
Stakeholder 1: Which sector?
Stakeholder 2: All sectors. It doesn't really matter.
Stakeholder 3: That's a great plan.
Stakeholder 1: But what if there are companies that really want to know the truth? You know, really want an honest informed opinion about their material issues to inform their sustainability strategy?
Stakeholder 3: Hahahahahahhahaha now you really made me laugh.
Stakeholder 2: Hahahahahahahahaha, me too. Not in our lifetime, buddy.
Stakeholder 1: OK, OK, I was just kidding. Stakeholder engagement is here to stay. Just like we love it.

How real is stakeholder engagement? Who is actually a stakeholder? How do companies engage with stakeholders? Whats on the cards for stakeholder engagement? Is it here to stay? And if so, what does it look like?

More on this in what promises to be a kick-ass discussion live online, hosted by 2degrees on Tuesday December 9th (next week) at 15:00 GMT. Tune in to hear and engage.. yes, engage.... with Rowland Hill (Marks and Spencer Sustainability Reporting Manager), Rachel Depree, (Sky, Senior Engagement Manager), Peter Collins (RSA Insurance Group, Group Head of Corporate Responsibility) and Oliver Hurrey of 2degrees, and myself. Check it out here and register. No powerpoints. No scripts. No pressure. Just a genuine discussion and sharing of insights and opinions on what stakeholder engagement has become, what it should be and where it's going. Approximately. It should be fun. Especially if we all disagree :-)

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).  Check out our G4 Report Expert Analysis Service - for published G4 reports or pre-publication - write to Elaine at info@b-yond.biz to help make your G4 reporting  even better. 

Digitizing materiality



This week was a fun week! Amidst all the intensely intensive intensity of G4 reporting for several months as clients race to meet reporting deadlines and us with them, I was able to take a couple of serene days to spend time with fabulous people, enjoy fabulous food in a fabulous setting, and hear some fabulously new stuff.

 

Yes, I was at the Lundquist 6th annual CSR Awards conference and event in Milan, a gathering of specialist communications and CSR experts from all over Europe. Lundquist is a strategic communications consulting firm based in Italy, and the company boasts a team of leading thinkers in the digital corporate communications space. The recently published Lundquist survey results with trends and practices around CSR and the online universe can be downloaded here:

 

 

The research shows an acceleration of the uptake of social and digital technologies compared with previous editions of the research. Now, virtually all sustainability professionals (94%) are on social media with three quarters of these doing so in relation to CSR and sustainability. Video and infographic content are gaining popularity and CSR Managers have become the new social media stars, with everyone wanting to hear from them online. It's always fun to know what frustrates people and the Lundquist research confirmed what we already know - that too much good news is not good news.

 

 

 

 

The full results and the details of the CSR award winners can be downloaded here. Deutsche Post DHL took first prize, with Nestle and Unilever close behind.

 

 

In the Lundquist home market, Italy, Telecom Italia, Hera Group and Snam took the trophies.

Lundquist's research and analysis is really quite fascinating and contains much that should be of interest to CSR corporate communicators. Well worth studying!

During the two day conference, I was pleased to facilitate a workshop with presenters and panelists from Hera Group, Birra Peroni (SAB Miller) and Adidas. I opened up (my presentation embedded below) with an overview of opportunities and risks in the digitization of materiality and stakeholder engagement. While there is incredible potential to reach to stakeholders using online tools, there are also dangers arising from inappropriate use. Not everything that is online provides real insight that is relevant enough to deliver a robust materiality conclusion. The fact that Survey Monkey is free and there is a (G4) stakeholder engagement materiality box to tick does not mean that stakeholder engagement happens. As an element in a set of digital and non-digital tools, there is a place for online surveys. But let's not dumb down stakeholder engagement to the point of mindlessness by going through the motions without due planning and focus.

Materiality in a digital world - elaine cohen presentation at the Lundquist CSR Awards May 2014   

One of the questions that generated the most debate in our workshop was how to find the right balance between, on the one hand, targeted engagement of experts that can make a contribution based on knowledge, experience and critical analysis and, on the other hand, reach to the general mass consumer population that is, after all, the group that decides whether to buy a company's product or not. We shared lots of views and recognized that each company needs to assess what tools will deliver the most useful materiality input and most reflect stakeholder views in a representative way. Not all stakeholders are equal but no single algorithm can determine which are the most equal.

All in all, a stimulating couple of days, professionally and skillfully organized by the Lundquist team.

My photo gallery from the CSR Awards conference and event

a fabulous colorful place to stay - Hotel Mediolanum

Kicking things off with digital disruption

Joakim Lundquist who kept the two days moving at a pace

Are sustainability reports really dinosaurs? 

The Gala Dinner - in anticipation

The Gala Dinner - home straits

Gotta keep talking

James Osborne, the CSR social media stats and trends wizard

hate turgid

David Connor @davidcoethica raring to present on the ways of using social media

Christine Hermann of Orange talks about what's important

My daughter's new ear piercing  - oops, how did that get in here? 

elaine cohen, CSR consultant, award-winning 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)

The Commoditization of Materiality Feedback

A popular post of a while back related to us poor cheapskate consultants not accepting to do work for free. I got a lot of feedback on that post, all of it positive and supportive. This time, I want to refer to a different challenge, as while some of the symptoms generally show up in the same form, this is rather different.

Let's start with a case in point. I recently received the following email - representative of several of those I receive on an every increasingly frequent basis.

Dear Ms. Cohen, We are undertaking a review of our most material corporate responsibility (CR) issues and would greatly appreciate benefiting from your expertise and perspectives. XXXXXXX has commissioned sustainability consultancy XXXXXXXXX to undertake half hour telephone interviews and facilitate the materiality analysis. The Interviews will be between XXXXXX 10th and XXXXXX 28th. The topics covered in the interview are: • What do you consider to be the most important CR issues relevant to XXXXXX? • Which areas do you see as current XXXXXXXX strengths and weaknesses related to CR? • Do you have any expectations or suggestions for XXXXXX future CR focus? In appreciation of your participation, we will make a $100 donation in your honor to XXXXXXXX, which helps to reforest communities devastated by natural disasters. Please let me know by this XXXXX 7th if you are interested in participating and we will follow up to schedule a 30 minute phone call at your convenience. 

And this was my response (to which I have received no reply:)):

Many thanks for your invitation. I believe XXXXXXXX has shown significant leadership in sustainability matters and in general, I have a high level of admiration for your work. However, I will respectfully decline to participate in your stakeholder interview session. As a consultant in the sustainability and CR space, I assume you approach me for my professional opinion, rather than just any person who might use XXXXXXX services. The issues I could mention "off the cuff" from my general knowledge of the sector are probably fairly obvious and similar to those which other stakeholders will raise and therefore wouldn't add much value. Therefore, providing a professional response would require specific research and preparation on my part for which I charge a fee. If you are interested in a professional consultation, I could provide you an offer for such services. However, I do not feel I can meaningfully contribute in a 30 minute conversation without proper preparation. Thanks for your understanding and good luck with your process  

Now, the point there is not that I am being asked, again, to give professional opinion for free, but the way in which companies are going about obtaining input for their materiality processes. These bulk approaches to anyone and everyone are anything but focused and designed to deliver a result which, in my view, will be of rather limited relevance to the companies involved.

I call this the commmoditization of materiality feedback. Instead of being knowledgeable, focused, relevant, and driven by both a level of expertise in the subject matter and a knowledge of the company in question, and also some basis of relationship with the company involved as an interested stakeholder of the company, materiality input is becoming broad-scale, technical, hit-and-miss and reminiscent of the days when we all ticked boxes in order to demonstrate sustainability progress. Ticking the materiality feedback box is apparently the activity du jour. Cast your net wide and you catch some fish, but let's not forget, all fish were not created equal.

In the case of the above company, I would barely call myself a stakeholder, beyond the fact that, as a citizen of the world, I am a stakeholder of every company in the world that has an impact on anything in the world. But that's taking the concept of stakeholder to unmanageable proportions.

GRI defines stakeholder as (my highlights):

"Stakeholders are defined as entities or individuals that can reasonably be expected to be significantly affected by the organization’s activities, products, and services; and whose actions can reasonably be expected to affect the ability of the organization to successfully implement its strategies and achieve its objectives. This includes entities or individuals whose rights under law or international conventions provide them with legitimate claims vis-à-vis the organization. Stakeholders can include those who are invested in the organization (such as employees, shareholders, suppliers) as well as those who have other relationships to the organization (such as vulnerable groups within local communities, civil society)."

As a consultant and critic of reporting, I may refer to this company's report on the CSR Reporting Blog or other reviews I publish. But I still don't think this meets the definition of stakeholder as it's doubtful that my writings can reasonably be deemed to affect the organization etc.

I suspect we will be seeing many more companies attempt to engage us all in their new we-have-seen-the-light materiality investigations. This is a good thing. Materiality is becoming part of the new sustainability awareness of corporations. Companies are wanting to get focused. That's fabulous. But moving in a new direction requires a new mode of transport. Trying to get to a different place using the same behaviors that landed you here ain't gonna cut it. You just end up in another wrong place.

The objective of the stakeholder material engagement process is not to reach out to as many voices as possible. The objective is to reach out to the voices that count. Voices count because they belong to meaningful stakeholders, who have some form of relationship with the company, or who are leading external expert voices in matters relating to a company's sector and have, or can develop, enough specific knowledge to provide focused and useful input. In my view, it is far better to have conversations with a few relevant people that engage at a deeper level than to consult the masses and get input which is so broad and varied that it is of no use in making decisions. With great respect for James Suroweicki whose book I tremendously enjoyed, I fear that stakeholder engagement is not a case for the "wisdom of crowds". It's a case for widsom. Period.

In this sense, company XXXXX above was moving in the right direction - by asking to have a telephone conversation rather than send me a SurveyMonkey link. However, in selecting me, a stranger to their company and one who is not known for expertise in their industry sector, it indicates to me that the approach to materiality analysis is off track. It's like me asking a train driver if she thinks I should buy a new refrigerator. The train driver might have an opinion but well, unless she is a former refrigerator saleswoman, is her input really of so much value? (PS. I don't need a new refrigerator at present, but if anyone has any suggestions just in case .... )

The new drive for focused materiality is causing companies to rethink the way they develop sustainability strategy and report on performance. I am genuinely seeing companies wanting to change and leading processes to help them define material issues. It is happening. It's actually really encouraging. It's also engendering a phase of materiality experimentation. That's also good. Many roads lead to materiality, as someone wise once said. I think.

But let's not ignore the dangers. Tickboxing is a bad habit in terms of sustainability. Whether this is tickboxing a number of stakeholders we interviewed or sent a questionnaire to, or tickboxing a list of material issues that appears in a SASB standard or in the newly-published 10 GRI G4 Sector Disclosures without having done the analysis and engagement work, it's bad. Stakeholder engagement and dialog is not something you can commoditize. It always has to be targeted, relevant, meaningful and supportive of processes which have decisions at the end of them.

A respected colleague-consultant, Dwayne Baraka, recently published a guide to materiality, and it might be relevant for the companies that are currently grappling with defining or validating materiality ... including XXXXXXXXXX ... to read it.

In the meantime, anyone who has invented a questionnaire-fatigue antidote stands to make millions over the next few years.  

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)