Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Avoiding the Reporting Trap - A Frontrunner Approach for Building 'Investor Proof' Sustainability Strategies


Published on

From 18 years of experience and supported by 2014 Dow Jones Sustainability Index data from the chemical, pharmaceutical, food and telecommunication industries, this report is created for companies that are looking to improve their ROI from sustainability by embedding it into the business strategy. Using best practice examples on sustainable innovations , it shows an effective approach to actively avoid the reporting trap.

Published in: Business
    Are you sure you want to  Yes  No
    Your message goes here
  • The Bulimia Recovery Program, We Recovered, You CAN TOO! ★★★
    Are you sure you want to  Yes  No
    Your message goes here

Avoiding the Reporting Trap - A Frontrunner Approach for Building 'Investor Proof' Sustainability Strategies

  2. 2. > Table of Contents 2 3 4 5 7 19 24 7. Food Sector 28 8. Telecommunication Sector 31 9. From report to result – our approach 33 11. What’s next? – some of our solutions 11 4. Making materialities work as innovation drivers 35 Acknowledgements and sources 10. Does the value of benchmarking offset the burden? 12 15 Foreword Executive Summary 1. An introduction to different sustainability perspectives 2. The Accountant’s Lens: risk mitigation focus is becoming stale 3. The Investor’s Lens: the ROI of sustainability 5. Chemical Sector 6. Pharmaceutical Sector 37 Annex: Checklist for avoiding the reporting trap AVOIDINGTHEREPORTINGTRAP
  3. 3. Increasingly, resource scarcity is becoming a reality in our every day business life. Over the past months Bloomberg has been asking if “There is Enough Lithium for Tesla's Gigafactory?” and Rabobank is claiming that the animal protein gap is already triggering important questions, such as how the supply of vegetable protein sources can keep pace with the rising demand for animal feed? Ironically, during our 18 years experience, we encountered many CSR and sustainability departments that also suffer from a chronic lack of resources. Evidently too much time is needed for reporting activities and too little time is available for generating considerable impact. Our aim with “Avoiding the Reporting Trap” is to help companies efficiently build “investor proof” strategies while reducing the burden of non-financial reporting. Together we need to move better and faster towards a sustainable future. Hopefully our report is a small contribution to that cause. Jan van der Kaaij, Managing Partner Finch&Beak 2 AVOIDINGTHEREPORTINGTRAP > Foreword
  4. 4. The reporting trap implies that companies predominantly use their materiality analysis and data for reporting purposes only, and miss the opportunity for value creation from sustainability issues for shareholders and society. Systematic materiality analysis and industry-level standardization of sustainability issues have rendered non-financial reporting more professional, but also more complex. While an accountant’s lens with a ‘checking boxes’ risk mitigation perspective typically ensures that sustainability information is being collected in a methodical manner, it contains the risk of falling into the reporting trap, where publication of the sustainability report itself becomes the final objective. In contrast, there is the investor’s lens. Investors such as BlackRock and Apax are increasingly looking for frontrunner companies that report transparently on material risks, but also on how these companies leverage opportunities in order to ensure and enhance long-term economic returns. For these frontrunners, sustainability is an integral part of the strategic focus and helps drive long term value creation by addressing unmet needs for instance through ‘greener’ product design, improved social impact or by turning waste streams into valuable resources. This kind of innovation often starts with the design and implementation of new business models that require strong capabilities for value chain collaboration and strategic partnering. Next to a value creation focus on material issues, jumping the reporting trap requires supplementary skills – particularly in the area of innovation and partner development. By analyzing Dow Jones Sustainability Index 2014 data from industry leaders in the four sample sectors: chemicals, pharmaceuticals, food and telecommunications, different approaches for effective execution have been identified: • Chemical sector: Finding opportunities for strategic collaboration and partnering to demonstrate societal relevance • Pharmaceutical sector: Adopting digitalization and innovation, while ensuring greater transparency • Food sector: Towards more balanced food consumption and nutritional offers • Telecommunication sector: From passive provider to active entertainment and convenience contributor The growing burden of engaging in sustainability reporting and benchmarks increasingly makes sense when companies look beyond the risk mitigation of material issues – avoiding the reporting trap. > Executive Summary > Executive Summary 3 AVOIDINGTHEREPORTINGTRAP
  5. 5. Sometimes, sustainability ‘champions’ such as Unilever, Interface and Patagonia appear to be a white whale of sorts. How do they manage to embed sustainability while appearing to do so in an almost effortless manner? Luckily there is no reason to be intimidated. Although they are doing things that may appear to be magical, they are dealing with the same market conditions, the same shareholders expecting continuous growth rates, and the same critical consumers, as the rest of the industry. There is no motive why other corporations could not follow into their footsteps – as long as the notion of sustainability is approached from the right perspective. Since the introduction of materiality corporations have started involving their stakeholders to determine which sustainability issues have to be on top of their list. With the emergence of advanced reporting standards, more and more companies are using materiality as the basis for reporting towards their stakeholders. Such reports typically contain valuable information on how they are dealing with societal issues. However, the positive intentions of an organization often fall into the reporting trap. This implies that companies predominantly use their materiality analysis and data for reporting purposes which leads to missed business opportunities from materialities. At times, non-financial reporting is still being approached from an ‘assurance-based tick- sheet’ point of view, where materialities are seen as risks, and nothing more than risks. Embedding sustainability requires a business approach of sustainability issues and broader megatrends, such as urbanization, scarcity of resources and food security, being applied as opportunities for creating value from innovation. From 18 years of experience and supported by 2014 Dow Jones Sustainability Index data from the chemical, pharmaceutical, food and telecommunication industries, this report is created for companies that are looking to improve their ROI from sustainability by embedding it into the business strategy. Using best practice examples on sustainable innovations , it shows an effective approach to actively avoid the reporting trap. 1. An introduction to different sustainability perspectives > An introduction to different sustainability perspectives “If we achieve our sustainability targets and no one else follows, we will have failed.” Paul Polman, CEO, Unilever 4 AVOIDINGTHEREPORTINGTRAP
  6. 6. > The Accountant’s Lens: risk mitigation focus is becoming stale Over the past decade, materiality analysis has emerged as an instrument for mapping non- financial business risks. It revealed factors that might lie in investors’ blind spots and, as such, remained unvalued by the market, because they were out of scope from ‘traditional’ risk analysis. Over the years, the materiality matrix has become a reporting tool that offers an overview of issues with an impact on the company’s long-term performance. The rise of valuable initiatives such as the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) underlines this development. Increasingly, regulations and voluntary frameworks have been put in place as non-financial risk analysis and mitigation has started to become a significant part of the annual reporting process. Some examples: • In 2010, integrated reporting became mandatory in South-Africa for listed companies on the Johannesburg Stock Exchange. • In 2013, both the IIRC’s International Integrated Reporting Framework and the Global Reporting Initiative’s G4 Guidelines were released. • In 2014, a new EU directive was adopted, reflecting the European Union’s position that non-financial reporting is vital for managing change towards a sustainable global economy. As of 2017, approximately 6,000 EU companies with more than 500 employees are required to report on social, environmental and governmental issues. As usual, there are restrictions to these positive developments. While helping to unveil material risks, an exaggerated risk mitigation focus will most likely result in a limited influence on business strategy. Sticking solely to the accountant’s lens, driven by compliance and assurance, is an approach that carries some essential disadvantages. Key risks of the accountant’s lens Distance to the actual business strategy Companies that approach materialities from a pure accountant’s perspective typically use them for the inventory of risks and, subsequently, the development of mitigation strategies. By considering non-financial reporting as the single desired outcome, corporations run the risk of falling into the reporting trap. Similarly, they lose the focus on the ultimate goal: transposing materialities into a well-executed strategy that offers opportunities for innovation and engagement of stakeholders while positively contributing to relevant societal issues. Taking a one-size-fits-all approach The movement towards increased levels of standardization in materiality analysis ensures that the most common topics are efficiently addressed on a general industry level. At the same time, global companies can still have widely varying characteristics, for example due to geographical coverage, having in- or outsourced facilities or the legal frameworks in which they operate. Over- standardization limits companies to identify and act upon aggregated company-specific issues, and at the same time threatens potential distinction and building competitive advantage. 5 2. The Accountant's Lens: risk mitigation focus is becoming stale AVOIDINGTHEREPORTINGTRAP
  7. 7. > The Accountant’s Lens: risk mitigation focus is becoming stale GRI’s New Strategy: Beyond reporting In June 2015, the Global Reporting Initiative (GRI) revealed its new ambitions for the future. With its 2020 strategy entitled “Empowering Sustainable Decisions”, GRI extends from pure sustainability reporting to focusing on capturing value creation opportunities. It aims to empower companies to leverage their capabilities and competences towards building a more sustainable economy and society. The new strategy has four key priorities. 6 GRI’s four key priorities 1. Enabling Smart Policy Providing governments, capital markets and international organizations guidance on smart sustainability policies that address some of the toughest challenges of our time, such as climate change, human rights and corruption. 2. More Reporters and Better Reporting Stimulating the non-financial reporting movement by inspiring and inviting more organizations to start reporting and for those that already do, to strive for better quality reporting. 3. Moving Beyond Reports Making clear that the sustainability report is valuable output, but not the final result. Instead, the report serves as the groundwork for sustainability efforts. GRI wants to make sure that decision makers have access to high quality and reliable information. 4. Innovation and Collaboration Using the GRI standards as a launch pad for sustainable innovation and collaboration with key stakeholders. AVOIDINGTHEREPORTINGTRAP 6
  8. 8. 3. The Investor’s Lens: the ROI of sustainability Contrary to the accountant’s lens, the investor’s perspective looks at creating shareholder value. Obviously, the business case for sustainability is not always an easy one to make. Companies experience much difficulty when describing the actual business value of sustainability. A recent study demonstrates that only 26% of CEO’s trust they have a clear business case for sustainability. This translates into challenges towards their shareholders as well. How do ESG initiatives create a tangible impact on the bottom line, in terms of cost savings, additional revenues or gross margin protection? This complexity comes at a price. As companies fail to quantify the return of their activities, investors are left with question marks when evaluating the impact that the company’s sustainability efforts have on their future financial position. Linking sustainability to business risks and opportunities Both the accountant’s and investor’s lens are useful perspectives. By combining the two, companies can operationalize the materiality matrix and use it as the base for a well-executed program. Risks and opportunities can be clarified with metrics used by investors to measure the performance of their investment, creating a common language for both parties. Consider the example of former mining company Umicore. In making the shift towards a circular economy business model, this company is able to use business metrics to explain its shareholders how the change decreases exposure to volatility, and improves financial and environmental performance as well as the company’s competitive position. From the standpoint of investors, environmental, social and governance factors are used to drive investment decisions. Private equity firm Apax Partners for instance, has embedded sustainability principles in its investment process as a tool to help release the full potential of its portfolio. In the pre-investment phase, a rigorous due diligence process takes place on ESG risks and performance. After successfully passing this test, companies included in the portfolio are then monitored using a software system that collects data on key ESG indicators. 7> The Investor’s Lens: the ROI of sustainability AVOIDINGTHEREPORTINGTRAP BlackRock: building a culture of long-term investment and growth BlackRock, the world’s largest asset manager with more than $4.3 trillion in assets under management, emphasizes that managing risks forms a crucial part of a company’s sustainability blueprint. One of BlackRock’s main concerns is that corporations currently are taking short-term decisions that may bump earnings up in the near future, but might lead to failures when looking at long-term viability. A tell-tale sign of this phenomenon is a sustainability report that separates business growth from social and environmental issues. As an investor, BlackRock is interested in understanding how sustainability principles are related to risks and opportunities for each business, and how the company is managing that. The asset manager finds itself encouraged by the efforts made by leading companies in reporting material ESG risks, as well as opportunities. This helps shareholders (and others) to understand whether or not risks are mitigated successfully and if opportunities are seized in order to protect and improve long-term returns.
  9. 9. Only 26% of CEO’s trust they have a clear business case for sustainability. > The Investor’s Lens: the ROI of sustainability 8 Source: MIT Sloan & Boston Consulting Group AVOIDINGTHEREPORTINGTRAP
  10. 10. “In our experience, companies that manage all dimensions of the business to the highest standards are more resilient and generate more sustainable financial returns over time.” Michelle Edkins, Global Head of Corporate Governance and Responsible Investments, BlackRock Key risks of the investor’s lens Limited accuracy in quantifying business value The aforementioned struggle that companies have in quantifying initiatives into tangible impact on the bottom line makes it nontransparent and difficult for investors to value sustainability efforts. Benchmarks and industry standards are helping to get the most relevant data on the table, but these are often very general and do not take the company’s own specific situation into account. Lack of long-term investment horizon Societal issues such as food waste are increasingly being addressed with value chain approaches in collaboration with suppliers, peers and/or end users. This creates more complexity, which can make it difficult for participants to distill direct financial benefits on an individual company level. It might also take more time to obtain a return on the efforts made. As a result, investors are challenged to understand both the upside of participating in these initiatives, as well as the downside of not doing so. When combined with a short-term investment horizon, shareholders might be tempted to pressure companies to prioritize instant gains over long-term value, risking them for instance to put sustainable innovation on hold. If companies start favoring quick-fix initiatives over strategic ventures, this creates a risk for greenwashing, particularly when the accountant’s perspective is poorly embedded and the identified material issues are not clearly scoped. > The Investor’s Lens: the ROI of sustainability 9 AVOIDINGTHEREPORTINGTRAP
  11. 11. > The Investor’s Lens: the ROI of sustainability 10 AVOIDINGTHEREPORTINGTRAP Recent mergers and partnerships between large food companies and retailers such as Heinz & Kraft, Mondelez & D.E Master Blenders, and Ahold & Delhaize, are underpinning the fact that food truly is a global business. This calls for a global overview of the issues that are most pressing for global stakeholders. Nevertheless, significant variances may occur at the level of regional and local conditions as well as between different business areas. Engaging with stakeholders on a global and local level not only reveals which topics are most relevant for your company to address, it can also help you to determine how to best collaborate with suppliers, customers or NGO’s to collectively tackle issues that go beyond your organization’s influence. This does not only accelerate sustainability progress, it also builds stronger ties within your value chain, strengthens your reputation, and will inspire employee engagement and customer intimacy. As a result global and diverse companies are challenged to develop regional materiality assessments that build on the company’s global framework and that take, the specific (local) stakeholder's needs and business impact for the operating company, into account. When developing a global-to-local materiality analysis, three simple design criteria need to be considered: 1. Terminology: morph the legal and accountancy lingo of the corporate materiality matrix into language that can be straightforwardly linked to the business. 2. Easily scalable: include solutions for “emerging” businesses and markets that are just starting on their sustainability journey 3. Clear measurement of progress: not only on internal KPI’s but also external perception needs to be considered. A strong example of localizing materiality can be sourced from the dairy sector with the development of the Dairy Sustainability Framework. In 2009, the Global Dairy Agenda for Action was launched, which committed the dairy industry to actively reduce greenhouse gas emissions. The initiative developed a framework to provide overarching goals and alignment of the sector’s actions globally on the path to a broader sustainability: the Dairy Sustainability Framework (DSF). The DSF was designed to accelerate sustainability in the dairy sector through a common language, alignment of international sustainability activity and through this generate a common sustainability commitment at global, regional, national and organizational levels. The Framework recognizes 11 key sustainability issues to be addressed. Implementation of the different materialities can vary depending on the company’s priority areas. However, all the categories should ideally be evaluated and tackled over time. In 2014, FrieslandCampina together with its partners Unilever and Danone, started an implementation pilot project to be able to demonstrate the increasing sustainability of dairy farming to customers and consumers. Global-to-local implementation of material issues: Think global, act local Example: Dairy Sustainability Framework
  12. 12. 4. Making materialities work as innovation drivers Companies such as Novozymes, where the ‘sustainability department’ is part of their business development team, discovered a long time ago that materialities cannot be translated one-on-one into sizable business opportunities. Even though in theory big global issues, such as carbon emission or child labor, create big global markets with unmet needs, materialities need to be studied more closely in order to reveal their true potential. This often requires researching the materiality in its day-to-day practice in its specific environment for which the support of value chain partners is indispensable. In line with this conclusion, our research in the four target sectors demonstrates that apart from having the right strategic focus, partnering in the value chain is vital to uncover solutions that stand a chance as a new product or service. Having the capabilities to collaborate is vital to develop ideas that potentially make sense. Meanwhile, companies need to make sure that their rough ideas are challenged through questions such as “What are the expected switching costs?” and “How easily can the idea be scaled?”. Once the material issues have been digested, qualified and, together with some of the value chain partners, turned into ideas that might work, the real efforts start. The challenge with sustainable innovation, as with all innovation, is not the generation of ideas, but making them actually work. Applying lean startup principles is recommended, especially since ‘green’ solutions seem to be very sensitive to differences between what customers will tell you and what they will actually do. Using a ‘build-shape-launch’ approach to develop new concepts, products or services, which starts with the conception of a prototype that is constantly improved and built upon, based on rigorous user testing and customer feedback. Don’t be afraid to experiment, and use extensive data analytics to measure what works and what doesn’t – and adjust accordingly. Once launched, apply innovation accounting techniques to measure progress and set up milestones. If the concept does not find recognition, it’s time to let go and pivot towards a new idea to be explored. > Making materialities work as innovation drivers To get through the first most difficult phase of new ideas, Innosight CEO, Scott D. Anthony provides a simple acronym to take the right process steps called DEFT: • Document your idea and what you plan to do • Evaluate based upon the strategic intent of the idea • Focus on prioritized uncertainties with high impact • Test early, learn and adjust AVOIDINGTHEREPORTINGTRAP 1111
  13. 13. Finding opportunities for value chain collaboration and strategic partnering to demonstrate societal relevance The international chemical industry is shifting focus, as Western companies are dealing with commoditization of their products, and fierce competition from emerging markets, which drives the change towards specialty chemicals. The global shift is most visible in sales output: EU sales shrunken from 33 % in 2003 to 16.7% in 2013, while sales from Chinese chemical companies accelerated from 10% to 33.2% during the same timeframe. Developments that enable chemical companies to regain their competitive edge are for instance found in more innovative (bio-)technology, advanced manufacturing and digitalization. The ability to produce more customized products on a smaller scale makes companies able to address more specific functional customer needs. Waste efficiency and renewable materials contribute to the development of a circular economy, an ecosystem in which the chemical industry with its technological knowhow is playing a significant role. While technological innovation is expected to make a significant contribution, chemical companies will need to adapt more than their hardware. New business models are required, deploying unique assets and abilities that differentiate innovative specialists from low-cost competitors. Most notably, strategic partnerships and value chain collaborations are helpful instruments in creating value from sustainable innovation. By working together with customers and suppliers, companies get a better grasp on the problem drivers and specific client requirements, to better meet those needs with tailored solutions. An industry-wide collaboration example is the ‘Together for Sustainability’ initiative for sustainable supply chains in the chemical industry. This network connects 13 major companies, including DSM, Clariant, BASF, Bayer and Henkel, with the aim of developing and implementing a global audit program to assess and improve sustainability practices within the supply chain together with suppliers but also with logistic service providers such as Vopak, Bertschi and Hoyer. As a major supplier to a broad range of industries, the chemical industry can underline its societal relevance in its position as a prime driver of sustainable innovation with an impact that spreads out widely. 5. Chemical Sector > Chemical Sector: Finding opportunities for value chain collaboration and strategic partnering to demonstrate societal relevance 49 AVOIDINGTHEREPORTINGTRAP 12
  14. 14. Based on the 2014 results of the Dow Jones Sustainability Index by RobecoSAM, a good overview of the current sustainability status in the chemical industry can be given. The graph demonstrates the most important criteria for the industry, comparing the industry average with a selection of frontrunners. The frontrunners clearly outperform the industry on all criteria: on average, the score of the selected frontrunners is 83% higher than the industry average. Moreover, frontrunners distinguish themselves through a strategic focus on sustainability. On the economic dimension, the gap between the frontrunners such as sector leader AkzoNobel and industry average is the smallest. Particularly on compliance criteria such as Corporate Governance and Codes of Conduct, the industry on average scores well. While the majority of companies in the chemical industry seems to have adopted an Environmental Policy, they yield varying results. Frontrunners obtain scores that are more than twice as high as the industry average in the area of Operational Eco-Efficiency, and the gap for companies that have adopted a Climate Strategy is even more extreme. Frontrunners have made it their priority to structurally reduce their environmental impact, while the rest of the industry lags behind. Within the social dimension, we see a pattern comparable to the economic dimension. The compliance-driven criterion of Labor Practice Indicators and Human Rights shows a moderate industry-wide score, while leading companies perform better. However, the most distinctive gap of the entire graph can be found on the issue of Human Capital Development. Where leading chemical companies have started to catch up and recognize the value of developing their human capital, this notion has not yet sunk in on an industry-wide level. In conclusion, what seems to set the frontrunners apart from the herd is a strategic focus on sustainability as a key driver. They approach sustainability as an opportunity for value creation, and not just as a set of measurements in order to comply with regulation. A balanced view on materiality ensures chemical companies to look at the broad picture and focus on the range of economic, environmental and social issues that are important to their stakeholders, have impact on their businesses, and bring opportunities for the development of initiatives that deliver cost savings or generate direct revenues. 49 Sustainability status in the chemical industry > Chemical Sector: Finding opportunities for value chain collaboration and strategic partnering to demonstrate societal relevance 0 25 50 75 100 Risk & Crisis Management Codes of Conduct/Compliance/ Corruption&Bribery Corporate Governance Supply Chain Management Environmental Policy/Management System Operational Eco- Efficiency Climate Strategy Environmental Reporting Labor Practice Indicators & Human Rights Human Capital Development Social Reporting Chemicals (industry average) Chemicals (frontrunners) AVOIDINGTHEREPORTINGTRAP 13 Source: RobecoSAM, DJSI 2014 Results
  15. 15. “By signing up to ‘Together for Sustainability’, we will further improve the efficiency of our current processes, create transparency around sustainable supply markets, and eventually benefit the whole value chain.” Tim Tolhurst, Chief Purchasing Officer, Royal DSM Since its public listing in 2000, Danish company Novozymes has been extremely successful in delivering shareholder value from sustainable innovation. Established as a spin-off from sister company NovoNordisk, Novozymes has focused on the enzyme business. Using nature’s own technology, the company has developed a wide range of applications including food processing, biofuels and biological for agriculture. The most familiar example of an enzyme product can be found in laundry detergents that enable consumers to wash at lower temperatures. The impact of such low temperature detergents is remarkable. If for instance all Belgian households, which on average wash 4.5 times a week, would do their laundry at 30°C, the amount of reduced carbon dioxide is comparable to the emission of 100,000 cars. Novozymes’ innovations are spurred on by partnerships in specific areas for example as with Unilever on Food and Beverages, Poet on biofuels and Monsanto on agriculture. Also the company participates in the UN Sustainable Energy for All initiatives to scale up the development and deployment of sustainable bio-energy solutions. New products include an enzymatic solution that converts waste oils to biodiesel, and a probiotics product for animals that decreases the use of antibiotics among poultry. 49 Best Practice: Novozymes > Chemical Sector: Finding opportunities for value chain collaboration and strategic partnering to demonstrate societal relevance AVOIDINGTHEREPORTINGTRAP 14
  16. 16. Adopting digitalization and innovation, while ensuring greater transparency Pharmaceutical companies appear to be stuck in trying to find a balance between healthy profits and serving the community. Rising health care costs are putting margins under pressure, as health care insurance companies are strictly evaluating suppliers on costs, and governments are putting pressure on drug prices. Patent expirations have driven up fierce competition from generics: while US branded pharmaceutical sales are expected to grow 2.0% between 2014 and 2019, the growth rate for generic medicines is anticipated to increase 4.8%. Changing business models require pharmaceutical companies to develop a solid retail strategy as the shift is made from a focus on treatment of diseases to prevention, putting consumers in a more active decision-making role. However, legal and safety issues have not benefited the industry’s reputation among the public. On the other hand, the sector has the highest score across industries in the RobecoSAM Yearbook 2015 when it comes to reporting on material sustainability issues in the annual report. Pharma clearly puts in the communication effort, but appears to fail in leveraging a positive impact on its public image. In order to rebuild trust, transparency is a key factor. Constrained by complex regulation, reporting on more than what is legally required does not seem to come naturally for the pharmaceutical sector. Further improvements can be made by a better application of sustainability standards, facilitating companies to gradually increase transparency on key social and environmental issues in a way that the information is useful for a broad range of stakeholders. In addition, the industry has to ensure its ability to maintain high standards for ethics and quality, as well as a focus on attracting and retaining the best talent to execute and drive innovation in the sector. Data-driven e-health startups harvest big data, identify potential personal health risks while bringing disruptive innovation to medical research and its outcomes. To remain relevant in this fast-moving playing field, pharmaceutical companies must adopt digitalization and innovation in a broader sense. At the same time they have to ensure higher levels of transparency in order to keep up with the rising expectations of consumers and regulators to build trust. 6. Pharmaceutical Sector > Pharmaceutical Sector: Adopting digitalization and innovation, while ensuring greater transparency 49 AVOIDINGTHEREPORTINGTRAP 15
  17. 17. More than half of consumers (54%) feel that there is not enough regulation in healthcare, the same level that applies to the poorly rated financial services industry. Source: Edelman Trust Barometer 2015 > Pharmaceutical Sector: Adopting digitalization and innovation, while ensuring greater transparency 16 AVOIDINGTHEREPORTINGTRAP
  18. 18. Comparable to the chemical industry, the pharmaceutical frontrunners outperform the industry average on all criteria, when looking at 2014 DJSI data. As it appears, the 80-percent threshold is only exceeded on the three occasions of Risk and Crisis Management, Codes of Conduct and Corporate Governance, all in the economic dimension. Overall good performance can again be found on compliance-driven criteria, including Labor Practice Indicators. On the environmental dimension, frontrunners are performing generally well except the industry average lags behind, most notably when it comes to Climate Strategy. Social dimension criteria show a more varying level of maturity for both the industry average and frontrunners. Most striking are the scores on Human Capital Development: even frontrunners perform very poorly here. This is particularly remarkable for a knowledge-driven industry such as the pharmaceutical industry, and offers a major opportunity for improvement. Returns of investment in human capital development efforts include an increased capacity to innovate, lower employee turnover and lower levels of absenteeism. Stakeholder engagement and reporting are critical factors for building trust and restoring reputation that require serious attention across the industry. While frontrunners are doing alright in terms of Environmental Reporting, they are still challenged where it matters most: Social Reporting. Overall the performance on the Stakeholder Engagement criterion is low compared to other sectors. This suggests that pharmaceutical companies have insufficient clear policies, procedures and governance structures in terms of stakeholder management, as well as a structural review of activities in that area. 18 Sustainability status in the pharmaceutical industry Source: RobecoSAM, DJSI 2014 Results 0 25 50 75 100 Risk & Crisis Management Codes of Conduct/Compliance/C orruption&Bribery Corporate Governance Supply Chain Management Environmental Policy/Management System Operational Eco- Efficiency Climate Strategy Environmental Reporting Labor Practice Indicators & Human Rights Human Capital Development Stakeholder Engagement Social Reporting Pharmaceuticals (industry average) Pharmaceuticals (frontrunners) > Pharmaceutical Sector: Adopting digitalization and innovation, while ensuring greater transparency AVOIDINGTHEREPORTINGTRAP 17
  19. 19. Best practice: Amgen Amgen’s Neulasta Delivery Kit, launched in March 2015, is an on-body injector which helps easing some of the side effects of chemotherapy by delivering pegfilgrastim, a recovery drug, to patients the day after their treatment starts. After a chemotherapy session, clinicians can fill and activate the syringe with the correct dosage. The on-body injector is then applied to the patient, and automatically activated the following day. This provides the patient with the medicines they need, and releases them from the burden of having to return to the hospital for the shot. > Pharmaceutical Sector: Adopting digitalization and innovation, while ensuring greater transparency AVOIDINGTHEREPORTINGTRAP 18
  20. 20. Towards more balanced food consumption and nutritional offers The food industry is of the sectors upon which megatrends such as population growth, growing levels of consumption and climate change have the biggest direct impact. The 9 billion people that are expected to live on this planet in 2050 will be hungry for high- quality and nutritious food that is affordable and readily available. The majority of the additional calories to be eaten (and produced) by then will consist of animal protein, which calls for an efficient growth in livestock production. This industry already has a major impact on climate change, as it is responsible for 14.5% of the global total output in greenhouse gases – more than the emissions from global transportation combined. Meanwhile, changing weather conditions are already having an impact on agricultural production. The ongoing drought in California in the United States has directly affected supplies and price levels of state- sourced fruit, vegetables, nuts and dairy across the entire US. In 2014 alone, loss of revenues and additional pumping costs added up to $1.5 billion in total drought-related costs for the agricultural sector. One of the major food problems today is that food production and consumption is not evenly distributed across the globe. Up to a third of all food produced never gets to be consumed, as it is spoiled, disqualified or discarded. An innovative food waste counteraction comes from the Swedish startup FoPo, that turns almost expired fruits into a nutritional powder which can easily be distributed to developing countries. Frontrunning food producers are also taking measures to improve the nutritional composition of their products, for instance by reducing salt, fat and sugars levels. Examples include a bold 43% sugar reduction for children’s dairy beverage Fristi, and Nestlé reducing the saturated fat levels of Kit Kat wafers. Measures such as these reflect the pro-active intention of food producers to respond to consumer’s concerns and mitigate risks from potential regulations, such as taxes on high calorie/high sugar products. In the end, we all have to eat – and the food industry’s challenges also pose a major opportunity to benefit from a shift towards higher levels of consumption of a more balanced nutritional offer. 7. Food Sector > Food Sector: Towards more balanced food consumption and nutritional offers 19 AVOIDINGTHEREPORTINGTRAP
  21. 21. About one in eight people in developing regions remain chronically undernourished today – while 13% of the world’s adult population was obese in 2014. Source: World Health Organization, FAO 49> Food Sector: Towards more balanced food consumption and nutritional offers AVOIDINGTHEREPORTINGTRAP 20
  22. 22. 49> Food Sector: Towards more balanced food consumption and nutritional offers AVOIDINGTHEREPORTINGTRAP 21
  23. 23. The sparkling wine industry has a sustainable product innovation that addresses various materialities at once and can be found in the eco-design of the bottle. In the past, the Comité Interprofessionnel des Vins de Champagne dictated the champagne industry with its standards of producing authentic bottles of 75 centiliters with a weight of 900 grams. However, in 2010, the committee agreed to new standards for champagne bottles and announced the technical validation of a bottle of 835 grams. This small change can result in an annual reduction of 8,000 tons of CO2 emissions, the equivalent of removing 3,000 cars from the road. Looking at efficient logistics, up to 1,000 more bottles can be loaded in one, resulting in a significant reduction in transport costs. In addition, the design and advantages that have been achieved in reducing the weight of the glass led to 11% waste reduction. The results of lighter champagne bottles emphasize the great importance of packaging and its environmental impact. Innovative concepts that address food issues are coming from within and beyond the industry itself. Biotechnology innovations for animal feed are making livestock production more and more efficient. A life science company such as DSM, for instance, combines lowering greenhouse gas emissions from livestock with higher milk yields in Clean Cow: a feed additive that reduces the internal production of methane by cows. Best Practice: Sustainable Champagne 49> Food Sector: Towards more balanced food consumption and nutritional offers AVOIDINGTHEREPORTINGTRAP 22
  24. 24. High industry average scores indicate well- established industry standards and a mature level of sustainability. Looking at the Dow Jones Sustainability Index 2014 data, Food products’ frontrunners outperform the herd, but the difference between them is smaller than observed in chemicals and pharmaceuticals. The industry average scores are relatively high: an indicator for high industry standards and a mature level of sustainability. It is for a reason that companies from this category, such as Unilever and Nestlé, are consistently named among global sustainability leaders across industries. Gaps on criteria such as Corporate Governance, Labor Practice Indicators and Human Rights are the smallest, driven by compliance and established industry-specific initiatives such as Fair Trade. However, frontrunners clearly maintain their lead in the environmental dimension. This suggests that the industry in general is still figuring out how to reduce environmental impact, and how to communicate about this topic. Social reporting appears to be the main challenge for frontrunners. On Human Capital Development industry average lags behind but, in contrast to pharmaceuticals, frontrunner companies in food have recognized the significance of this area and are strategically investing in the development of their people. 49 Sustainability status in the food industry 0 25 50 75 100 Risk & Crisis Management Codes of Conduct/Compliance/C orruption&Bribery Corporate Governance Supply Chain Management Environmental Policy/Management System Operational Eco- Efficiency Climate Strategy Environmental Reporting Labor Practice Indicators & Human Rights Human Capital Development Social Reporting Food Products (industry average) Food Products (frontrunners) > Food Sector: Towards more balanced food consumption and nutritional offers AVOIDINGTHEREPORTINGTRAP Source: RobecoSAM, DJSI 2014 Results 23
  25. 25. From passive provider to active entertainment and convenience contributor Characterized by high levels of consolidation, local European telecommunication markets are steadily following a US model of a small number of dominant players with comparable market shares, supplemented with maybe one or two operators with remarkably lower presence. Over-the-top (OTT) content providers like Netflix and Spotify make use of existing infrastructure to offer their services, while more established players such as Google and Apple are expanding from being an OTT-only threat to actually taking steps towards operating (virtual) mobile and fiber networks themselves. Regulatory developments may accelerate the development of new business models and the investment to meet the growing demand for speed and capacity. The European Commission’s Digital Single Market Strategy, to be delivered in 2016, is a key framework that will influence the ability of telecom operators to be competitive within the EU. The Commission itself already boasts that a fully functional Digital Single Market could contribute €415 billion per year to the EU economy and create hundreds of thousands of new jobs. A shift towards providing more digital services may contribute to redefining the telecoms profile from a passive provider of an intangible service to a business that plays an active role in supporting and delighting the customer with convenience and entertainment. Since consumers’ appreciation of telecom operators is generally modest, repositioning as a technology or entertainment company provides an opportunity for building the positive brand associations that come with this sector. Consumer trust in the technology industry stood at 78%, according to the 2015 Edelman Trust Barometer – the highest of all industries. The emergence of a digital ecosystem of connected people, devices and networks through the Internet of Things presents itself as a major growth area. There are valuable opportunities in partnering with other companies to offer solutions in terms of e-health, smart cities, cloud computing or digitized manufacturing – innovations that will significantly improve efficiency in industrial and business processes as well as work habits and lifestyles. 8. Telecommunication Sector > Telecommunication Sector: From passive provider to active entertainment and convenience contributor 24 AVOIDINGTHEREPORTINGTRAP
  26. 26. Growth opportunities in the area of open innovation are also found in venture funds and supporting startups through accelerator programs. Accelerators are popular: companies that have initiated programs of their own (or started partnerships with existing programs) include operators such as Telenet, Telefónica, Deutsche Telekom and Vodafone. By setting up a close connection with these young businesses, corporations gain access to ideas for next- generation services, as well as enjoying reputation benefits and injecting a sense of intrapreneurship among employees. Finally, telecommunication companies have to take an active standpoint in addressing consumer concerns surrounding the industry. Privacy and data security matters require firm internal policies and control measures, but also offer opportunities. Expertise in security, identity authentication and other forms of privacy protection can be a reputational asset which could also be positioned as a service to (business) customers. Deutsche Telekom, Intel and Cisco are collaborating in the Challenge Up! Program, a joint startup initiative organized by the three companies. In July 2015, twelve startups were selected to participate in a 4-month incubation program designed for young innovative companies building Internet of Things solutions. The winning teams were selected after five days of intensive mentoring sessions and workshops during the introductory Acceleration Week, where participants worked on refining their pitching skills, product development, business modeling, user experience design and sales strategy. The startups joining the Challenge Up! Incubation program come from nine different countries, and are working on solutions including a smart LED light bulb enhanced with a presence sensor which helps to protect homes, a solution that measures and helps maintain blood sugar levels of diabetic patients, and a technology to provide real-time information on parking vacancy. 49 Best Practice: Challenge Up! > Telecommunication Sector: From passive provider to active entertainment and convenience contributor AVOIDINGTHEREPORTINGTRAP 25
  27. 27. Global mobile traffic data grew 69% in 2014 to 2.5 exabytes each month, and in the US approximately 35% of mobile consumers check their smartphone at least 50 times per day. Source: Cisco Visual Networking Index 2015, Deloitte Global Mobile Consumer Survey US 2014 49> Telecommunication Sector: From passive provider to active entertainment and convenience contributor AVOIDINGTHEREPORTINGTRAP 26
  28. 28. Among the four industries included in this report, telecommunication services is the industry where the gap between the industry average and frontrunners is the smallest, based on DJSI 2014 data. On 12 sustainability criteria, the scores of the frontrunners are on average only 30% higher than the industry’s average. In terms of environmental performance, Operational Eco-Efficiency appears to be a sore tooth for frontrunner companies and, to a lesser extent, industry average. Growing a business fueled by pumping networks and ever-increasing levels of data consumption, while reducing carbon emissions and energy consumption appears to be tricky. Finally, a rather high score on both average and frontrunner level can be found on Stakeholder Engagement, suggesting that communication with local communities has been recognized as a key indicator for success by telecommunication companies. 49 Sustainability status in the telecommunication industry 0 25 50 75 100 Risk & Crisis Management Codes of Conduct/Compliance/C orruption&Bribery Corporate Governance Supply Chain Management Environmental Policy/Management System Operational Eco- Efficiency Climate Strategy Environmental Reporting Labor Practice Indicators & Human Rights Human Capital Development Social Reporting Telecommunication Services (industry average) Telecommunication Services (frontrunners) > Telecommunication Sector: From passive provider to active entertainment and convenience contributor AVOIDINGTHEREPORTINGTRAP Source: RobecoSAM, DJSI 2014 Results 27
  29. 29. 9. From report to result – our approach In order to prevent that reporting becomes the end- station of the sustainability journey, companies should use their material issues to create an impact that is tangible for investors and other stakeholders. Focusing on the relevant material issues helps to identify the specific opportunities and pointing out the route towards leveraging those opportunities. The GLOBE-US model is developed to integrate sustainability into the business model, according to its seven-step approach. GLOBE-US leads to a strategy roadmap for business value from sustainability through a structured and comprehensible process. Starting with the existing business model based on the Business Model Canvas by Osterwalder and Pigneur, the stakeholder landscape is defined and the most material issues for the company are assessed, resulting in a materiality matrix. By looking at how competitors are performing on sustainability, the relevant touch- points for value creation emerge. After making a selection of most relevant issues, ambitions and targets for future progress are set. Opportunities for value creation can be identified in the strategic areas of eco-efficiency, innovation and customer intimacy. Finally, real innovators incorporate feedback gathered throughout the process into the business model for a complete business model re-design. 28> From report to result – our approach AVOIDINGTHEREPORTINGTRAP
  30. 30. A practical application of the GLOBE-US model is found in Belgian telecom company Telenet. Starting in 2010, the efforts of Telenet’s sustainability reporting activities quickly led to inclusion in the Dow Jones Sustainability Index. This outstanding performance helped Telenet with its reputation towards investors, but unfortunately did not lead to a comparable improvement of the company’s sustainability reputation among consumers, nor did it trigger service innovations. As a response, a five year master plan was designed. This master plan aimed at cementing the company’s sustainability policy as an integral part of long-term strategy and included the goal to become one of the top ten reputable brands in Belgium by 2017. Three distinct areas for improvement were designated to achieve this ambition: • Establishing potential for sustainable innovation to become “neighbor of choice” • Training aimed at internal capacity building on business design thinking from societal challenges • Building engaging communications for both internal and external stakeholders In 2013, the packaging of Telenet’s set-top boxes was redesigned, leading to savings of over € 2 million thus far. In addition to going green in products, Telenet also engaged with beginning entrepreneurs, both to support their development and draw on their valuable insights. In August 2014, the company launched an entrepreneurial accelerator ecosystem to support aspiring entrepreneurs and promote innovation. Out of the 450 applications, Telenet selected ten startups focused on innovation domains, like games, e- commerce, big data and social innovation. The majority of the startups aimed to achieve positive societal results such as education, circular economy solutions that increase the yield of underleveraged assets, and improvement of neighborhoods. In the spring of 2015, five out of the ten participants received second stage funding. A second year of the accelerator program begins with a brand new selection of startups in October 2015. A more detailed version of the Telenet case was previously published on INSEAD Knowledge Blog. 49> From report to result – our approach AVOIDINGTHEREPORTINGTRAP Using the GLOBE-US process to avoid the reporting trap 29
  31. 31. The key lesson from the Telenet experience is that C-suite managers responsible for sustainability programs should steer clear of the reporting trap. After getting the basics right in reporting, and sustainability being embedded in the organization’s core, a strong focus on sustainable innovation is the next frontier. A deeply-rooted company purpose is a great enabler to make bold initiatives fly. Not all CEOs will be as inspirational as Paul Polman or Richard Branson, but there are some key elements to help infuse sustainability into the veins of the corporation. Formal routes include establishing a clear governance structure including board responsibility and linking relevant KPIs to senior management’s remunerations. More informal interventions can be planned in order to engage employees, for instance through internal capacity building in training and education sessions and stimulating intrapreneurship focused on societal issues. Finally, companies have to speak up. Without communication, stakeholders will not be able to acknowledge the company’s efforts nor become a part of the change. By being vocal about the sustainability journey and communicating consistently on the most relevant occasions, corporate reputation, as well as engaging with stakeholders to create shared value, can be seized. “I think it comes down to setting an agenda for transformational change in the business and then really driving that change through innovation.” Steve Howard, Chief Sustainability Officer, IKEA Group > From report to result – our approach AVOIDINGTHEREPORTINGTRAP 30
  32. 32. 10. Does the value of benchmarking offset the burden? Aside from the annual sustainability or integrated reporting efforts, each year companies receive a large number of invitations to participate in sustainability benchmarks, ratings or surveys. Value of participating lies in the opportunity to compare performance with peers and, in case of a good evaluation, sustainability leadership will be demonstrated by a credible third party. Rankings are voluntary, laborious and there are many around so companies should opt for those few rankings that matter most. However, some companies feel overwhelmed by the sheer volume of requests and workload presented with responding to these questionnaires. How do you determine which are the most relevant rankings in order to make an informed decision about allocating resources? For companies that want to avoid the reporting trap, here are four things to consider: 1. Initiator and target group Who is asking the questions and for whom are the insights being collected? Make sure to have clear priorities in terms of stakeholder relevance and impact in order to determine which groups are most deserving your attention. For most companies, customers are among the most important stakeholder groups, which could justify to respond to an EcoVadis request from a major client as a key priority. 2. Focus and recognition of the benchmark or ranking Are they focusing solely on a specific issue or are they looking to assess the company’s sustainability performance as a proxy for financial success in the long term? In addition, consider whether the rating applies an industry-specific perspective or if all companies are jumping through the same hoop. > Does the value of benchmarking offset the burden? AVOIDINGTHEREPORTINGTRAP 31
  33. 33. > Does the value of benchmarking offset the burden? Additionally, it is worth to review the reputation of the requesting party. Meta-benchmarks such as SustainAbility’s Rate the Raters provide insight in the credibility of well-known raters such as CDP, Dow Jones Sustainability Index and the FTSE4Good Index series. Asking your most important stakeholders directly which third- party sources they trust can also be a good way to assess. 3. Level of personalized feedback on performance Which feedback on company performance is provided once the questionnaires are processed? Feedback from these assessments can be a valuable tool, as it provides an objective reflection of performance. However, the usefulness of this feedback depends on the level of detail and insight into areas for improvement. Comprehensive results (e.g. partial scores on sub-criteria) can be used to plan interventions for improving performance and measure year-on- year improvement on these areas. 4. Public communication on results Finally, it is worth noting how the rating agency communicates its results. Particularly when companies are looking for recognition of their sustainability efforts from independent third- party sources, the level of transparency on outcomes is an important criterion to take into account. Publications such as the RobecoSAM Sustainability Yearbook, which includes complete listings of leading companies for 59 industries, are particularly useful to demonstrate your company’s performance from an independent expert objective. 32 “The data collection and review process we engage in as part of DJSI’s annual evaluation provide an opportunity to engage leaders and experts across our company, drive change and foster improved performance in our sustainability program.” Art Gibson, VP of Environment, Health & Safety, and Sustainability, Baxter International Inc. AVOIDINGTHEREPORTINGTRAP
  34. 34. Where to go from here? Check out our Checklist for avoiding the reporting trap on page 37. It contains a useful structure to self-assess your sustainability strategy. To support our customers on embedding sustainability into the business, Finch & Beak offers a range of consulting services including: 33 Appraisal and development of a 100-days outlook Identification and status measurement of the current sustainability efforts including corporate communication. Which sustainability issues carry value creation potential, in relation to the core business? To what extent are opportunities from sustainability captured and communicated? Our 100-days outlook identifies your potential building blocks for integrated sustainability and contains an action list for execution. Contact Josée van der Hoek Founding Partner Finch & Beak, to receive more information about the 100-days outlook at or call +31 765 22 28 17. DJSI and CDP – Heatmap Analysis Based upon your Company Scorecard, our heatmap analysis identifies the main improvement criteria for next year’s participation, including an analysis of your company’s sustainability performance compared to best-in-class and industry’s average. In doing so, next year’s score can be improved by starting to work directly on challenges that matter. Ask Nikkie Vinke, Senior Consultant Finch & Beak, for more information on the DJSI and CDPHeatmap Analysis at or call +31 765 22 28 17. > What’s next? – some of our solutions AVOIDINGTHEREPORTINGTRAP 11. What’s next? – some of our solutions
  35. 35. Finch & Beak is an agency that helps companies accelerate their performance on today’s biggest sustainability challenges. In 1997, we launched our business as Between-us: a boutique consultancy that worked on bringing sustainability into the mainstream. During this 20 year period, we have serviced over 100 corporate clients throughout Europe, trained more than 5000 executives and worked with top level business schools from around the globe. Today, our rapidly shifting society and its sustainability challenges mean that things have to change and that we have no time to waste. It is essential for businesses, to be adaptable if they are to survive and thrive in these turbulent times. Finch & Beak uniquely focuses on helping its clients to speed up the process of business evolution. We deliver clear and concise services aimed at building business cases and turning them more quickly and effectively into value for both the company and society. Founded in 1995, RobecoSAM is an investment specialist focused exclusively on Sustainability Investing. It offers asset management, indices, engagement, voting, impact analysis, sustainability assessments, and benchmarking services. Asset management capabilities cater to institutional asset owners and financial intermediaries and cover a range of ESG integrated investments (in public and private equity), featuring a strong record in resource efficiency theme strategies. Together with S&P Dow Jones Indices, RobecoSAM publishes the globally recognized Dow Jones Sustainability Indices (DJSI). Based on its Corporate Sustainability Assessment, an annual ESG analysis of 2,800 listed companies, RobecoSAM has compiled one of the world’s most comprehensive databases of financially material sustainability information. 34 About Finch & Beak AVOIDINGTHEREPORTINGTRAP About RobecoSAM This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Between-us Media Marketing Consultants B.V., its members, employees and partners do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2015 Between-us Media Marketing Consultants B.V. All rights reserved. Copyright and Disclaimer
  36. 36. > Acknowledgements and sources Ahlquist, G.D., Javanmardian, M., Kaura, A., & Belokrinitsky, I. (2015). 2015 Healthcare Trends. Retrieved from healthcare-trends Anthony, S.D. (2014). The First Mile. Boston, MA: Harvard Business Review Press. Arizona State University. (16 April 2014). Which foods may cost you more due to Calif. Drought. Retrieved from grocery-prices-richards Capgemini. (28 July 2014). Communications Industry: On the verge of massive consolidation. Retrieved from industry-on-the-verge-of-massive-consolidation Cefic, the European Chemical Industry Council. (2015). The European Chemical Industry, Facts & Figures 2014. Retrieved from Chilukuri, S., Rosenberg, R., & Van Kuiken, S. (November 2014). A digital prescription for pharma companies. Retrieved from rvices/a_digital_prescription_for_pharma_companies Cisco. (2015). Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update 2014–2019 White Paper. Retrieved from provider/visual-networking-index-vni/white_paper_c11- 520862.html Daneshkhu, S. (5 February 2014). Sugar debate turns sour for food groups. Financial Times. Retrieved from 00144feab7de.html#slide0 Deloitte. (2014). 2014 Global Mobile Consumer Survey, US Edition. Retrieved from and-telecommunications/articles/global-mobile-consumer- survey-us-edition.htm Deloitte. (2015). 2015 Life Sciences Outlook, United States. Retrieved from ents/life-sciences-health-care/us-lshc-2015-life-sciences- report-011215.pdf Deloitte. (2015). 2015 Chemical Industry Outlook. Retrieved from cles/ Deutsche Telekom. (14 July 2015). Challenge Up! Retrieved from products/281678 DSM’s Integrated Annual Report 2014. Retrieved from: 478193.html Economist, The. (2015). Slimming down. America’s processed-food makers are having to adapt to declining popularity. Retrieved from americas-processed-food-makers-are-having-adapt- declining-popularity-slimming-down Edelman. (2015). 2015 Edelman Trust Barometer: Trust Across Industries. Retrieved from barometer/trust-across-industries/ European Commission (6 May 2015). A Digital Single Market for Europe: Commission sets out 16 initiatives to make it happen (press release). Retrieved from Food and Agriculture Organization of the United Nations. Food Loss and Food Waste. Retrieved from 35 > Acknowledgements and sources AVOIDINGTHEREPORTINGTRAP
  37. 37. > Acknowledgements and sources Global Reporting Initiative (2015). Sustainability Disclosure Database. Retrieved from Accessed 7 August 2015. GlobeScan & SustainAbility. (2013). The 2013 Sustainability Leaders, A GlobeScan/SustainAbility Survey. Retrieved from sustainability-leaders#.VdspNPntmko GlobeScan & SustainAbility. (2015). The 2015 Sustainability Leaders, A GlobeScan/SustainAbility Survey. Retrieved from ability-leaders#.VdspS_ntmko (2015). CSR is dead, part 2: Frome here, it’s all about transformation. Retrieved from transformation (2015). Six reasons to respond to the Dow Jones Sustainability Index Survey. Retrieved from: sustainability-index-survey Ioannou, I., & Serafeim, G. (20 August 2014). The Consequences of Mandatory Corporate Sustainability Reporting: Evidence from Four Countries. Working Paper. Boston, MA: Harvard Business School. MIT Sloan & Boston Consulting Group. (2015). Joining Forces, Collaboration and Leadership for Sustainability. Retrieved from Osterwalder, A. & Pigneur, Y. (2010). Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Hoboken, NJ: John Wiley and Sons. Peters, A. (28 July 2015). This Startup Turns Almost-Expired Fruit Into Tasty Nutritional Powder To Fight Hunger. Retrieved from turns-almost-expired-fruit-into-tasty-nutritional-powder-to- fight-hunger Principles for Responsible Investment. (2015). Annual Report 2015. Retrieved from http://2xjmlj8428u1a2k5o34l1m71.wpengine.netdna- Ries, E. (2011). The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. New York, NY: Crown Business. RobecoSAM. (2015). RobecoSAM Sustainability Yearbook 2015. Retrieved from United States Department of Agriculture. (2015). California Drought: Farm and Food Impacts. Retrieved from drought-farm-and-food-impacts.aspx University of California, Davis. (15 July 2014). Drought impact study: California agriculture faces greatest water loss ever seen. Retrieved from Van der Kaaij, J. (27 April 2015). Steering Clear of the Sustainability Reporting Trap. Retrieved from of-the-sustainability-reporting-trap-3978 World Hunger Education Service. (24 March 2015). 2015 World Hunger and Poverty Facts and Statistics. Retrieved from r%20facts%202002.htm World Health Organization. (2015). Obesity and overweight. Retrieved from 36 AVOIDINGTHEREPORTINGTRAP
  38. 38. > Annex: Checklist for avoiding the reporting trap Vision: Integrated sustainability can only be achieved when the overall, long-term goal of the company is aligned with the sustainability objectives. Sustainability sits at the heart of the business vision. 5 Areas of engagement: A clear understanding of the business environment is required to determine value creation opportunities. The areas of engagement describe your geographical areas of operation, the customer segments you serve, structure of your value chain, overview of products and services, selection of your key stakeholders and a list of the most relevant material issues. Business case: Sustainability needs to fit within the current activities and has to leverage the core competencies of the company, such as operational excellence or growth leadership. By developing the business case for sustainability, it will become clear how sustainability will add to the bottom line. Differentiation: Sustainability is a driving force when it comes to increasing the competitiveness of the company. Mapping the strategic areas that will make the company winning helps you to enlarge competitive edges. Reputation, the pricing of products and services, innovative or better products and services, customer intimacy or eco-efficiency are key differentiating areas. 13Targets & ambitions: You can only measure success when sustainability goals are formulated in the initial phase. In this way, the company tracks its progress over years and you know where to adjust or accelerate. Formulated external goals can be measured by benchmarking. 18 Means & tools: The path towards achieving the sustainability goals requires a solid implementation plan. Stakeholder engagement activities and internal trainings are crucial tools for embedding sustainability into the business. Staging: You need to schedule a roadmap for integrated sustainability by determining the speed and sequence of developing sustainability within the company. 37> Annex: Checklist for avoiding the reporting trap AVOIDINGTHEREPORTINGTRAP