Directions 05
Trends in CSR reporting 2004-2005
01 Introduction
02 This year I have been driving a lot
   Simon Beavis
04 Taking control
   Doug Johnston
06 Addressing th...
Directions 05
Trends in CSR reporting
                             Welcome to Directions 05, a review
A report b...
By Simon Beavis
Founder of The Word Works   BEEN DRIVING A LOT
                            ANY SUCCESSFUL...
reader; many appeared to have an altogether       Here are three reasons why this
different target in mind, namely the was...
By Doug Johnston
Head of Ernst & Young’s
Corporate Responsibility
Services in the UK

Confident communication                           Evidently, the wind is blowing in just one
By Matt Haddon
Partner in the international
consultancy ERM. He was a core
to check the numbers before going to print,       being open about technology and product
By Martin Cutts
Founder of Plain Language

Neither the readers nor – probably –                                                                     statements’. And ...
By Nigel Salter
             Director, salterbaxter

THERE ARE ALREADY SOME                             ‘Our strategy is straightforward                C) ‘Does the OFR mean t...
So this year Directions is baring its teeth.
Top 100 UK
companies    A key to our approach in the first 4 editions of Dire...
Please note the panellists’ views are their own personal views and
The judging                                    not nece...
Aerospace & defence page 14                        Media & entertainment page 21
The sectors             Banks page 15    ...
The banking sector covers a very broad              Transparency International to develop group
BANKS:                    ...
All four of the beverages companies in this         Allied Domecq and SAB Miller also do a good
 BEVERAGES:               ...
The chemicals sector provides a range of              This year, in particular, chemicals companies
CHEMICALS:            ...
All of these companies provide information        environmental sustainability aspects of
 ELECTRICITY:                   ...
All of these companies have some form of         + • The focus of Unilever’s sustainability
FOOD PRODUCERS &             d...
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
Directions 05 A review of best in show of this years crop of CSR reports
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Directions 05 A review of best in show of this years crop of CSR reports

  1. 1. Directions 05 Trends in CSR reporting 2004-2005
  2. 2. 01 Introduction 02 This year I have been driving a lot Simon Beavis 04 Taking control Doug Johnston 06 Addressing the crisis of trust in business Matt Haddon 08 Reducing corporate hot air emissions Martin Cutts 10 The OFR – compliance will not be enough Nigel Salter 12 Top 100 UK companies by sector 13 The judging panel 14 The sectors 28 And the winners are 30 Global 100 36 About us
  3. 3. Directions 05 Trends in CSR reporting 2004-2005 Welcome to Directions 05, a review A report by salterbaxter of the Best in Show of this year’s crop of CSR reports. The first 4 editions of Directions studiously avoided passing judgement on the quality of CSR reporting in the top UK companies. Nigel Salter, salterbaxter This is because we felt the big issue, especially in the first couple of years, was how many companies were reporting, not how well they were reporting. All but a few of the major UK companies now report in some way or other so this year we’re turning our attention to the issue of effectiveness. Yes most companies report – but is their Doug Johnston of Ernst & Young argues that effort worth it and are they doing much more companies need to get to grips with their than ticking boxes? non-financial controls on page 04 and Matt Haddon of ERM looks into the crisis of trust Some companies seem to think size matters, in business on page 06. some go for completeness, some go for short but sweet. So what actually works? Building on last year’s call in Directions to ‘Cut the fluff from CSR’, Martin Cutts, founder To help us decide we have assembled a panel of the Plain Language Commission, gives a of experts who will be giving out rosettes, guide to the challenges of writing about CSR plaudits, pithy criticism and insight into the in good plain language on page 08. state of reporting in all the FTSE 100 companies. The competition starts on page And, of course, this will be the year of the 12 but for those who always turn to the OFR which may see a substantial shake up conclusion first, the prizes are awarded on in the way the top companies approach CSR page 28. communications. See what your options are on page 10. As usual our review of the year also includes thinking from other experts on some of the Finally, we move away from our shores and main issues. cast our eye around the world to see what the top 100 global companies have published. The art of the Chief Executive’s statement is illuminated by writer Simon Beavis on So all in all another fun-filled, fact-filled page 02. Directions report. Enjoy! 01 DIRECTIONS 05
  4. 4. THIS YEAR I HAVE By Simon Beavis Founder of The Word Works BEEN DRIVING A LOT ANY SUCCESSFUL CEO NEEDS TO GET OUT AND ABOUT. BUT, TO JUDGE BY THE THINGS BRITAIN’S LEADING EXECUTIVES SAY IN THEIR CORPORATE REPORTS, MOST SEEM TO BE SPENDING JUST TOO MUCH TIME IN THEIR CARS. CEOs, it appears, do a lot of ‘driving’. Companies are led by individuals, most of It’s one of their favourite pastimes; next, that them highly valued for their particular skills. is, to ‘delivering’. And some of them do both, How would it be if more of them wrote as often in the same sentence. Reassuringly, individuals, using the same sorts of words they most of them are determined to do these would use to describe any other important activities ‘going forward’. Think of the chaos aspect of their lives – say, family, sport, if it were otherwise. Africa or Mozart? It’s easy to do parodies. To be fair, the world WOULD ANY OF THEM of business – like any other – has its own language, both formal and informal. Corporate NORMALLY SAY: “GOING reports are formal documents issued to meet FORWARD, I AM DETERMINED a specific requirement. ‘High performance’ TO PLAY MORE TENNIS?” vocabulary gets thrown in there to help persuade, often sceptical, readers that the Communication is one of the most important executive team is doing all the right things aspects of leadership. You can’t lead a highly to guarantee success. complex organisation – employing tens of thousands of people and answerable to an The trouble is too many business leaders flock army of shareholders – effectively if you can’t to the safety of common clichés and jargon to make yourself quickly and clearly understood. do this. As a result, official reports become samey and predictable. Far from being carried If you sift through the annual reports of by the argument, readers find themselves leading companies you’ll notice that most asking: ‘haven’t I read this somewhere before?’ CEOs and Chairmen shy away from everyday language when talking about their work. There is a way to stop this problem. You’ll be struck too by those who are brave enough to break away from the grey uniformity Let’s pose a simple question. If CEOs were to of business speak, and how effective it is write an annual review of their leisure time when they do. would they choose the same language? Would it involve so much time at the steering wheel Let’s not get this out of perspective. Business or on the tail gate of a truck? communications are undoubtedly improving. Not so many years ago the documents foisted It’s a much more important question than on the public were, almost without exception, it sounds. utterly dreary. Few were really written for the 02____03 DIRECTIONS 5 05
  5. 5. reader; many appeared to have an altogether Here are three reasons why this different target in mind, namely the waste- should change: paper bin. 1. Words have real value, but THEN A NEW FASHION they are rarely valued. TOOK HOLD. EXECUTIVES Since a huge number of the words we read everyday are produced either by companies or STARTED TO PERK UP THEIR by big public sector organisations, we deserve OPERATIONAL REVIEWS, better. If these organisations are going to BORROWING WORDS FROM dominate the written spaces of modern society with reports, advertisements and brochures, THE BUSINESS SCHOOL it’s important that they use language well. LEXICON INCLUDING MANY To do otherwise is arrogant. IMPORTED FROM THE US. 2. The second is rather more The fads of reporting were all too clear difficult to explain. to see. One year it was fashionable to talk of Executives often seem to struggle most when synergies; next year, everyone was busy talking about people. This is where the language leveraging things left, right and centre; the tends to be most opaque, embarrassed and following year, engagement was all the rage weak. Phrases like “we have a strong and and everyone was absolutely passionate clearly articulated strategy to focus on the about it. human performance aspect of our business” will almost certainly leave the reader thinking Used sparingly, these words are perfectly the strategy is neither strong, nor clearly acceptable. Overused in familiar stock phrases, articulated and that the “human performance they quickly become devalued. aspect” isn’t all it’s cracked up to be either. This writing business is not easy and there are legal constraints on what can and can’t 3. The third is specific to the be said in corporate reports. But within these age we live in. constraints, a simple truth still holds true – Companies are under pressure to disclose the most powerful writing uses simple, plain more information than ever before. Corporate language. Everyday language – used wherever Responsibility reporting is growing rapidly and, possible – is invariably best. done effectively, demands plain talking based on facts. Warmer words, with no hard evidence, Yet in some parts of the business sphere, won’t do. The question “Can that statement a misguided belief still persists that using really be justified?” needs to be asked complicated, over-earnest and inward-looking constantly. It’s the first question the reader language loaded with fashionable buzz- will be asking. phrases lends seriousness. In fact the opposite is true. More often than not, jargon and clichés just make the reader – whether specialist or non-specialist – tired. They also invite mockery. So, each reporting season, journalists have a field day lampooning the mangled language of CEOs. It’s great sport – though not yet quite The introduction next year of the operating on a par with the annual Bad Sex in Fiction and financial review (OFR) will also swell the Award (just one reminder that even the finest volume of words coming out of top companies. professional writers are also capable of The idea of the OFR is to give shareholders the dreadful writing). chance to assess the risks facing a business and make a more informed judgement about its true prospects. Companies should see this as an opportunity not a threat. The danger is that some will respond by lurching back into jargon and legalistic language – more words, less clarity. That would be a real pity – greater openness must be a good thing. It would also be irresponsible, a step sure to inspire greater public cynicism in companies at a time when they can least afford it. So perhaps an appropriate pledge for CEOs this year would be: “Going forward, we will drive changes in our communications strategy to deliver greater openness in our stakeholder relations.” Or, put more simply: “In future we are going to describe what we do more clearly.”
  6. 6. By Doug Johnston Head of Ernst & Young’s Corporate Responsibility Services in the UK THERE IS NO POINT IN ISSUING A CSR REPORT OR A year ago, this publication called for companies to cut the fluff from their AN OFR SIMPLY TO BE SEEN TO BE DOING THE CSR reporting. It was a timely request. RIGHT THING. COMPANIES NEED TO UNDERSTAND Stakeholders’ tolerance thresholds are lowering dramatically all the time. Taking THE BUSINESS CASE – AND THE BUSINESS control of the ways in which they identify, BENEFITS – THAT FLOW FROM TAKING CONTROL gather and report key non-financial information should become a priority for OF THE NON-FINANCIAL INFORMATION THAT the management of UK companies. Those THEY REPORT TO THE MARKET. that get it right will benefit from better decision-making and better performance. Mounting pressure Various factors are driving companies to reassess how and why they disclose their non- financial performance. Uppermost amongst these is encroaching regulatory pressure. The UK’s Operating and Financial Review (OFR) 04____05 DIRECTIONS 05
  7. 7. Confident communication Evidently, the wind is blowing in just one The importance of building this confidence – direction – and it is picking up speed. Directors and the strategic edge it delivers – should not of UK companies need to understand that this be underestimated. Now, with the regulatory is not a worthless box-ticking exercise. It is still spotlight falling on the disclosure of non- early days and there is, as yet, no best practice financial information, there are real lessons template to be adopted for the disclosure of to be learned from the s404 experience. The non-financial information. That said, there are OFR is a fact of life. Directors of UK quoted certain fundamental issues to bear in mind. companies have to report on non-financial The OFR helps to provide a framework by business issues and – if this process is to stressing the need for ‘relevant’ information deliver sustainable value to their businesses, to be included. Accordingly, before putting instead of undermining their reputation – they these controls in place, companies need to need to develop much greater confidence in identify what information is relevant to their the clarity and integrity of this information. stakeholders – and what is not – with the investment in controls being directed at the PUT BLUNTLY, THE QUESTION information that is deemed most relevant. As experience has already shown, readers of HAS TO BE: “WHY DISCLOSE CSR reports quickly become disengaged, if SOMETHING IF YOU’RE NOT not cynical, when they are expected to wade SURE YOU CAN BELIEVE IN IT through fluffy non-core information. YOURSELF?” Arriving at an assessment of the relevance of this information is not a scientific process, Nor is it just the OFR’s arrival that adds but certain key indicators will prove helpful. urgency to this issue. There is a much wider Common sense judgements are called for: for appreciation that non-financial issues example, a relevant issue might well be the underpin sustainable business performance subject of questions at the AGM; alternatively, and, therefore, an increased desire to have it might have affected the share value/revenue/ appropriate performance management and reputation of a peer organisation, or already reporting frameworks which allow progress be occupying significant management time. in non-financial performance to be tracked. Other developments clearly signpost the Accurate, balanced and relevant need for companies to overhaul their internal controls – and their disclosure mindsets. The ONCE THE KEY NON- recently-published Flint Review stressed the FINANCIAL ISSUES HAVE need for companies’ Turnbull statements to BEEN IDENTIFIED, COMPANIES contain assurances that annual reviews of controls environments have been performed, SHOULD START TO PUT IN now obliges UK quoted companies to report benchmarked against the key risks facing each PLACE CONTROLS ENABLING on a broad range of relevant non-financial organisation. The intention is to encourage INFORMATION AROUND THESE business issues. Crucially, directors have to cross-fertilisation between the OFR and the sign off on the OFR. At the same time, identification, control and monitoring of ISSUES TO BE IDENTIFIED, companies have become increasingly alert to business risks, as well as clear, confident MONITORED AND CONTROLLED the ways in which non-financial issues impact market communication. ON A REGULAR BASIS. on their core business, affecting everything from employee retention to building trust The OFR talks about making statements and safeguarding reputation. balanced and comparable over time. Stakeholders want more than random To date, limited investment in the controls snapshots – they want to know that a needed to provide confidence in non-financial sustainable controls environment is in place. information means that the quality of this information has varied from reasonable to poor. Three imperatives should provide the Understandably, in the post-Enron era, the foundation for this process – keep it accurate, emphasis has instead been on building robust keep it balanced and keep it relevant. financial controls. This trend has been most Once management is confident that the acute for SEC-registered companies, forced by organisation’s controls environment delivers s404 of the Sarbanes-Oxley Act to evaluate BETTER on all three counts, it can have confidence in the effectiveness of internal controls over all the financial information they report to CONTROLS the information it is feeding to stakeholders. the markets. S404 compliance was a major undertaking, = Don’t replace fluff with puff. According to Directions 2004, 145 of the consuming resources and management BETTER UK’s 250 largest companies produced a CSR report last year. This is obviously positive. attention and it is clear that, as a result, a DECISIONS However, if, as many of these companies number of financial control issues have come profess, CSR matters are integral to business out of the woodwork: poor standards of documentation and evidence, underdeveloped + performance, why are so many of these companies prepared to disclose information in reporting routines and systems and a lack BETTER which they can surely have little confidence? of focus on traditional financial internal controls are just three noteworthy issues. PERFORMANCE Companies need to start focusing on their If this is the case for financial controls that controls. After all, there’s little point stakeholders may previously have perceived replacing fluff with puff. as robust, what lessons can be learned from the experience of these companies to ensure stakeholder confidence in non- financial controls?
  8. 8. ADDRESSING THE CRISIS By Matt Haddon Partner in the international consultancy ERM. He was a core OF TRUST IN BUSINESS member of the World Business Council for Sustainable Development (WBCSD) team THE CRISIS OF TRUST IN BUSINESS IS IMPOSSIBLE which developed ‘Beyond reporting: Creating business TO IGNORE. ACROSS 20 COUNTRIES SURVEYED BY value and accountability’, of which this article is an extract. GLOBESCAN AT THE END OF 2003, NON-GOVERNMENTAL The full report can be found at ORGANISATIONS (NGOS) WERE ONCE AGAIN THE MOST TRUSTED AND GLOBAL COMPANIES THE LEAST. THE NAMES OF SOME BUSINESS PEOPLE ARE NOW INDELIBLY LINKED WITH CORPORATE WRONGDOING. 06____07 DIRECTIONS 05
  9. 9. to check the numbers before going to print, being open about technology and product the ‘reporter’ develops a sophisticated view of development with society, politicians, what’s in place to implement non-financial authorities, NGOs, customers and investors. policies and uses external assurance exercises Increasingly it is focusing on engagement that provide confidence to the Board that the through stakeholder round-tables and has been organisation is walking its talk. able to learn from the public policy debate on bio-ethics. IN SHORT, NON-FINANCIAL Or Australian bank Westpac, which has REPORTS WERE IN DANGER OF been rebuilding its reputation since BEING PERCEIVED AS LARGELY suffering financial problems in the early PERIPHERAL AND MOST 1990s against a backdrop of unprecedented consumer pressure over branch closures, BUSINESS PEOPLE (AND IF lack of transparency and bank charges. THEY WERE HONEST, MANY A new chairman provided the leadership to SUSTAINABLE DEVELOPMENT differentiate the bank by emphasising the employee/customer interface. And its corporate (SD) AND CR PROFESSIONALS) responsibility team engaged the business to KNEW THEY DID LITTLE TO devise a straightforward approach through HOLD THEM TO ACCOUNT. disarmingly simple and well communicated internal programmes such as (the customer After working with more than 60 companies should only have to) ‘Ask Once’ and ‘Do the and a series of professional commentators Right Thing’. from AccountAbility to the OECD, the WBCSD project found that businesses and the people SD or CR champions have a vital role to play within them are entirely comfortable with being in co-ordinating or catalysing change. But held to account. What was equally clear was they need to approach each business function that the traditional view of what businesses with a very open mind. Individual functions Yet how can this be, comes the cry? should be accountable for, and to whom, is (e.g. ethics, diversity, community relations) are Surely the sustainability/corporate failing to equip corporations with the tools often wrestling with problems that they do responsibility/environment/‘jolly good egg’ they need to survive and prosper in a highly not see as ‘sustainability’, but these are reports that corporations have been dutifully connected stakeholder age. probably the sustainability issues that really producing were enough to convince sceptics do matter for the business. that their hearts were in the right places? These concerns are now reaching the mainstream and new corporate governance So how can reporting organisations get more Clearly, the answer is no… requirements explicitly ask for a forward- business value from reporting, and at the same looking approach. For example, the UK time move more firmly to rebuild trust? Of The World Business Council for Sustainable government’s proposals for Operating and course, there is no silver bullet, no single Development (WBCSD) recently reached Financial Reviews call on companies to report answer that will light up the eyes of either the a staging-point in a two-year project to on how management of non-financial issues CEO or the NGOs. But there is a lot to aim at. understand how businesses can better may impact the business going forward. frame, discharge – and report on – their The WBCSD project identified five ‘accountabilities’. The title of its conclusions And here lies an additional challenge. To have fundamentals for creating value from provides part of the answer: ‘Beyond sufficient confidence to provide this forward- accountability and non-financial Reporting’. looking view of what will really affect the reporting: success of the business, companies need broad, IN HINDSIGHT IT SEEMS robust reporting and assurance processes. • Understand what drives value in your A compliance-driven response is limited in its business; CRAZY THAT SO MANY • Recognise that different people are ability to identify issues that may destroy or COMPANIES APPEARED HAPPY create value. accountable for different things; TO SEE PRODUCTION OF A • Connect the functions that drive the WOULD SARBANES-OXLEY value drivers; STANDALONE CORPORATE • Leverage the effort that is going into RESPONSIBILITY REPORT REALLY HELP A FOOD straightforward compliance; and AS ‘ENOUGH’. MANUFACTURER UNDERSTAND • Tell people what you think THAT THE FUTURE OF ITS accountability means for you. Yet only recently have leading reporting organisations moved from once a year ‘report BUSINESS WOULD BE DEFINED It boils down to one simple idea: let go of the production’ to embedded non-financial BY OBESITY? CR and reporting agenda – and help others in ‘reporting’. your organisation find their own solutions. Sadly, and despite the millions of dollars The difference is subtle, yet crucial. While the spent, the answer is likely to be no. ‘report producer’ often had to skirt around sensitive topics (such as how does diversity The WBCSD project highlighted a number of really affect a professional services firm?), cases where companies are beginning to the ‘reporter’ engages with different business create value in their business. units and functions to help them to identify material issues for themselves. While the Take Denmark-based Novozymes, which ‘report producer’ used annual emails to gather believes that a broader view of accountability data to tick the boxes of a checklist, the offers the potential to learn from ‘reporter’ taps into underlying business stakeholders, not just communicate to information that their colleagues use to them. To retain its licence to operate in the manage material issues day-to-day. And controversial world of industrial enzymes, while the ‘report producer’ found a verifier Novozymes recognises the importance of
  10. 10. By Martin Cutts Founder of Plain Language Commission REDUCING CORPORATE HOT AIR EMISSIONS PRACTICAL STEPS TOWARDS PLAINER LANGUAGE IN CORPORATE REPORTS It’s my childhood’s fault. As a boy there used of the failure to explain insider jargon Worse still are the backslappings that pepper to be milk churns awaiting collection next to to readers, and an example of the fluff so many chairman’s messages: ‘Our corporate rural railway lines. So I’m already thinking that Directions has been bemoaning in responsibility programme has been overseen lactation, mastitis, woolliness and fluff when recent issues. by our Corporate Responsibility Advisory Task I delve into the XYZ annual report: Force, under Simon Wallaby’s inspiring and SOME CSR REPORTS AND OFRS pulsating leadership.’ • ‘One of the lowest rates of churn in the ARE EXEMPLARY BUT OTHERS world demonstrates the customer loyalty generated by our high-quality products.’ ARE SO FLATULENT THEY COULD POWER A WIND FARM. • ‘Maintaining churn at a low rate is a key component of maximising the return One says: we make on our investment in customer acquisition.’ ‘Demonstrating the many beneficial ways mobile telephony is being used in wider And then in huge letters, So It Must Be society is a positive way we can demonstrate A Good Thing: the social use of this technology.’ • ‘9.7% Our rate of churn.’ Prick this gassy bubble and perhaps it just means: Maybe I’m the only person reading company reports who doesn’t know what a non-milk ‘Mobile is being used in many socially churn is or who has to look up ‘dosimetry’ beneficial ways, and we need to keep and ‘epidemiology’, but to me it’s typical demonstrating this.’ 08____09 DIRECTIONS 05
  11. 11. Neither the readers nor – probably – statements’. And instead of ‘As a consequence Mr Wallaby need such exaggerated praise. of declining revenues over the past three years, When he wins the office sweepstake, actions have been taken at both Cox and the there’ll be no superlatives left. Dibble Group to reduce the operating cost base’, we can say ‘Declining revenues in the AS LUCY KELLAWAY HAS last three years have led Cox and the Dibble Group to reduce operating costs’. That’s more POINTED OUT IN THE FT, than a third shorter. COMPANIES SPATTER BUZZWORDS LIKE ‘PASSION’ Often it’s better to replace abstract nouns with verbs. For example ‘a flexible approach to EVERYWHERE – SHE COUNTED the resolution of risks’ means ‘a flexible 379 PASSIONS ON GENERAL approach to resolving risks’, while ‘in addition ELECTRIC’S WEBSITE. to the collection and redistribution of reports’ means ‘as well as collecting and redistributing She awarded a prize for cant to the Bank reports’. Chestnuts like ‘we are in receipt of’ of America’s CEO, Kenneth D Lewis, for and ‘on a regular basis’ can be written simply pronouncing, ‘The reason Bank of America as ‘we receive’ and ‘regularly’ respectively. is in business is to help make communities stronger and to help people achieve their Plain-language authors and editors use a dreams.’ Kellaway says this ‘offends against rather fluid set of guidelines because each sincerity, it is not truthful, and it is document is different. The guidelines include: hideously fashionable’. People think plain language is about using short words and short sentences, and indeed these are part of the story. But even more important is saying the right things and HELP ME. IF THIS IS ENGLISH, keeping to the essentials. Readers haven’t time for fluff. This means excising what John I NEED A DOCTOR TO EXPLAIN • Keep sentences short and simple. Cleese called ‘statements of the bleedin’ WHY I’M SUDDENLY ILLITERATE. • Prefer verbs to abstract nouns, obvious’ like these: because they are easier and livelier We all welcome headings as resting places to read. • ‘Pre-pay customers pay in advance for where we can stop, regroup and skim. But the • Where possible, prefer active to their usage...’. headings in many reports leave you ignorant passive verbs. of what’s to come, like these: • Avoid pomposity, verbosity, Now who’d ever have thought that? You • ‘Debtor recoverability’ archaisms and official jargon. mean pre-pay means paying in advance? Come on. This sounds like they go hunting for missing • Organise the contents in a logical debtors and returning them to their grateful framework. • ‘Business planning is an important process families like lost dogs. The text that follows • Make the type highly legible and within the Group and is a key ingredient in is scarcely more enlightening: ‘... we maintain the layout attractive. delivering the long term objectives of the provisions for doubtful debts for estimated business. It is central to the delivery of the losses that result from the inability of a corporate objectives...’. portion of our customers to make required payments.’ Why can’t we start this with Now this really is extraordinary: a multi-billion some normal English like, ‘Some of our pound group actually planning before it customers don’t pay up, so...’. does things. This whole idea could catch on. The public must be informed immediately. • ‘Customer performance’ Is this about how customers are performing? Even when readers have been told what No, you silly boy, that’s what the words say EBITDA and GAAP are, it’s a good idea not but not what they mean – it’s about how to befuddle them with stuff like this: the company is performing towards its customers. It’s just a new wrapper for that ‘As EBITDA is not a measure of financial old 20th-century idea, ‘customer service’. performance under UK GAAP, it may not be comparable to similarly titled measures of • ‘Revenue recognition’ other companies because EBITDA is not Maybe this means being able to recognise a uniformly defined.’ cheque among the junk mail, but somehow I doubt it. Which manages the rare feat of being a double-because and a triple-negative • ‘Mast site restoration provisions’ sentence, a combination guaranteed to Probably this means ‘Restoring mast sites to At Plain Language Commission we defeat most people. The paragraph goes on: their original condition’. To make headings specialise in converting the sow’s ear of meaningful, they often need unpacking corporate prose into the silk purse of plain ‘EBITDA should not be considered by and lengthening. language through editing and training. investors as an alternative to group Many of the documents we edit display the operating profit or loss or profit or loss on Reports also need more active-voice verbs. Clear English Standard to show they’ve ordinary activities before taxation as an So instead of ‘This commentary should passed our checks of clarity, structure indication of operating performance, or as be read in conjunction with those financial and layout. More than 10,500 documents an alternative to cash flow from operating statements’, we can say ‘Please read carry the logo, and it’s good that more and activities as an indication of cash flows.’ this commentary alongside the financial more company reports are seeking it.
  12. 12. By Nigel Salter Director, salterbaxter COMPLIANCE WILL NOT BE ENOUGH WHY LISTED COMPANIES THAT JUST TICK THE BOXES WHEN RESPONDING TO THE NEW OFR REGULATIONS WILL NOT GET THE BENEFITS THAT THE NEW APPROACH HAS TO OFFER. Many companies are already groaning about businesses and their investors, companies the end of the standard review section and the amount of work required to comply with are going to have to rethink their approach to not change much else – obviously not what the new OFR guidelines. reporting in lots of ways. we’d advise. You could roll the Chief Executive’s review, the Financial review and the CSR But, unfortunately for those companies, Here are some of the options to consider: content all together under a new banner of an simply aiming for compliance is to miss the OFR. Or you could completely rethink the point of the OFR. To get any real benefit from A) Where does the OFR go? report and start from first principles about the changes they are going to need to go This is probably the most important question what the OFR is aiming to achieve. This might beyond mere compliance. as the answer probably then informs all your lead to a new structure altogether and might other options. To over-simplify a bit, if you actually make reporting a bit easier in future – The government has adopted a flexible decide that the OFR is a part of the Finance and this is what the forward thinking framework (in consultation with the business Director’s report or should sit alongside the companies will be doing. sector) in order to avoid companies simply Remuneration report in the ‘back’ (ie purely ticking the boxes and producing boilerplate statutory) section of the annual report then copy. The objective is to provide better you’re probably just going to be ticking the BUT THE CHALLENGE IS information, not more information. So the boxes. This is what happened to the US NOT JUST WHAT STRUCTURE trade off for the flexibility that has been built equivalent ‘Management Discussion and YOU CHOOSE. IT’S HOW YOU into the regulations is that the onus is very Analysis’ and rather than being enlightening much on businesses to view the OFR it became a bit like reading the small print in GO ABOUT PUTTING THE as an opportunity for better disclosure a sales contract. INFORMATION ACROSS… rather than an excuse for publishing more turgid guff. If, on the other hand, you see the OFR as B) Illuminate or obfuscate? sitting in the ‘front’ section of the report and The type of information being asked for in the And there should also be an element of being owned by the Chief Executive then you OFR is, at first sight, quite technical and could enlightened self-interest in all of this. have more of a challenge and more choice. easily, if left to just the accountants and To make the new format work for their You could simply stick a box ticking OFR at lawyers, become unreadable. 10____11 DIRECTIONS 05
  13. 13. THERE ARE ALREADY SOME ‘Our strategy is straightforward C) ‘Does the OFR mean that we can stop publishing a separate CSR report?’ EXAMPLES OF ENTIRELY Fix it The answer should be no for all those COMPLIANT BUT ENTIRELY We are two-thirds of the way through the companies wanting to take disclosure DULL OFRS. Fast Forward programme which is aimed at seriously. transforming our core business. This is where we think the companies that are It may mean that the CSR report can be willing to go the extra mile will gain the most. Strengthen it shortened or that more information can Good writing will make all the difference. We have to keep ahead of the competition by move onto the web, reducing the need for constantly improving our customer offering. the lengthy printed report but the CSR Take the following example of where we can We are developing our newer businesses and information required in the OFR will almost see problems (and therefore opportunities). positioning to exploit rapid growth in certainly be different in substance and tone electronic trading. from that published in the CSR report. Describing the company strategy: This is tougher than many might imagine and is an Grow it Some companies will undoubtedly use the integral part of the new OFR. Having a company Our relentless focus on the fundamentals OFR as a get-out. But not those that see their strategy is one thing but having one that makes means that we can now also begin to look communications as more than just a sense to the outside world and that you’re ahead: where will our future growth come regulatory burden. comfortable publishing in the annual report is from? We are identifying and investing in quite another. Contrast these two examples… opportunities in new areas and building on Of course, all of these points are put forward our single biggest asset – our strong brand.’ in the hope that listed companies will see A few years ago, a utility company described the potential of the OFR and will approach it its strategy like this (unnamed for obvious Hallelujah! positively. There is, however, a real risk that reasons)… ‘Through its unique combination of the box ticking approach will prevail because skill and experience, Xco provides a range of The challenge will be the same for sections even this could involve a lot of hard work. infrastructure support services to the utility, such as the nature of the business and But companies will surely want to make the transport and public sector markets. Xco its objectives, business risks and future hard work worthwhile. applies its expertise to infrastructures ranging prospects – all likely areas for obfuscation from managing PFIs to building new hospitals, and corporate fog. Compliance will be enough from a legal managing public housing stock to pipeline perspective. But is that really enough for networks.’ your company’s shareholders and WE WOULD RECOMMEND stakeholders? … hello?! YOU HAVE THE OFR WRITTEN BY AN EXPERT IN WRITING Reuters (admittedly a salterbaxter client) describes its strategy in its latest annual RATHER THAN AN EXPERT report like this: IN YOUR BUSINESS.
  14. 14. So this year Directions is baring its teeth. Top 100 UK companies A key to our approach in the first 4 editions of Directions was to try to simply record what the largest companies were publishing in by sector terms of CSR communications – no judgement and no commentary. Things have moved quickly. In 2000 just under 50% of the top 250 UK companies could be classified as ‘reporters’. Last year there were only 44 companies without any substantial CSR disclosure and only 17 of the FTSE 100 could be described as non-reporters. So it seemed to us that the issue is no longer how many companies report. We think the focus should now be on how good and how worthwhile the reporting of the top companies is. So we’ve decided to assess the effectiveness of CSR reporting in the UK. And in order to do this we’ve put together a crack panel of experts who are willing to offer praise when praise is deserved but also happy to tell it straight when it appears that a company really is either wasting its time or publishing fluff. We set a couple of ground rules but otherwise we felt it was important that each individual should be able to express his or her own views in the way that they saw fit. So we are not pretending that this is a scientific, quantitative benchmarking exercise. It is a sector by sector review by experts with insight and the ability to spot what’s good and what’s not. 1. The assessements should be based on information on company The rules websites or in public reports available up to and including 19 August 2005. 2. The reviewers are encouraged to make full use of irony and humour. 3. The reviewer’s decision is final (but you’re more than welcome to contact us if you feel your company has been treated harshly). 4. Size isn’t everything. 5. Don’t take it too seriously. So please read on to see which companies win the wooden spoons, which receive special judges’ commendations and which are best in show… 12____13 DIRECTIONS 05
  15. 15. Please note the panellists’ views are their own personal views and The judging not necessarily those of their organisations. The SRI analysts’ panel views are not recommendations or investment advice. We’d also like to apologise to any of our clients who don’t win! We hope this proves that the judges are entirely independent. Simon Abrams Senior Analyst, Jupiter Richard Aldwinckle CR Consultant Roger Cowe Director, Context SRI and Governance team Richard is a London-based corporate Roger is a director of the corporate Simon is responsible for the strategic responsibility consultant specialising in responsibility consultancy Context, which analysis of companies’ corporate communications, stakeholder dialogue, social he joined after a career in journalism which responsibility performance. Prior to joining investment, and development issues. He has included 12 years on the business staff of Jupiter, Simon was responsible for managing worked with many leading European, US and The Guardian. From the late 1990s Roger the Business in the Environment Index of Japanese companies on CR strategies and specialised in corporate responsibility, Corporate Environmental Engagement. programmes. He also writes speeches and contributing to publications including the Simon is a judge on the ACCA awards for articles on CR. Financial Times and The Observer. He also Sustainability Reporting. wrote reports for organisations ranging from the Association of British Insurers to Forum for the Future. Melissa Gamble SRI Research Analyst, Matt Haddon Partner, ERM Douglas Johnston Director, Morley Fund Management Matt is a Partner in international consultancy Ernst & Young LLP Melissa is a Senior Analyst on the Socially ERM. He works with a number of blue chip Doug leads Ernst & Young’s Corporate Responsible Investment (SRI) Team at Morley, corporate clients to develop cutting edge Responsibility Services team in the UK. the fund management arm of the Aviva Group. non-financial reporting and assurance He has represented Ernst & Young in leading Her role is to cut through the ‘greenwash’ programmes, and was a core team member several discussion groups on the future of and find stocks which are set to outperform of the World Business Council for Sustainable non-financial reporting. Doug directs non- by identifying social, environmental and Development (WBCSD) Accountability and financial reporting and assurance projects governance issues that have an impact on Reporting working group. for Ernst & Young – working with some of a company’s profitability but are generally the world’s leading non-financial reporters. under-analysed or mispriced by the market. Peter Mason Editor and co-founder of Emily Osband Director, CR Futures Nigel Salter Director, salterbaxter Ethical Performance Emily is a corporate responsibility Nigel is a communications consultant and A journalist for more than 20 years, Peter communications consultant. She has ten managing director of salterbaxter. He has has written on various subjects for a number years experience in this field and recently been working in the corporate reporting of national newspapers and magazines, and set up CR Futures – a new forward thinking field for 12 years, advising major UK and has been a staff member on the foreign CR consultancy. She specialises in writing European companies on financial and CSR desk of The Guardian. He is also the author CR reports and other CR communications reporting and branding. of five books. such as intranet sites, brochures and annual reports. Emily also advises companies on CR policy and strategy.
  16. 16. Aerospace & defence page 14 Media & entertainment page 21 The sectors Banks page 15 Mining page 22 Beverages page 16 Oil & gas page 23 Chemicals page 17 Personal care & household products page 23 Construction & building materials page 17 Real estate page 24 Electricity page 18 Software & computer services page 24 Food & drug retailers page 18 Speciality & other finance page 25 Food producers & processors page 19 Support services page 25 General retailers page 19 Telecommunication services page 26 Health, pharmaceuticals & biotechnology page 20 Tobacco page 26 Leisure & hotels page 20 Transport page 27 Life assurance & insurance page 21 Utilities page 27 FTSE 100 list taken from the Financial Times, Friday 1 July 2005 KEY: + Worthy of note Overall winner In this sector BAE Systems stands out since In contrast, BAE Systems has two pages on AEROSPACE & DEFENCE: it’s the only company that has a full CR report. its ethics programme and includes data on Smiths Group and Rolls-Royce touch on CR calls to the ethics hotline. There is a frank issues in their annual reports/websites, but admission that the number of calls they BAE Systems their formal reports only cover environment, received is low for a company their size and Rolls-Royce health and safety issues. Rolls-Royce also has that they need to address this. Smiths Group a community report. I was surprised to see that Rolls-Royce came 10th in the Business in BAE Systems’ CR report is clear and concise the Community CR Index despite its lack of – a good length at 30 pages. It seems to cover PANELLIST: public disclosure on CR issues. the key issues and includes data. My main Emily Osband criticism is that it lacks challenging targets. CR is obviously a tricky subject for defence companies. A comment at the beginning of All three companies report comprehensively BAE’s report acknowledges the controversial on environment, health and safety. I was nature of their products: ‘No matter how impressed to see that all the companies have necessary, the manufacture and sale of ISO 14001 certification at nearly all their major equipment that is designed to kill inevitably manufacturing sites. Smiths Group and Rolls- evokes strong feelings’. This, combined with Royce have quantitative targets – something the inclusion of some quotes that are critical absent from the BAE Systems report. of BAE, gives the impression that the company However, I was disappointed to see very little is open and listens to its stakeholders. The about the efficiency and design of aircraft report also devotes two pages to an interesting engines – a pressing issue for the sector given debate between BAE and the British American the increase in air travel and its impact on Security Information Council on whether the climate change. defence industry really benefits the economy. One of the most important issues for the sector is business ethics, in particular bribery and the winner is... and corruption. Rolls-Royce says nothing BAE SYSTEMS about this. Smiths publish their Code of Business Ethics but give no further details. 14____15 DIRECTIONS 05
  17. 17. The banking sector covers a very broad Transparency International to develop group BANKS: spectrum of institutions from the regional wide policy on this and that it expects the Northern Rock to the global HSBC and the highest standards of itself and its suppliers. range and quality of their CR reporting is Again, a bit more context wouldn’t have gone Alliance & Leicester equally diverse, from Northern Rock’s amiss. With HSBC and RBS both investing in Barclays extremely basic on-line, design-free offering, Chinese banks, it will be interesting to see how HBOS to the 66 pages from RBS. As ever, size is no human rights, transparency, bribery and HSBC guarantee of quality. It seems the larger the corruption will be tackled in next year’s reports. Lloyds TSB report, the more densely packed it is, not Several reports read more like corporate necessarily with more data but more verbiage, brochures; lists of highlights refer to awards Northern Rock especially of the “we need to build long term won, league tables entered and even, in the Royal Bank of Scotland relationships based on mutual knowledge case of Alliance and Leicester, the number Standard Chartered and trust” variety. of product “best buy” mentions in the press. No modesty, false or otherwise, in this sector! The banking sector has got more issues than Most reports seem aimed at the committed PANELLIST: you can shake a stick at – off-shoring, financial CR ‘wonk’, except for Lloyds TSB, which has Richard Aldwinckle exclusion, consumer debt, ethical investment, produced a colourful report that is clearly pensions mis-selling, responsible lending, aimed at a more general audience. A series money-laundering, bribery and corruption, of simply written stories and paragraphs to name just a few. make for easy reading but a rather busy design distracts rather than leads the eye. + HSBC does a good job of setting out what are the key issues for each of its divisions HSBC’s and RBS’s reports are both terribly up front. Some reports tackle them by text heavy, although with a crisp writing style, stakeholder; others mention them almost in warm tone of voice and generous spacing passing if at all. Most explain what the banks between sentences, HSBC just about holds have put in place to address issues, rather your attention. RBS’s report, on the other than how well they are tackling them, or hand, has such dense text and such a small where there have been breaches. As well as typeface that you have to be pretty committed lack of detail, there is often lack of context. to stick with it to the end. For example, Barclays baldly states it is staying in Zimbabwe for the sake of its employees My pick of the crop is Standard Chartered. and customers, but doesn’t attempt to put After the now obligatory letters from the this into the context of its experience in Chairman and CEO, it gets straight into a South Africa, who it consulted on this or description of the business and then a piece how it came to make this decision. on stakeholder dialogue. In the brisk and efficient style that it uses throughout the On human rights, HSBC merely states it report, it says how stakeholders are engaged, operates in countries accused of breaching what they said, what their response is and human rights, that it has worked with how stakeholder engagement will be improved in future. This written clarity is matched by a simple, predominantly two-colour design that helps break up the copy into manageable chunks without being too fussy. Each section contains well-signposted topics, with summaries of highlights and future actions in boxes alongside. Simple graphics make it easy for the reader who wants to take in a subject at a glance; sensible amounts of text provide the detail for the more serious reader. An excellent way of dealing with the differing needs of different audiences and varying levels of interest. and the winner is... STANDARD CHARTERED
  18. 18. All four of the beverages companies in this Allied Domecq and SAB Miller also do a good BEVERAGES: review recognise that ‘responsible drinking’ job of identifying that CR issues are crucial to is the most important issue facing the sector. the management of business risk. For example, All acknowledge they have an active role SAB highlights the link between water Allied Domecq to play in managing it – and to a greater or consumption and business costs and its efforts Diageo lesser extent their reporting reflects this. to reduce risk by working with local suppliers. SAB Miller And both SAB Miller and Diageo shine in their Scottish & Newcastle Allied Domecq leads the pack in producing a use of benchmarking to give context for their report that reflects the reality of the business, own achievements, helping give the reader a not just the aspirations of the CR department. sense of whether their performance is good PANELLIST: It demonstrates that accountability for key in the bigger scheme of things. Matt Haddon non-financial issues is embedded across the business and acknowledges that the company The main challenge that all these companies doesn’t yet have all the answers. struggle with lies in explaining why they report in the first place and, with the + SAB Miller is not far behind and showcases exception of Diageo, who they are reporting what CR really means for one of its to. What business value do they get from this operations. Diageo shows courage in annual rigmarole? recognising the boundaries of its influence and focusing on the material issues the Or is it all about increasing transparency and business can affect, measuring progress building trust? If this is the case then the through innovations such as marketers’ community sections of most reports could do performance assessments. S&N acknowledges more to really explain how they are tackling the need for CR to be owned by everyone, alcohol related challenges there. although we don’t get to see much evidence. Another gap across the board is demonstrating how the reported issues link to those identified by the company’s own risk management processes, to give us confidence that there are effective processes in place to manage the next issue coming round the corner. and the winner is... ALLIED DOMECQ See also special award on page 29. 16____17 DIRECTIONS 05
  19. 19. The chemicals sector provides a range of This year, in particular, chemicals companies CHEMICALS: solutions and challenges for sustainability were affected by high input costs as the oil with some products providing environmental price rose to all time highs and on top of benefits, and others creating problems. that, emissions trading and the rising cost of BOC The growth of the hydrogen market is being carbon affected energy prices. This had the ICI driven by environmental legislation to reduce biggest impact on high energy users such as Johnson Matthey sulphur emissions from oil refineries and BOC, and provided greater incentives to petrol. Johnson Matthey is a key beneficiary companies across the sector to improve their of automotive emissions regulations and energy efficiency. BOC still provides little in the PANELLIST: many of their products have positive social way of quantitative data and historical records Melissa Gamble and environmental benefits. They make strong on their energy performance. Improved data commitments in their reporting to continue in this area would assist in tracking efficiency to invest in R&D to develop new products improvements. Johnson Matthey’s energy such as fuel cells. and water use seems to be increasing. Generally speaking, chemicals companies are + It’s great to see Johnson Matthey and heavily regulated by safety legislation and + BOC including CSR information as part of have been good at reporting their impacts their annual report and accounts. This accordingly. In Europe, the introduction of the demonstrates joined up thinking on reporting REACH proposal, aimed at investigating the to investors on CSR and financial matters, alleged link between chemicals and health, thereby bringing these issues into the represents a substantial overhaul of EU mainstream. Little reference is made to Chemicals regulation. Its basis is to shift product safety litigation by BOC in their report, responsibility of higher safety testing and despite being subject to injury claims based on data provisioning standards onto the industry. allegations that manganese in welding fumes It would therefore be good to see CR reporting causes Parkinson’s disease. If this claim is of hazardous substances data broken down proven it would have a significant financial to specific product areas to give a clearer idea and reputational impact on the company and of each company’s exposure to safety risks more could be done to reassure stakeholders and other liabilities that may be associated about this issue. with the introduction of REACH. At present companies only provide aggregated hazardous waste information, except for ICI who provide the most detailed disclosure in this area. and the winner is... ICI Most comprehensive coverage of CSR issues in the chemicals sector – excellent quantitative data and targets for improvement in place. In general, FTSE 100 companies in the There is also a worrying reliance on bland CONSTRUCTION & construction sector have had some catching motherhood-and-apple pie statements BUILDING MATERIALS: up to do when it comes to sustainability delivered with no back up. Hanson says, for reporting – and though they at least now give instance, that it has ‘a fair and competitive corporate responsibility due prominence on remuneration and benefits policy everywhere BPB their websites, you’d be hard pressed to say we operate’, yet provides no tangible evidence Hanson they’ve done anything more than move up to – such as its rates of pay and how they Wolseley the back of the chasing pack. compare to the rest of the sector – to back up the assertion. Unsurprisingly, given the nature of their PANELLIST: business, health, safety and environment Sustainable procurement, which could be one Peter Mason topics are still the main focus of reporting of the sector’s most significant future inputs efforts. But even in those areas – which on corporate responsibility, merits hardly a lend themselves quite easily to statistical word anywhere. quantification – there is a disappointing lack of hard data. On the plus side, all three companies make sure their reporting on corporate responsibility In the more tricky areas of community and is nothing more than a couple of clicks away social impact there is even less to get the teeth from their home page – and what they do into. This is compounded by a general lack of present is well written, brief and accessible. specific, measurable targets for improvement. Not cutting edge by any stretch of the Those targets that are set tend to be put in imagination, but there is at least a sense of unhelpfully vague terms, such as BPB’s forward movement, with Hanson making the objective to ‘realise the potential of our people’. best fist of things. Rarely is any time span connected with such pledges, making them even looser and, frankly, hardly worth the paper they are written on. and the winner is... HANSON
  20. 20. All of these companies provide information environmental sustainability aspects of ELECTRICITY: on their non-financial activities – Scottish business performance, though provides some Power and Scottish and Southern produce useful insights on customer issues such as stand-alone reports and International Power fuel poverty and energy efficiency. International Power provide information on the web and as part Scottish and Southern Energy of the annual report and accounts. This is a My favourite of these reports is the Scottish Scottish Power sector that has a long history of reporting Power report – it basically told me exactly and there are some really good sections in what I wanted to hear. Each section told me these reports: what is important to them and why, their PANELLIST: approach to managing the issues and how Doug Johnston + • Scottish Power’s CEO statement which cuts they had progressed against what they had out a lot of the ‘fluff’ often seen in these planned to do. This is set within the context of introductions providing an honest overview some usefully constructed general overview of both successes and challenges. sections. I was particularly pleased to see a + • Scottish and Southern’s coverage of section on the reporting process which the ‘energy challenge’ and particularly the outlines how they have gone about improving challenges of operating coal-fired power the quality of the information they disclose – stations. this illustrates to me that they believe that + • Scottish Power and Scottish and it’s not just about getting the information out Southern’s clear presentation of how they there but making sure what gets out there is have progressed against targets – including directed at the right stakeholders and is of where these have not been met. sufficient quality for them to form appropriate conclusions about performance. Scottish Power and International Power’s reports are broad in coverage – addressing issues such as how they treat their people and how they deal with their suppliers. and the winner is... Scottish and Southern’s primarily deals with SCOTTISH POWER Morrisons may now be established as one of Safeway. Like its rivals, its reporting gives due FOOD & DRUG RETAILERS: the biggest players in the supermarket sector, attention to the company’s role in fighting but it’s clearly still the new kid on the block obesity, but most of the action in other spheres when it comes to corporate responsibility is promised for the future rather than Morrison Supermarkets reporting. chronicled in the present. Morrisons has Sainsbury’s pledged to produce more detail on the web Tesco By comparison with the fulsome efforts of in the near future, but for now its reporting Tesco and Sainsbury’s, Morrisons’ latest has failed to take any significant shape. three-page web offering is thin in the extreme, PANELLIST: although it does lay out how the group aims + Sainsbury’s, on the other hand, could almost Peter Mason to tackle CSR in its new era as owner of be accused of going too far. Its 129 page report is definitely on the long side, but contains impressive amounts of performance data and has all the bases covered. Tesco’s reporting is, if anything, even more comprehensive in terms of data, and comes with a self-contained section on KPIs that is especially useful for CSR anoraks. It also makes good use of case studies, which are always an engaging way to get the message across. If Morrisons delivers on its promise to scale-up its efforts, then the sector should soon have a good story to tell on the reporting front – though none of the three appear to have their data verified at present, which is an increasingly untenable position these days. and the winner is... TESCO 18____19 DIRECTIONS 05
  21. 21. All of these companies have some form of + • The focus of Unilever’s sustainability FOOD PRODUCERS & disclosure on their non-financial performance initiatives on 3 key themes – agriculture, PROCESSORS: – Cadbury Schweppes and Unilever produce fish and water. stand-alone reports and Associated British + • Tate & Lyle’s description of environmental Food (“ABF”) and Tate & Lyle have separate targets and progress against these in the Associated British Foods sections on their websites and within their environment section of their report. Cadbury Schweppes annual report and accounts. From my + • ABF’s description of what different Tate & Lyle perspective it’s not how the report looks or stakeholder groups can expect from ABF Unilever the format it’s in that counts, but how it helps and how they can expect to be engaged. me to answer some fundamental questions about the business: Some of the lowlights are: PANELLIST: Doug Johnston • What are the issues which are most critical • An almost complete absence in the reports to your success and how have you on how the topics covered have been selected determined these? or indeed why certain issues are hardly • What plans did you have in managing those covered at all. issues and how did you get on in progressing • There is a lot of talk about corporate social these plans? responsibility being embedded, but very • What challenges and opportunities will you little coverage of how. be responding to in the future? • On the whole the sector is big on reporting progress and successes, but there are only a With these questions in mind, some of the handful of examples where poor progress or highlights from these reports are; failure is discussed. + • The ‘how we make decisions’ section of the Cadbury Schweppes report which clearly sets out the governance framework and the winner is... across non-financial matters. UNILEVER The report is easy to navigate, it clearly outlines the sustainability initiatives which are important to the business and the report has been independently assured – the only one in this sector. GUS is a puzzle. The group which owns Argos, Next may not have given up reporting, but GENERAL RETAILERS: Homebase and the credit information company its latest version is for 2003 – and that was Experian initially appears to be antagonistic a muted attempt. The data shows a 23% to CR. Chief executive John Pearce describes it increase in carbon dioxide emissions but Boots Group as “a piece of jargon that is not always very there is no explanation. Dixons helpful”. GUS Still, that’s more than Dixons, which doesn’t Kingfisher Curiously, the body of the report is much better actually have a report. There is some Marks & Spencer than most in this sector. It includes some data information in the CR section of its website. on subjects such as energy and emissions, But it manages not to mention that it was Next supplier audits, health and safety. deleted from the DJSI Stoxx European index last year. And it says nothing in a PANELLIST: On the other hand, Boots and Kingfisher Trading Standards section about brushes Roger Cowe disappoint. Both seem to have gone with regulators. backwards in the last couple of years. Boots claims that the Dow Jones Sustainability Reassuringly, Marks & Spencer is the clear Index demonstrates that it is ‘clearly leader in this sector, despite its commercial positioned among the best in our industry’. troubles over the past few years. It provides But it offers no evidence to back that up. a wide-ranging CR website and a report as a pdf or hard copy. The report adopts quite a Kingfisher, the owner of B&Q and similar chains different approach to the website, which is around the world, used to have an innovative unhelpful. But each section consists of a clear approach, embodied in the 2002 report: presentation of last year’s targets, this year’s “How Green is my Kitchen?”. Sadly, the progress and new targets. The presentation is group appears to be stuck there. There was a bit boring, but maybe that’s fitting for what a 2003 update but now there is just a policy many would regard as the nation’s most document. predictable clothing retailer. and the winner is... MARKS & SPENCER