Target targets for 2019

Sustainability reporting used to be about activities and actions whereas today it is more about impacts and intentions. Substantiated intentions, that is, by which I mean T-A-R-G-E-T-S. Yes, that awful, threatening, potentially blood-pressure-raising concept of actually making a public commitment to making a difference. One of the things I find most frustrating about many sustainability reports is the extreme lengths companies go to in order to describe their mission, vision, what's important to them, what's important to stakeholders, what's important to the world and why it's ALL so important ("Sustainability is in our DNA" and "The world is about to end") .... but when it comes to saying what they plan to do about it: radio silence. Vague intentions, aspirations, declaratory blurb - it's all very nice but, well, no teeth. 

Andrew Wilson, expert advisor on sustainability, author of Green to Gold and The Big Pivot, has done leading-edge work in this area. He's even quite positive in his views of how targets have progressed and become embedded in the way most large companies report on sustainability. You can gain some comfort from his article from December 2017 here. He concludes that 94% of the largest 200 companies in the world include targets in their Sustainability Reports. 

You can check out Andrew's Pivot Goals database, containing 3,923 goals that have been publicly disclosed by (large) companies in their sustainability communications over the past few years (the database contains some duplication with both original goals and those that have been superseded or replaced). While this is apparent progress, it's by no means close to critical mass for all the thousands of companies that report on sustainability. Also, as you might expect, the distribution of targets is uneven - in the Pivot Goal database, for example, in the pharma sector, I counted 13 companies with targets, ranging from one company that has 62 targets and one that discloses just one target. 

Other aspects of target setting are coverage and quality. Coverage is the extent to which a company discloses targets for all material sustainability aspects versus targets that are limited to one area, say, environmental impacts which is the most popular. Quality is the extent to which targets are SMART. You know what SMART means. SMART is not: "Continue to improve our environmental impacts". Just sayin.  

Many of the reports I view and review are GRI-based and claim to be in accordance with GRI Standards at core or comprehensive level. Now, GRI has made reporting of goals and targets mandatory in the Management Approach Disclosures. Disclosure 103-2 requires (the organization SHALL report) disclosure of goals and targets. Well, sort of. The mandatory part is diluted by the addition of some small print: if the management approach includes that component.  

Additional guidance suggests including context, time-frame, reference to legislation if relevant and more. 

So, according to GRI, for GRI compliance, reporting of targets is mandatory if you have them. If you don't, no problem. Well, no problem is exactly how most reporters approach the Approach. It's so easy to say "we are committed to", "we place great importance upon", "we are passionate about" and all those other gloriously positive affirmations, but when it comes to the crunch, it's apparently more convenient to ignore the bits that bolt those commitments down in the organization and give stakeholders something to believe in. I believe disclosing targets should be a mandatory element of material topic reporting. Every single GRI Topic-specific Standard should include a requirement to disclose SMART targets - not IF they exist, but BECAUSE they should exist. And if they do not exist, conformance to GRI Standards should not either.

Some (random) examples of how companies commit in sustainability reports:

Arguably the best-of-the-best expression of public commitments and consistent reporting of progress is Marks and Spencer, whose Plan A, when it was created in 2007, immediately set M&S apart from the crowd with a bag of 100 commitments representing the most far-reaching and comprehensive set of targets by any company at that time (as far as I know).  Although Plan A's tagline was "Because there is no Plan B", Plan A has continued to reinvent itself and currently goes under the name of Plan A 2025. Behind the scenes of Plan A is a strong commitment to sustainable business, and business that positively impacts people and planet, and the pace has been maintained even at times when the company's financial results have been a bit wobbly. Marks  and Spencer's 2018 Plan A Report includes a detailed account of progress against all targets across the four Plan A pillars in a way reflects the M&S brand: quality, detail and tailored to meet a range of needs. 

Walmart's 2018 Sustainability Report includes a range of specific commitments at the start of its 230-page report. The targets are SMART enough and cover all areas of sustainability priorities - a comprehensive approach.

At the end of the report, Walmart discloses how it is doing against these commitments:

While it's possible to correlate progress reported to the commitments made upfront, it takes a little detective work to sort it all out as the language used is different in both cases. However, Walmart's (mostly) specific time-bound targets and progress statements are enough to quench my thirst for target-juice in this report. 

CVS Health also does a great job in its 2017 Corporate Social Responsibility Report with multi-year targets and reporting of progress in the reporting year. Across four pages, CVS demonstrates a mature view of its role in society with targets that reflect its impacts on society (help create a tobacco-free generation by acting to reduce youth smoking) as well as targeting improvements it its own operations. The targets are also in line with the material impacts CVS Health defines in its report. 

A super presentation of targets is from Sinyi Realty Group, one of Taiwan's leading real estate agencies in its 2017 Corporate Sustainability Report. For key strategic areas, the company sets long-range goals, medium term targets to 2025 and short-term targets for the coming year. Sinyi transparently reflects performance against the short-term targets set in the reporting year. No room for misinterpretation or detective work required here: it all hangs together very credibly.

Google's 2018 Environment Report includes a set of targets and progress made against these. It's a clear enough presentation and scoreboard markers give you a quick overview of progress. However, while this is totally fantastic, the targets are a mixed bag, for example, two of the targets are: set targets and others are either not time-bound or relevant for the single reported year - which in sustainability terms is no time at all. All targets relate to the direct environmental impacts of Google's own operations, for example, achieving zero net operational carbon emissions, which Google has impressively done for at least the past five years.

Of course, I couldn't write a post about targets without looking at Target Corporation. I mean, if your name is Target, you have to have targets, right? Well, Target doesn't disappoint, though, oddly enough, Target's targets are called goals 😂😂😂 But, whatever they are called, they are extensive and are presented across 7 pages in Target's 2018 Corporate Responsibility Report, followed by a couple of pages of upcoming goals (or targets) in areas not measured to date or not the subject of goals so far.  

There is no doubt in my mind that the inclusion of public commitments is both a way to reinforce trust with stakeholders and a tool to catalyze performance improvements. Several leading companies are doing this really well, and I tend to agree with the analysis above that more are doing so these days than in the past. However, the leading companies across the world represent only a small fraction of the entire population of reporting companies, and many (I might even say, most) of them do not even hint at targets or commitments.

So, let's be clear: If you want stakeholders to believe you are serious about sustainability, or whatever you call it in your organization, make SMART public commitments in key areas of impact and report your progress against these year on year. 

Of course, a great addition to any Sustainability Report would be the inclusion of a target to provide a lifetime supply of free ice cream to anyone who blogs about your targets on the CSR Reporting Blog. 

Happy Holiday Season and Happy 2019 to all CSR Reporting Blog readers!

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. 

Strauss Group: a special 7th report

I am always delighted to showcase reports we have worked on for our clients, and this month, Strauss Group published its seventh annual Sustainability Report.

Strauss Group is an international corporation with a portfolio of five companies in the food and beverage sector, headquartered in Israel, active in 24 countries and generating $2.35 billion in consolidated sales in 2013. The Group directly employs over 13,500 people.  

7 is a very special number in many ways. It's the lowest natural number that cannot be represented as the sum of the squares of three integers. 7 is the aliquot sum of one number, the cubic number 8 and is the base of the 7-aliquot tree. 7 is the only dimension, besides the familiar 3, in which a vector cross product can be defined. 7 is the lowest dimension of a known exotic sphere. Of course, if you understood all of that, you are way more intelligent than I am. Or probably than anyone I know. I copy-pasted these 7-facts from Wikipedia. Impressive, right? In the Jewish religion, 7 is special in different ways. More copy-paste - here we come: 7 is one of the greatest power numbers in Judaism, representing Creation, good fortune, and blessing. The Bible is replete with things grouped in 7. Besides the Sabbath, the 7th day, there are 7 laws of Noah and 7 Patriarchs and Matriarchs. Several Jewish holidays are 7 days long, and priestly ordination takes 7 days. The Land of Israel was allowed to lie fallow one year in 7. The menorah in the Temple has 7 branches. There's more from the Rabbi ... check it out here. In numerology, the number 7 is the seeker, the thinker, the searcher of Truth. The 7 doesn't take anything at face value - it is always trying to understand the underlying, hidden truths. The 7 knows that nothing is exactly as it seems and that reality is often hidden behind illusions. More for numerologists here. In gambling, number 7 is really lucky. According to the Psychic Library website, on July 7, 2007, the casinos were full up as hopefuls tried to beat the lucky date 07/07/07 (maybe they also went at 07:07 in the morning!) Someone even wrote a book about the magical, amazing and popular number 7. 

So, having established that 7 is special, we might then expect something special from Strauss Group's 7th Sustainability Report. Here are 7 special things about Strauss Group's 7th Sustainability Report.

First, it's prepared in accordance with GRI G4 (core), a first for Strauss. So far, worldwide, just a few hundred companies have ventured into G4 territory. Actually, the stretch was not overly significant for Strauss, as a deep materiality review had been conducted in 2012 and presented in Strauss's 2012 report. In 2013, in preparation for this report, further consultation with stakeholders was conducted and resulted in a revised focus on six core material issues. The main narrative of the report is aligned with these six material themes. 

Second, each materiality-based chapter presents the core issues, aligned strategic goals, GRI G4 material Aspects and reported Performance Indicators. As you will know if you have read my G4-Game-changer series, this is a critical element of a G4 report. There must be an audit trail from strategy to materiality to performance. The Strauss Group report ensures this is as clear as you can get. 

Third, this report presents Strauss Groups's 2020 Sustainability Strategy. Strauss Group has been assimilating sustainability practices into its operations for many years. This is the first time the Group has worked across company-boundaries and created a global corporate multi-year strategy with measurable targets. The strategy has two elements: impact and performance. Each has three dimensions.

In the Impact element, the three dimensions relate to the direct connection of stakeholders to the company. Colleagues (employees) are the first degree of impact. They are the first to experience the way the company behaves toward them, and they are also the ambassadors of the company and define the way the company impacts other stakeholders. Consumers are a much larger group, of course, and they are directly impacted by the product quality, choice, availability, access and messaging of Strauss Group. The way Strauss impacts consumers has a direct result on the quality of their lives and the way they connect to the company's products. Finally, the Citizenship dimension represents Strauss Group's impacts on society, the environment and all relevant stakeholders. By improving impacts in a spirit of citizenship, ethical behavior, efficient resource management and transparency, Strauss Group continues to make a positive impact as a good corporate citizen. 

In each dimension, the 2020 Sustainability Strategy defines 3 levels of performance - meet, exceed and lead. Meet refers to meeting the basic performance expectations of society and all stakeholders in relation to commonly accepted standards of responsible behavior including governance, compliance and ethics. Exceed represents continuous improvement, exceeding prior performance in certain strategically defined performance areas. Lead refers to a smaller number of performance areas where Strauss aspires to make significant progress and achieve levels of impact that can be considered leading performance at a global level. In this way, the Sustainability Strategy defines the scope and scale and degree of impact improvement that Strauss Group plans to achieve in the next few years. 

Fourth, Aron Cramer, CEO of BSR and one of the leading thinkers and opinion-leaders in sustainability today, reviewed Strauss's material issues and strategic direction and provided guidance. "Strauss should be focused on real issues that are driven by core products. These could include enhancing consumer choice, helping consumers understand the health implications of consumption habits, through product labeling and other means, and sustainable sourcing." His full commentary can be found in the report.  

Fifth, the people. Strauss people appear on many pages of this report and they are the ones that make it all happen. Working with Strauss Group, we are privileged to meet many employees in the course of our varied interactions with Strauss around the world, and we can testify to the Strauss spirit and values that motivate and inspire employees to do great things. Employee engagement at Strauss reaches 92% in parts of the Group, based on employee surveys, and that's what makes this 7th report (and all previous ones) special. 

Sixth, the infographic. It's always good to get the report highlights all in one place. If you are a numbers person, this is the page for you.

7th, is the fact that it's the 7th. Delivering a sustainability report year after year is no easy task. Strauss Group is the only Israel-based company to date that has published  7 reports, year after year, since 2008, demonstrating not only a commitment to transparency and continuous improvement, but also a commitment to local leadership and best practice. 

For us at Beyond Business, supporting clients such as Strauss, as we do around the world, is a privilege and we are delighted to have been able to help create this 7th report. 

Oh and by the way, I should also mention that the number 7 is very relevant to the world of ice cream too. I happened to come across, in my search for all things 7, this announcement by Perry's Ice Cream of 7 new flavors for 2014.  They all sound delicious. As 2014 is nearly over, I had better start tasting.....

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

Is G4 reporting suicide?

Following my two recent posts, in which I partially analyzed two reports for their alignment with the new G4 Exposure Draft, I wanted to add some concluding thoughts. In developing these two (limited) analyses of Clorox and Henkel reporting, I realize that in practice, G4 is much much tougher than G3, moreso than I anticipated. Value chain, supply chain, material aspects, core and add indicators, profile disclosures, management disclosures... it's all makes the reporting task a much more serious affair. In essence, this is what we should want: a more connected sort of reporting, one which addresses real impacts and outcomes and not just a list of let's-play-nice activities. G4 requires much more in the way of planning and preparation. Mapping your value chain, consulting your stakeholders, identifying your material sustainability issues in that chain, prioritizing them and selecting how to report requires great rigor. And all of this is before you have started to send out excel files to your internal content providers for data collection and filled in your case study templates. In essence, it's the right way to go. In theory, it's the right way to report on sustainability. It bridges the gaping gap between the shopping-list sustainability report and the material role-in-society sustainability report.

However, the G4 framework as presented in the Exposure Draft does not bring out this reality in the most effective way. The new G4 guidelines are not sharp enough to prevent confusion about what is required to report and what is recommended (guidance), and the presentation is difficult, taking some time to understand and then, even only after several readings. Because of the way G4 is structured, aligning management approach categories and aspects to material issues and performance indicators is no easy exercise, and makes defining the reporting structure a job which is more stretching than writing the report itself.

At this point, I would go as far as to say that launching G4 (as presented in the Exposure Draft) for the GRI would be akin to reporting suicide.

I tend to agree with Ben Tuxworth of SalterBaxter in his article on the Guardian Sustainable Business site, in which he states: "Though nobody doubts the good intention behind the changes, the overall sense I have from a seminar we held with a dozen leading reporting businesses in December is that G4 could make GRI simply too complex and burdensome. As one reporter we spoke to put it: "if the expectations of G4 cannot be simplified, existing reporters may begin to step away from GRI, and new reporters may not be in a position to report against the guidelines at all".

Marjolein Baghuis of the GRI responded to this article with the following comments about what might be expected to launch in May:

1)  A new “in accordance” system with two tiers
2) Material focus: reporters will be required only to provide disclosures and indicators that are relevant to the business. It will be for the organization itself, in dialogue with its stakeholders, to determine what these are.
3) Separation between “What to report on” from “How to report” – greater clarity on what is requirement and what is explanation

So "In Accordance" may now become Application Level A and Application Level B? A two tier approach is not the solution. GRI needs to find a way to allow and reflect gradual and evolutionary implementation of the guidelines in a more comprehensive way without a qualitative beginners/advanced, high/low, better/worse black/white, A/B, impressive/not-impressive dichotomy. The approach needs to be fundamentally different. GRI has to be more creative here, and not simply reapply a bad system in a different way.  Creating two tiers simply adds to the complexity and creates another margin for error, or even false claims.
 

Without the competitive benefit of being able to claim "In Accordance", at whatever tier, many companies will use G4 to "inform" but not to "frame" their reporting, which would lead to a stark dilution of the application of the GRI framework in practice, possibly even less rigorous than today. While G4 has some good ideas and intent - value chain, materiality, some more detail on supply chain etc - the sum of the component parts is horrendously burdensome and, frankly, unnecessary.

 

I disagree with Ralph Thurm who claims that many of the objections to G4 are about the (increased) number of indicators that should be reported. I don't think that's it. I think the problem with G4 is the relevance of the indicators required and not the quantity. We may want transparency, but we must curb our appetite for information overload for the sake of information overload. We want to see the wood and the trees. But if we have too many trees, all we will see is a big blurry landscape with undefinable constituent parts. The 2494-page document published by the GRI including all the responses to the G4 Exposure Draft Public Comment Period makes for interesting reading (if you have a few months to spare) and largely supports the need to simplify, clarify and focus the new guidelines on what's truly important.

 

Who will monitor G4 compliance? Will GRI perform "In Accordance" checks on every report that wishes to claim this achievement? If not, who will? Stakeholders will not perform detailed checks on adherence to GRI, no matter how many times the GRI says that it is their responsibility to do so.

We all want businesses to perform better on sustainability, and be more transparent, and we recognize that there are many gaps in the current reporting landscape. G4, as is, may only serve to make those gaps wider and impossible to reconcile. Companies who are already experienced in reporting at the highest (GRI Application Level A) level, may be tempted to push the envelope, but, frankly, why should they strive to be "In Accordance"? Would it not be simpler for companies to publish a more general non-GRI based report, while responding to specific requests for information such as the Carbon Disclosure Project and the DJSI or other rating and ranking and analyst companies? Despite the objective of harmonisation, it is not clear how the GRI aligns with these frameworks (except for realignment of emission scopes reporting with the CDP), and when it comes to the crunch, companies may believe that they could gain more value from focused responses to information requests rather than publication of an overly complex Sustainability Report. In fact, this is a core inconsistency in the GRI approach. On the one hand, reporting is for stakeholders who should check whether companies are indeed transparently accountable. On the other hand, most stakeholders are not willing/able to do the detailed work to identify whether companies are actually living up to their promise in terms of report quality, accuracy and adherence to a reporting framework.

 

This is what GRI says "GRI is not in a position to police or control the quality of reports based on its Guidelines – this is outside of the remits of what GRI does. However, using GRI’s Framework means organizations should engage their stakeholders when developing their reports. GRI also encourages stakeholders to challenge reporting organizations on their sustainability goals and what they report."

The fact that almost nobody notices when companies mis-report, or mis-apply the GRI framework, may suggest that stakeholders are passive and perhaps, gullible. Or it may suggest that they are looking for the big picture, the material impacts, the difference a company's activities makes in their lives and in their communities, rather than the detail of how many suppliers of which type a company employs in Latin America and how many tons of ingredients it buys from each. It may suggest that stakeholders want enough data, but not too much, to assure themselves that executive remuneration is equitable, aligned with company performance and competently managed, rather than the entire disclosure of the "ratio of the annual total compensation percentage increase for the organization’s highest-paid individual in each country of significant operations to the median annual total compensation percentage increase for all employees in the same country (excluding the highest-paid individual)." Stakeholders want to know about supply chain risks, but may not need the full report  of "the percentage of existing suppliers and other business partners identified as having actual and potential adverse impacts on society assessed on society-related performance, and actions taken".

In this sense, G4's focus on materiality is good. But this focus is buried in a mass of profile disclosures and a long list of performance indicators which go into unnecessary depth and which most stakeholders will not know how to use. Even the most skilled of financial analysts will be challenged to understand the financial impacts of such granular disclosures. Maybe G4 will have the effect of encouraging companies to leave detailed reporting of performance to those who specifically ask for it (and presumably know what to do with it) while publishing a more general review of their sustainability impacts for the bigger picture stakeholders. I think it would be a shame if this happened and could lead to disjointed reporting and potential for inconsistencies.

 

In the run-up to the May conference, I believe the GRI needs to do some soul searching, rethink several elements in G4 and turn it into something it was originally intended to be: a simpler, clearer, more relevant and more accessible framework that will deliver information that stakeholders need and know how to use. That doesn't mean just cutting out the extra bits. I think a real back-to-the-drawing-board approach is called for to get to what matters most in the most effective way.  I hope we will see a somewhat different G4 in Amsterdam in May. I suspect it's probably pretty much wrapped up by now, bar the waiting, so these comments may have missed the train. But it's not too late to make a change in the way G4 is launched......

....... I would recommend a soft launch for G4: an invitation to up to 100 reporters to produce their 2013/2014 report using G4,  log their experience, make recommendations, and help define whether G4 is really a workable, beneficial, new framework or something that looks great on the drawing board but overly challenging in the harsh reality of corporate practice.

 

PS: In the meantime, have your say about the reporting landscape now and in the future in the CR Perspectives survey from CorporateRegister.com.

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

The Top Ten CSR Reports of 2012

Previous posts on the CSR Reporting Blog with my pick of the Top Ten Reports of 2010 and the Top Ten Reports of 2011 have actually been among some of the most popular posts of all time on the CSR Reporting Blog. Who am I to mess with a winning formula? 

What do I look for in a winning report? Authenticity, Materiality and Impacts. The AIM model. This is how it works (reproduced from last years' post)

 

Authenticity: I look for whether the company has reported in an honest way, using stakeholder voices to supplement performance data. Authenticity for me includes balance, accuracy and completeness. I look for targets and progress against stated targets.

Materiality: I look for whether the company has clearly defined the most important issues for the company and its stakeholders and described the way in which those issues have been identified and prioritized. Reporting materiality should also include a certain amount of contextual information which can assist us in understanding the issues and why they are material.

Impacts: I look for whether the company identified impacts rather than just presenting a shopping list of activities. This means discussing the outcomes of what was achieved. The outcomes are the achievement, not the activities. This is by far the most difficult thing for companies to address and very few, if any, do it well.

My Top Ten are reports that have caught my eye and stand out for me in some way. It's not an objective or methodological selection. But, I do use, browse, read and review many many many reports throughout the year, so you might say that the ones that stand out are hitting the mark in one way or another. By the way, you can also read Leon Kaye's Top Ten Sustainability Reports of 2012 on Triple Pundit.  His picks are all western global companies: Cisco, Coca Cola, Intel, Marks and Spencer, Microsoft, Nike, Philips, SAP, Unilever and UPS. All great works, and worthy of any top report list. My selection includes reports which are probably lesser known and reflect a more diverse group of companies from different parts of the world.  

Here... drumroll..... in alpha order are my Top Ten Picks of Sustainability Reports published in 2012.

 

(Becker Underwood, BT, CEMEX, China Mobile, Estee Lauder, Impahla Clothing, Larsen & Toubro, Maersk Line, Symantec and Tieto Corporation)

Becker Underwood Sustainability Report 2011
First report, GRI Application Level C, 81 pages

Becker Underwood is a privately-held multinational company, founded in 1982 in Ames, Iowa, that develops and produces a wide range of agricultural and horticultural solutions, including seed colorants and polymers, inoculants, beneficial nematodes, and mulch and turf colorants. Becker Underwood operates on five continents and employs over 430 people and generates $200 million in net sales. (Just in case you are wondering, as I was, what beneficial nematodes are, here's a definition: "Beneficial nematodes seek out and kill over 200 species of pest insect in the soil and will have no detrimental effect on species such as ladybugs, earth worms and other helpful beneficial insects." )

 

What I like about this report, in addition to the fact that it's a first, is its simplicity in reflecting a single overarching aim of this company: to have a NET positive impact from all direct and indirect business practices. That's easier said than done, but Becker Underwood, as a global but small-ish company, has taken the long view and developed a clear strategy to progress focused actions against seven strategic objectives. Actions include purchasing Renewable Energy Credits to offset 100% of electricity use, installing 84 solar panels at the company's Missouri site, energy efficiency improvements at several facilities and Becker Underwood has been working with Trucost to develop an environmental profit and loss account for the company's supply chain.  

 

If anything, this report adheres too rigidly to the GRI framework which has constrained its writing. Rather than help us understand the true impacts of the company's activities, the report follows the GRI profile disclosure elements in order, and bypasses the stories and case studies that would make this report come alive. Nonetheless, as a first report, it's a credible testimony to the company's approach and actions, and is carefully crafted,  modeling what can be done by businesses below $1billion revenues and 1,000 employees size.

BT Better Future Report 2012
GRI Application Level A, web-based report with 8 page downloadable summary

BT is one of the world’s leading communications services companies, operating in the UK and in more than 170 countries worldwide. Main activities are the provision of fixed-line services, broadband, mobile and TV products and services as well as networked IT services. BT employees over 90,000 people and has a total revenue of over GBP 19 billion.

BT has been reporting since the 90's and they always tend to do a good job. One of the best features of BT's reporting for some years now is the linkage of non-financial indicators and financial indicators. You can see this clearly on page 7 of the summary report. For example, one financial measure of the value of sustainability to BT's business is the value of customer contracts that BT competes for that have a sustainability element as part of the bid, which reached GBP 2.7 billion in 2012. This is linked to the underlying sustainability action of maintaining or improving BT's ethical index score.

Aside from this, BT's reporting is centered around their mission to "provide reliable and secure networks that help people and businesses to thrive". The web-based report contains a selection of interesting case studies which illustrate the ways in which BT lives this mission. For example, a story about how BT's emergency services 999-number wait time was reduced significantly shows how technology and new social media tools can be used in innovative ways.

BT's material issues are clearly laid out and a commentary from an external Leadership Panel adds extra perspective.

CEMEX 2011 Sustainable Development Report
GRI Application Level A+, 61 pages

Founded in Mexico in 1906, CEMEX, S.A.B. de C.V. is the world’s leading supplier of ready-mix concrete, and a leading cement and aggregates producer, with net sales of over $15 billion, selling to over 50 countries with 44,104 employees worldwide and an annual production capacity of 95.6 million tons of cement.   CEMEX operates 59 cement plants, 1,921 ready-mix concrete facilities, 377 aggregate quarries, 226 land-distribution centers, and 70 marine terminals. That's a heck of a lot of cement.

CEMEX began publishing annual environmental, health, and safety reports in 1996, and then in 2003 published its first Sustainable Development Report. Entitled "Building a Better Future", the 2011 Sustainable Development Report is CEMEX's ninth report that covers the range of environmental, social, and governance issues and performance.

What's great about CEMEX's reporting is a very clear approach to sustainability with three key drivers and seven priorities, and a materiality matrix which highlights the priority issues, which are reported in detail. Health and Safety, for example, the highest material issue, takes five pages in this 61 page report, and, while demonstrating improved safety performance, doesn't omit to mention that a whopping 44 individuals died in connection with CEMEX's activities. I am sure that's a painful disclosure. Not surprisingly, really, that all these 44 fatalities were contractor and third party employees. This reinforces the big differential between safety performance for own employees and safety performance for third parties. I see this pattern with many companies (Note to self: This deserves a post of its own. Sometime soon). Companies using contractor or third party employees must pay far more attention to safety training and supervision. In the same section, CEMEX reports a reduction in lost-time accidents among its own employees versus prior year.

CEMEX is involved in activities to "proactively contribute to the transformation of the construction sector" through a range of collaborations and research programs on the value of concrete as a sustainable building material. CEMEX has even become somewhat of a consultant to customers in construction of sustainable buildings. A life-cycle approach to concrete features in the report. The impacts of concrete in so many different aspects of our lives - construction, urban infrastructure, even road congestion, makes this report a fascinating read, very informative and even educational, as CEMEX provides relevant background information. Each section opens up with "performance highlights" and continues with a description of the company's management approach and a selection of challenges ahead. Clearly a report which has been carefully planned, it is well structured, and presents issues in a credible way. The report is bolstered by the commentary of an Advisory Panel.

The thing I wonder is why the materiality matrix is hidden away on page 45, instead of being right up front as an essential backdrop to the company's strategy and reporting approach.


China Mobile Ltd 2011 Sustainability Report
GRI undeclared level, 58 pages

 

China Mobile has over 176,000 employees, nearly 650 million customers and a 66.5% market share of mainland China telecoms services. The company was incorporated in 1997, and has mushroomed to be one of the largest mobile networks in the world. Just a list of the China Mobile wholly owned subsidiaries takes up a full page in this report. China Mobile was the first company in mainland China to publish a Sustainability Report in 2007 and this is their sixth. It is indexed to the GRI, the UNGC and ISO26000. 

China Mobile's vision is "Mobile Changes Life" and this report links the activities of the company with outcomes for a better society and environment. The company covers a broad range of issues relating to mobile technologies and consumer behavior and impacts, providing contextual information and background to this company's extensive reach. One small example: empty nesters. This is what China Mobile says:

"Mainland China is continuing to become an elderly society and the number of “empty nest” families has increased significantly. According to the statistics, currently “empty nest” families have surpassed 50% in both cities and rural areas, with the number increasing to 70% in some large and medium-sized cities. The question of how to care for the elderly becomes more pressing. We have fully considered the need of the elderly in their daily life and innovated on information services for them through customised terminals."

 

The Sustainability Performance key indicators are collected towards the end of the report and provide a great overview of China Mobile's performance. I like the fact that some of the performance areas are expressed in terms of impacts, and not just inputs (although there is room for even broader thinking in this area).

Estee Lauder Corporate Responsibility Report 2012
GRI undeclared level, 80 pages

The Estée Lauder Companies Inc. is one of the world's leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products, with sales of products are sold in over 150 countries and territories under the following brand names: Estée Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, Tommy Hilfiger, and many more. The company has net sales of  almost $10 billion, and employs  approximately 38,500 people. The company was founded in 1946 by Estee Lauder.

The report is entitled "The Beauty of Responsibility" and this report is indeed a beauty. It projects a certain grace and refinement through its pleasing design, and well-placed imagery. Goals, progress in the reporting period and new goals are clearly set out up front, and issues such as diversity and inclusion, people development, advancing women, corporate philanthropy and environmental stewardship are well addressed. A large section is devoted to women's health and especially breast cancer, which has been the flagship cause of Estee Lauder for 20 years. Evelyn Lauder, who is credited with creating the pink ribbon, sadly passed away after battling with ovarian cancer in 2012 and a touching memorial page is devoted to her in this report.

While lacking some of the heavyweight aspects of Sustainability Reporting (stakeholder engagement processes, materiality analysis, value chain impacts, specific challenges etc), this report does present a credible picture of a company doing much to operate in a sustainable way as part of a core business philosophy. It certainly is the beauty of responsibility.
  

 

Impahla Clothing Integrated Annual Report 2012
Integrated Financial and Sustainability Report, GRI Application Level A, 64 pages.

Spring Romance Properties 34 (Pty) Limited, trading as Impahla Clothing (Impahla), is a company based in Cape Town, South Africa and manufactures clothing under a sole source agreement for PUMA, a world-class sport and lifestyle company. Impahla is a privately owned business that has grown organically over the last eight years from 60 employees in 2004 to 234 in February 2012. In 2012, Impahla supplied in the order of 445,000 garments for a total turnover of R38 million, 31% up from 2011. The most significant recent development in the Impahla business has been the move to manufacture exclusively for PUMA. 

 

Impahla started reporting in 2007 and this is their fifth report, and each one has been a gem. If anyone wants a role model for SME reporting, this is it. The open and inclusive style, the genuine and frank discussion of core issues, the well-written and carefully crafted messages, the conformance to the GRI framework without the appearance of a tick-box approach and the focus around material issues all make this company and its reporting one of the best, not just of 2012, but of several years. Design is always great too, with original photos of the operations and employees at all levels. Nothing Stock about this report. This discipline and degree of transparency does not come easy for a privately owned SME and is by no means an obvious approach. It requires absolute consistency and integrity by the company's leader-owners. We need more of this in business today. (Watch out for my DoShort book to be published in January about Sustainability Reporting for SME's in which I use Impahla as a case study, having interviewed the Managing Director, William Hughes).  

 

Larsen and Toubro Sustainability Report 2011
GRI Application Level A+, 112 pages

I covered Larsen and Toubro's reporting on the CSR Reporting Blog earlier this year with a Triple Cone Award for consistently compelling and creative reporting.

Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing company. It is one of the largest companies in India, founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro. Both of them were strongly committed to developing India's engineering capabilities to meet the demands of industry. L&T is traded on the Indian Stock Exchange and employs over 50,000 full-time employees and over 300,000 contract workers, boasting a turnover of around $13 billion.

 

For more detail, read my post earlier this year. Suffice it to say here that this company has become one of the few that delivers a report which I look forward to reading each year.

Maersk Line’s Sustainability Progress Report 2011
Not GRI, 127 pages.

 

Maersk Line, headquartered in Denmark, is the largest shipping company in the world with a global market share of 15%. Maersk Line employs 25,000 people with 325 offices in 125 countries around the world and operates a fleet of more than 600 ships which sail every major trade lane on the globe, and make about 35,000 port calls every year.

This is Maersk Line's second report and what I like about it is the vision and long-term thinking it projects. Entitled "Route 2", the name of Maersk Line's sustainability strategy, the report's introduction kicks off with "Towards 2050" and an overview of the challenges facing the shipping industry in the light of global issues and mega-trends. The report is structured around five core issues that are at the heart of Maersk Line's strategy, and includes fascinating insights. For example, the report includes a description of the Indian banana trade based on a socio-economic impact study conducted by Maersk Line, and examines the risks to this sector in light of the different findings. Maersk Line's cold-chain shipping is an important part of the global perishable food distribution network.  

 

Maersk Line also presents good environmental data, including the impacts on its customers' supply chains. For example, Maersk reports that 169 key customers saved over 748,000 tons of carbon emissions by shipping with Maersk versus the industry average. In fact, overall, this report is one of the most fascinating reports I have read this year. It's immensely readable, with each section providing context, case studies and highly informative content. Maersk covers issues ranging from energy efficiency to illegal trade, from biodiversity to the floorboards in containers and from waste handling to exhaust gases from ships.

 

While I miss the structure of the GRI framework (an index, for example, and certain key indicators), and a materiality matrix, and this report is a little light on process for engaging with stakeholders, overall this is a great example of high-quality narrative and visionary sustainability performance.

Symantec Corporation 2011 Corporate Responsibility Report
GRI Application Level B+, 43 pages

I reviewed this report for the December edition of Ethical Corporation Magazine, and gave it a thumbs-up. These are the first two paragraphs of my review:
 

"Symantec’s latest report reflects a step-change in the company’s thinking and presentation of its corporate responsibility approach and performance. For the first time – the company has been reporting since 2008 – the report is organized around Symantec’s three strategic responsibility priorities: people (employees), world (environment, human rights, sourcing and community) and information (online security). These three focus areas form the basis of the structure of this report, which, at 43 pages, covers a healthy breadth of information in a crisp, coherent and intelligent way, while retaining focus. As reports go, this has all the positive elements: materiality matrix, input from internal and external stakeholders, clearly laid-out performance data over three financial years, and even a few failures frankly discussed. In fact, this is one of the few reports that lend themselves to reading cover to cover without inducing sleep." Enough said. Read it!

Tieto Corporation Corporate Responsibility Report 2011
GRI Application Level A+, 45 pages.

Tieto is an IT and product engineering services company headquartered in Finland and operating mainly in Nordic markets, Russia and Poland, with net sales of close to EURO 2 billion and employing 18,000 people.

 

This is Tieto's third CR Report, and it covers the spectrum of CR issues well. There is a detailed (and colorful) materiality matrix covering 25 issues, of which 10 are more material than others. Tieto clearly links its role as a business to the context of Green IT, about which there has been much research and clear conclusions drawn about the environmental benefits of online living. Providing good context, Tieto describes the ways in which it supports the online transition and offers customers lower-carbon lifestyles, calculating that in 2011, Tieto helped customers reduce carbon emissions by over 160,000 tons.  Tieto has a vision to achieve carbon neutrality in its own operations, and provides detail on carbon performance including specific multi-year targets.

Tieto reports authentically, for example, detailing non-conformities found in quality audits and corrective actions taken. Similarly, customer satisfaction, a key material issue, is reported both in terms of the positive aspects mentioned in customer feedback, and also in terms of points for improvement.

While the Tieto report could be livened up with a little more in the way of case studies and stakeholder voices, and a greater shift from inputs to outcomes, it is a good example of clear, straightforward, well-structured GRI-based reporting.  

Special Mention:

All the above reports are published by corporations. I wanted to make a special mention of another excellent report published in 2012: CEFIC's Towards Sustainability 2011/2012 Report.
 

 

The world of business is moving into a future of sectors, not just individual corporations. More and more, we need to consider value chain impacts by sector because there is a minimum threshold of sustainability performance is required by all companies in a sector to enable meaningful systemic collective progress. The more advanced companies understand this and the more advanced sectors are already organizing themselves around sustainability themes. CEFIC (The European Chemical Industry Council "the forum and the voice of the chemical industry in Europe") is not the first sector association to publish a Sustainability Report - there are many, some geography specific as well as sector specific. However, I highlight the CEFIC Report because it is a good, serious example of a strong considered approach to sustainability by an industry sector, and as a first report published in 2012, represents another breakthrough on our collective sustainability journey.

Note: To be fair, as in previous years, I did not include published reports of clients which my company, Beyond Business, served this year. These include:
GSK Romania Sustainability Report
Netafim Ltd Sustainability Report
Novus International Sustainability Report
Liberty Global Corporate Responsibility Report

Wishing everybody Happy Reporting in 2013!


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)