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Here we are with the second in the series of sector analyses of sustainability reports using the new CR Sector Reviews from CorporateRegister.com as our inspiration. As I mentioned in my last post on the Forestry and Paper Sector, the CR Sector Overview series covers 11 sectors so far, (take a look at CorporateRegister.com Publications page to see if your sector is covered) and over the coming weeks, I will be blogging about each one. The CR Sector Overviews are free to subscribing members of CorporateRegister.com but I have kindly been provided with a full set, so that I can share some of my own insights about each one with the CSR Reporting Blog readers.
Some context about the automotive industry from the CorporateRegister.com CR Automotive Sector Review: The automotive sector includes companies which design, develop, manufacture, market, and sell motor vehicles � including cars, vans, trucks, motorbikes and caravans. The sector also includes firms that make and sell components used by manufacturers to produce their vehicles. The majority of the main vehicle makers own and manage large manufacturing plants with mass production assembly lines, often highly mechanized. They may also have significant non-manufacturing facilities where new vehicles and technologies are designed, developed, and tested. Most vehicles are sold through networks of dealers that have varying degrees of independence.
The ten largest companies in the automotive sector generate a combined turnover of more than $2 trillion, and over 84 million vehicles were manufactured in the world in 2012. The sector supports over 50 million jobs, of which around 20% are direct employees and the rest are those that benefit from the ripple effect.
The ten largest companies in the automotive sector generate a combined turnover of more than $2 trillion, and over 84 million vehicles were manufactured in the world in 2012. The sector supports over 50 million jobs, of which around 20% are direct employees and the rest are those that benefit from the ripple effect.
Ten material sustainability issues for the automotive sector are listed in the CR Sector Review, plus an additional 5 general issues which have relevance for the sector and three additional "upcoming" issues which should be on the radar of any company in this sector. Can you guess which is the first (and most significant) material issue listed for this sector? I'll give you a clue. It starts with carbon and it ends with emissions. Any offers?
The CR Sector Overview lists the top 20 companies worldwide in this sector. Here are the top five:
Now it's time to take a look at how they report. All have delivered 2012 standalone sustainability reports, with over 1,000 pages of content. That includes Ford's full sustainability website download, which alone is 558 pages. All the top five companies have been reporting since the mid-late 1990's, with the exception of Daimler whose first report appears to have been in 2000. This means that we are looking at a bunch of very experienced reporters in this sector, so we can be justified in having high expectations. Is there a correlation between reporting experience and quality of reports? I haven't worked that one out yet conclusively, though I tend to think that companies get better at reporting over the years. But I can't prove it. Maybe that's worth a special analysis someday.
The top five automotive reporters include three GRI G3 Level A reporters, one GRI Undeclared level reporter and one non-GRI reporter. Guess the non-GRI? Toyota. But you didn't need to think too long and hard about that, right? GRI reporting in Japanese companies is a rare occurrence. Although CorporateRegister.com stats show Japan as the country with the third highest number of reports published, GRI-based reports represent less than 14%. Wonder if G4 will have any impact on these stats? Ask me in another 5 years' time.
The interesting finding when looking at the sustainability material issues determined by the top reporters in this sector is that first, they list loads of issues, and second, just as I found with the forestry and paper sector, the most material issues do not appear to be closely linked to the sectors in which the companies operate. In the top ten material issues listed by four out of the five companies, we can find one or two sector-related issues at best, and even then, they don't appear at the top of their lists. I find this very surprising. I would expect that the most material issues of most companies would be found in the area in which they make their unique contributions. If urban mobility and traffic congestion, alternative transportation, air quality, vehicle safety, eco-vehicles, alternative fuels and electric vehicles etc are not top of the sustainability league table of issues for these companies, I begin to wonder how they are actually developing their lists of material issues. When employment, integrity and compliance, supplier relationships and customer satisfaction top the material issues list, I feel that these companies are missing the point. These issues are of course no less important for the automotive sector than in any other sector, and who could argue with having satisfied customers? But surely, the greatest sustainability impacts are defined by the sector a company operates in? Maybe that's just my peculiar view, but it really surprises me to see such a variety of material issues which could apply to any sector at all.
And now for some highlights from the top five automotive players, in order of bigness (by revenue):
Volkswagen 2012 Sustainability Report (GRI G3 A+, 168 pages)
This is a very serious report. At 168 pages, it covers a lot of ground. It's written with systematic precision in staccato sentences, as narrative, with no quotes or commentaries and just a few very short case studies. It's a plain black and white design, with just an occasional splash of color here and there. Although Volkswagen's report may be just a little dry and even a little boring at times, it's an easy read and the content is impressive.
An example of the boredom factor might be the section on "Vocational education and training". We are told that vocational training is "critical to developing a top team at Volkswagen" and that 16,174 employees were engaged in vocational training at the end of 2012. We are then treated to an additional two pages about the detail of different vocational training programs in place in different locations in Germany, U.S., Spain, different awards and competitions in the area of vocational training, a range of collaborations involving apprenticeships and suggestions from the Works Council as to how to increase the scope of certain vocational programs. While this may be very transparent, it's far too detailed and frankly, loses the reader after the first paragraph. More importantly, no link is made between vocational training and creation of the "top team" at Volkswagen. Instead of this long (boring) activity summary, I would have been more interested to read about whether this vocational training is effective. What percentage of trainees achieve vocational certification and/or go on to do meaningful work within the Volkswagen group, what percentage of trainees have stayed with the group after they have received all this training, and how many have been promoted? Volkswagen could disclose how many of the Volkswagen top team has actually come up through the vocational trainee route - since this is the stated desired outcome of all this investment. There are many more examples of the boredom factor in this report - but if we get past that, there is an earnest tone and a credibility about Volkswagen's reporting that is quite positive.
The report is structured in four main content sections: Strategy, Economy, Society and Environment with additional sections providing context before and after. There is a clear link between material issues and reported content, although the Volkswagen actually reports much more extensively than is required to cover only the material issues. An opportunity to go to a more compact version with G4 here.
Once you get past the photo of the completely homogenous Managing Board of Volkswagen, you can actually appreciate some truly serious sustainability ambition backed up with performance. It does puzzle me, though, that with 524,849 permanent employees all over the world, only middle-aged white men in gray suites and blue or red ties can make it to the top management positions in this company. (Overall, Volkswagen reports 15.2% of employees are women.)
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| Volkswagen's Management Board - a picture of diversity (not) |
So, now that we got past the gender imbalance thing, Volkswagen's report gives confidence that the company is making strides in sustainability areas noted as most material, and in many more. Strong performance against stated quantified targets through to 2018 is recorded, with improved environmental impacts on energy, emissions, waste and water per vehicle. Volkswagen gives a full Scope 3 inventory for the first time which is very best practice, as well as discussing a range of environmentally-related issues that are on the sustainability agenda, such as sustainable mobility, traffic noise, fuel efficient vehicles and more.
A nice touch to the Volkswagen report is the section on highlights and lowlights. The highlights include a page of interesting achievements and awards, while the lowlights contains cases of awards not received, including Greenpeace protests on vehicle CO2 emissions, and lack of recognition for achievements in the eco-compatible cars category rankings. While these lowlights are fairly innocuous, the fact that Volkswagen includes them at all is a plus point for credibility. We all know how bad news sells sustainability reports.
Toyota Sustainability Report 2012 (63 pages)
Another very Japanese report from Toyota. No material issues, no GRI Index, but more diagrams and charts than anyone can reasonably expect to fit on 64 pages, an index against the ISO26000 framework and a fairly encouraging third party opinion. The nice thing about Japanese reports is the way the culture shines through - not only in the design but also in the words. I now know what monozukiri is, and kokuru haboku, and senzbaru, and by now, we all know what kaizen means.
Toyota's reporting is very forward looking. It all starts with the principle of visionary management, symbolized by the Toyota tree.
This is supported by visually engaging approaches about how Toyota plans to deliver, as in the Fifth Environment Action plan, for example. Toyota places emphasis on the future of the automotive industry and contributing to new mobility societies, new smart-grids for low-carbon environments and transport infrastructure. It's a very interesting look into the way our lives will change and the role of the automotive sector that Toyota envisages. If you can get past the crowded pages, and actually enlarge the text enough to make it legible, you will find some gems in this report.
One of the gems I found was way Toyota is developing "partner robots that are useful to people by combining cutting-edge technologies from various disciplines including the robotic, automotive, and IT fields", providing support for the aging population of the future and mobility options for people who are disabled. Similarly, Intelligent Transport Systems Technology is being applied to make the vehicles of the future safer using sophisticated communications systems and helping cars talk to one another. I am sure there must be a Japanese name for that as well.
Toyota's reporting demonstrates strong ongoing sustainability performance in current operations, including environmental impacts, an important community spirit with continued investment in Japanese society still rebuilding after the Great East Japan Earthquake, and investment in research and education into sustainable living and programs for safe driving.
The tough thing about Toyota's reporting is that it really is difficult to separate the important from the interesting. Much of the content is about vision, approach and policy, and it's not always easy to link this to performance and outcomes. It's a disjointed read, you jump around from text box to more short text boxes, and if your eyes don't hurt, your head starts to.
GM's report is refreshingly fun and appealing. You can't miss the Sell the Plug story in the first sections. It's all about electric vehicles, ecosystems for electric vehicles, market presence of electric vehicles, partnerships for advancing electric vehicles and, of course, GM's electric vehicles. If you haven't heard of electric vehicles by now, GM's report bumps you up to 6th grade in a short read.
GM's introductory pages set the context, as mentioned, of a plug-based future, and the second half of the report covers ten global issues which are the result of a focused materiality process which started out identifying 38 issues and then settled at ten, with internal consultation and external validation. "This set of global issues forms the foundation of our annual sustainability reporting and reflects the most material global topics facing General Motors with respect to its economic, environmental and social impacts." Three of these ten issues are specifically relevant to the automotive sector, and the rest are more generic sustainability issues relevant to any company, any sector.
GM provides a narrative about each issue in turn, describing the context and relevance of the issue, and what GM is doing about it, including performance against targets where relevant, and this includes some impressive 2020 targets in the environmental area. The report ends up with a set of KPIs and then a couple of pages each about GM's regional performance in four regions.
This is a nice report which combines a serious message in more of a fun package that we are seeing from the other players in this sector. It's an easy read - and a good story.
Daimler Sustainability Report 2012 (GRI G3 A+, 111 pages)
Daimler's report is another fascinating look at the automotive industry and its impacts on our lives. In a report which is quite outwardly focused, Daimler takes us through its 2010 - 2020 sustainability strategy, covering its own performance as well as the sustainability issues of the sector with thought and perspective. Including external experts in fairly detailed interviews, Daimler is able to provide context and opinions relating to the role of mobility in our society, the imperatives of sustainable business, and the challenges and benefits of innovation. In a detailed materiality matrix, Daimler places most emphasis on customer satisfaction, with just a couple of the most material issues relating specifically to the automotive sector. Interestingly, all social projects and community investment initiatives are bunched in the lower left quadrant.... not so material. Relatively speaking.
Daimler does the report reader a favor by pulling out the key highlights for 2012 into a list to help us gain a quick appreciation of progress made in 2012. I like it when companies do this. Saves me hunting around the report and trying to work out what appear to be the most significant performance developments. Progress in the creation of a new Stakeholder Advisory Board, remuneration management, renewable energy, social projects and more are listed here.
The entire management team at Daimler has something to say about sustainability. While none of these insights are terribly mind-blowing, I like to see the leaders of an organization coming out in print about their commitments. This sends a clear signal that sustainability is not just the whim of the CEO but a total management responsibility and acceptance of accountability by all.
Half way through the Daimler report, the switch is made from narrative to "facts and figures", which is a round-up of all the sustainability performance areas, supported by data and relevant context and explanations. It's pretty comprehensive and covers all the bases including the material issues in the matrix.
Ford Motor Company Sustainability Report 2012 / 2013
(GRI G3 A, 558 pages)
(GRI G3 A, 558 pages)
And finally, the baby of the top 5 group with only $134 billion turnover, Ford has always been a mammoth reporter, delivering incredible levels of detail. I often quote Ford's materiality matrix which is an exercise in precision - whittling 550 issues in 15 groups down into one single list, of which 14 are most material. Of these 14 issues, I can discern three which are sector specific.
The materiality analysis is online, and accessible but not user-friendly. Navigating the fourteen most material issues alone, without all the rest, is rather a nightmare, making it rather difficult to see at a glance where Ford is placing its sustainability priorities. Each material issue is shown versus its matrix position in the past, showing whether it is trending more material or less material, or whether it is a new issue. It would be interesting to see all the most material issues (14) listed on one chart with the headline trend information so that we can quickly see how materiality at Ford is changing overall, rather than the bite by bite way it is presented. I also have my reservations about the need to start from such a broad base (550 issues? ) and it would be interesting to know if Ford have derived any tangible benefit from such an extensive analysis.
The materiality analysis is online, and accessible but not user-friendly. Navigating the fourteen most material issues alone, without all the rest, is rather a nightmare, making it rather difficult to see at a glance where Ford is placing its sustainability priorities. Each material issue is shown versus its matrix position in the past, showing whether it is trending more material or less material, or whether it is a new issue. It would be interesting to see all the most material issues (14) listed on one chart with the headline trend information so that we can quickly see how materiality at Ford is changing overall, rather than the bite by bite way it is presented. I also have my reservations about the need to start from such a broad base (550 issues? ) and it would be interesting to know if Ford have derived any tangible benefit from such an extensive analysis.
This year, Ford expanded its analysis even further to include a broader look at the value chain to help Ford get ready for future G4 reporting. The chart is interactive and each issue is supported by a description of the key impacts in that part of the value chain and the key stakeholders affected, plus some data.
If you can take the time to delve into the Ford report, you will find a wealth of detailed information about a range of topics. . This paragraph caught my eye:
"In the long term, we hope consumers will begin to see a radically different transportation system, particularly in urban centers. Cars will be connected to each other, as well as to the infrastructure around them. Vehicles will take in a significant amount of information that will allow them to have automated capability, such as parking themselves or driving in connected groups on the freeway. There will also be seamless connections between different modes of transportation, from personal cars to public transit systems to parking facilities at businesses." The day that my car parks itself will be a happy day! I say, bring it on!
Fortunately, for those with a little less time, in addition to the 558 web-site page download (it's much easier to use the online report), Ford produces an 8 page Sustainability Report Summary, which gives a taste of Ford's performance and key impacts.
And there we have it...
A quick round up of the 5 largest automotive reporters in the world...funnily enough, as I write, the Greenbiz newsletter popped into my inbox, with the headline that IKEA will have installed electric car charge points for customers by the end of the year, teaming up with Nissan and green energy provider Ecotricity to install fast charge points in the car parks of all 18 of its UK stores. Nissan just missed being included in this post, being the sixth largest automotive company in the world, but clearly, the Plug agenda is very much on the Nissan radar as well.
As you can see, there are some common areas of focus and reporting among the large automotive players, and each has a distinct style and focus in their sustainability reporting approach. If I have to award a cone for the report I found most appealing, and readable, you've probably guessed that my pick would be General Motors.
The major investment in transparency and detailed disclosures provided by the remaining reporters in the automotive big five is impressive. In looking at whether these reports are G4-Ready, although we have not performed a complete G4-Ready analysis, I suspect some of these reports are G4 TOO-COMPREHENSIVE, providing far more information than the average stakeholder can reasonably digest or that the professional stakeholder reasonably needs. Once again, as with the forestry sector, we can see that materiality is not showing up within a sector frame of reference, but as individual company selections based on individual company approaches and individual stakeholder engagement processes.
Clearly, the degree to which stakeholders from different backgrounds are included and their input evaluated as part of the materiality process can play a major role in determining what's material for any company, irrespective of the sector. If you get Greenpeace and Rainforest Alliance around your stakeholder table, then your materiality matrix will look somewhat different than one produced by a table populated with Oxfam and Feeding America. Question is: who invites who?
In the meantime, the CorporateRegister.com CR Sector Reviews can help you work through the materiality maze.
elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise guide to Next Generation Sustainability Reporting AND Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen or via my business website www.b-yond.biz (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm
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