Communicating the Value Chain

What could be more important to stakeholders than understanding the nature of a company’s business? Yet many reporters miss the opportunity to provide this basic information. That’s changing, though, as sustainability and CR reports are used more often to provide greater clarity on a company’s business model (how it makes money) and on its value chain (key direct and indirect activities that support the business model).

 

This is happening in tandem with increased integrated reporting and additional focus on corporate purpose. In fact, the International Integrated Reporting Council’s guidance (IIRC) requires that companies illustrate the business model. Whether they use the IIRC framework or not, more and more companies are creating visual representations of their business, which can also help to make their reporting more visually engaging.

 

Showing the value chain can be straightforward, as our client Novelis did:

 

novelis

 

Campbell Soup Company’s simple wheel graphic is also straightforward, but includes examples of material issues, activities and initiatives related to each step of the value chain.

 

campbells

 

At the other end of the spectrum, Fibria, a Brazilian pulp company, uses the IIRC’s approach to reporting on value creation by clarifying the business model and showing how the business increases or decreases stocks of financial and non-financial capital. Fibria offers multiple business model infographics for a range of audiences, putting the visual of how the company creates value front and center for key audiences.

 

fibria

 

To determine which approach makes the most sense for your company, consider the following questions:

 

+ Who is the primary audience? Is it investors, suppliers, customers or some combination?

+ Which framework are we following (IIRC, GRI, etc.)? This is a great place to start, since frameworks offer advice on what to include in visual depictions of value chains.

+ Are there stakeholder misconceptions about our value chain that we have an opportunity to clarify or correct through a value chain graphic?

+ What are the highest priority areas to share? Be sure to include the most important steps of the value chain—if your chosen audiences would be overwhelmed by seeing detail like Fibria’s, consider a mostly visual representation.

 

No matter how you approach sharing your value chain, it’s an important step at a time when reporting about activities outside a company’s core operations is all but expected.

Four New Tools for Sustainability Professionals

Here’s a brief roundup of new sustainability and general business tools on our radar. From visualizing company financial performance in context to understanding the interconnected benefits of green infrastructure, there’s something helpful for sustainability professionals working in all kinds of disciplines.

 

Finviz.com

 

This financial visualization tool allows you to view the color-coded financial performance of sectors, categories and companies at a glance. For example, the consumer goods sector varies from red to green, representing the performance of each company’s stock, while the size of the block corresponds to the company’s relative market cap. Hovering over the sector or category allows you to see the performance of top companies. You can also filter the tool by S&P 500 companies.

 

finix

 

Transformative Transparency

 

Supply chains are notoriously complex and often opaque, but also vitally important to understanding a company’s impacts and opportunities to shrink its footprint. Created by the Stockholm Environment Institute, the supply chain transparency platform, now in beta testing, aims to help researchers and others understand the flow of agricultural goods from their origin through traders and importers to a destination country.  The current version focuses on the commodities of coffee and soy due to their ties to deforestation. The tool sources shipping data to provide supply chain mapping, which is then overlaid with social and environmental data to help identify sustainability risks and opportunities.

 

Partnership for Resilience and Preparation (PREP)

 

As a part of its late-September announcement on climate partnerships through the Partnership for Resilience and Preparation (PREP), the Obama Administration announced a new data platform created by the World Resources Institute and the U.S. Department of the Interior. The PREP platform aims to provide unprecedented access to robust, actionable, climate data for companies and communities. Though the platform is in beta, a quick look through it reveals historical and projected data related to precipitation, temperature and emissions as well as human-centered research around topics like climate justice.

 

City Performance Tool

 

Directed at urban planning and municipal sustainability professionals, Siemens’ City Performance Tool (CyPT) analyzes how improving infrastructure could support economic development and reduce environmental impact in cities like San Francisco. Specifically, CyPT uses modeling to show how (and which) green energy, building and transportation technologies reduce impact and create jobs. The city of San Francisco plans to use this data to meet its 2050 environmental goals.

 

Smithfield Foods Increases Engagement with Phased Release Approach

Smithfield Foods is a longstanding BuzzWord client that never stands still. And when it comes to sustainability reporting, the company consistently looks for ways to push the envelope.

 

This summer, Smithfield released its annual integrated sustainability report in phases over a period of nearly two months. The goal? To engage more deeply with stakeholders on a variety of topics and showcase each section of its sustainability program in manageable pieces. The complete report, which was posted in August, was in accordance with the core option of the Global Reporting Initiative’s G4 Guidelines (although Smithfield reported on many indicators beyond the core requirements).

 

Smithfield’s latest report includes a new feature designed to further increase the company’s transparency. The food ingredient glossary – the first of its kind by a pork processing company – lists and describes ingredients used in products across the company’s brands. Although the primary ingredient in Smithfield products is pork, the glossary includes nearly 100 additional ingredients used.

 

The report tracks the company’s progress on its sustainability commitments, including its industry-leading pledge to convert all company-owned farms to group housing systems for pregnant sows. At the end of 2015, Smithfield was more than 81% of the way toward its 2017 completion goal.

 

In addition, the report highlights the company’s recent “One Smithfield” initiative, which centralized the organization and is reaping efficiencies across the company, particularly in areas of transportation and procurement. And it features the company’s innovative partnerships in its agricultural supply chain with a leading national environmental organization, which together with Smithfield is collaborating on ways to reduce fertilizer loss from farms.

 

Read the full report here.

Engaging with the Sustainable Development Goals – not Business as Usual

Launched with great fanfare a year ago, the United Nations Sustainable Development Goals (SDGs) build on the success of Millennium Development Goals and go well beyond them. Like the MDGs, the SDGs have three interconnected objectives: ending poverty, protecting the planet and ensuring prosperity by 2030, all while tackling climate change. However, the SDGs were developed in a true public/private/NGO collaboration, taking multiple perspectives into account and addressing issues critical to developed and developing countries alike. There’s a call to action here, too: the goals specifically ask the business community to engage in solving global challenges. They also give companies a new way to evaluate their business models in a sustainability context.

 

A year out, companies are engaging with the goals in a variety of ways from pro forma to strategic – as well they should: according to research from PwC UK, 90% of people think it’s important for businesses to work with the SDGs, and 78% of people are more likely to buy from a company using them.

 

How companies are using the SDGs: a few examples

 

Unilever: Leading consumer packaged goods company Unilever celebrated the launch of the goals with short animated videos explaining how the company supports individual goals like clean water and gender equality. Later, it engaged employees in the process, asking them to make videos about what the goals meant to them on a personal level. By bringing employees into the conversation, Unilever creates a connection that makes the goals that much more embedded in the organization.

 

Coca-Cola Enterprises: Many companies, including Coca-Cola Enterprises (CCE), are mapping their existing CSR initiatives to the SDGs; CCE even shared its mapping in a sustainable development infographic. While this is valuable, it would be even more meaningful if CCE used the goals and underlying targets to inspire strategy, including future goals and targets. Not many companies are there yet, but it’s where leaders are headed.

 

Novozymes: For example, Novozymes, a Danish biotechnology company, describes its approach to connecting the SDGs and its business in its sustainability report. The company elaborated at last June’s Sustainable Brands conference in San Diego on how it mapped its company purpose, strategy and long-term goals to the SDGs. The rationale is that thinking about these goals now means it will be better-positioned to deal with a tougher regulatory environment and scarcity of natural resources like water. The company even developed a tool to evaluate its innovation pipeline against the goals.

 

Engaging with the SDGs

 

Initial Steps

 

1. Spot opportunities to leverage the goals through mapping, engagement and communications, like CCE did.

 

2. Figure out what steps you’ve already taken throughout your value chain, in internal and external CSR initiatives and through strategic philanthropy. Are there opportunities to have the goals inform existing initiatives?

 

Deeper Engagement

 

3. While the 17 goals are inspiring – and it’s hard to imagine anyone questioning them – the real substance of the SDGs lies in the 169 targets that set out how the goals will be met. So it’s important to dig into the details of each target and figure out what’s best aligned with your business and where the threats and opportunities lie. The PwC UK survey reports that more than 30% of businesses surveyed only plan to assess impact on some of the SDGs relevant to their businesses, while just 10% plan to assess impact on all relevant SDGs.

 

4. In your next materiality assessment process, leverage the goals as another lens by which to assess your material issues. The SDG Compass guide, created by the UN especially for businesses looking to integrate SDGs into strategy, offers step-by-step advice.

 

Looking to the future

 

Despite the high profile and flurry of activity around the SDGs, a recent, sober assessment by DNV-GL  of the likelihood the goals will be reached concluded that eight of the goals are unlikely to be achieved in any global region by 2030. But the same report, which was presented to the UN Global Compact (UNGC), offers examples of how UNGC signatories are having an impact on each of the goals and sets out a challenge to business to raise their level of ambition and improve the odds of success.

 

Implementing the SDGs is not business as usual. It’s business for a sustainable future.

Kellogg’s CR Report Includes Bold New Goals

Earlier this month, Kellogg Company published its ninth annual Corporate Responsibility Report, which includes an ambitious set of new targets to help combat climate change. BuzzWord has worked with Kellogg from the beginning, helping it develop and update its reporting strategy and report content every year since 2007. While the company has long had goals aimed at reducing its own environmental impacts – including greenhouse gas (GHG) emissions, energy, water and waste – the new targets outlined in this latest report reach into the supply chain and are even more robust and science-based than previous years. Specifically, Kellogg has pledged to reduce GHGs from its own facilities by 65 percent by 2050, and to work with direct suppliers to help reduce their emissions by 50 percent during that same timeframe. These targets were first announced at the climate talks in Paris in December 2015.

 

Kellogg has also pledged to remove artificial colors and flavors from Kellogg’s® branded cereals, a variety of Kellogg’s® branded snack bars and Eggo® frozen foods by the end of 2018. Worldwide, the company expects to change approximately 80 product recipes. Already in North America, 75 percent of the company’s cereals are made without artificial colors and more than half are made without artificial flavors.

 

Of course, Kellogg’s report covers recent accomplishments as well as forward-looking commitments. Their achievements include the following:

 

  • A 62 percent decrease in waste to landfill (per metric ton of food produced) since 2005
  • Steady reductions in sodium and sugar in its existing food portfolio
  • Programs to improve farmer livelihoods and crop sustainability are reaching about 8,000 smallholder farmers to date, including approximately 3,000 women
  • The donation of 1.4 billion servings of food to children and families around the world since 2013, through the company’s signature Breakfasts for Better Days® hunger-relief program
  • A Board of Directors that includes eight men and six women – one of the most diverse in corporate America

 

Kellogg’s Corporate Responsibility Report addresses these and other topics in its four “pillar” areas of marketplace, workplace, community and environment, plus the critical cross-cutting issue of responsible sourcing. Read the full report here.

Putting a Spotlight on Progress

After years of research and development, Keurig Green Mountain recently reached an important milestone. To meet its 2020 sustainability targets and address consumer concerns, Keurig announced the introduction of recyclable K-Cup® pods this spring. The Keurig sustainability report was an important part of the launch, chronicling the company’s journey, which included tests to learn more about what happens to K-Cup® pods in the recycling stream. Armed with this knowledge, Keurig began transitioning its manufacturing facilities to bring the first recyclable K-Cup® pods to market in June of 2016.

 

The company also made exciting progress toward its goal of balancing 100% of the water used in all its beverages through projects that give back an equal volume of water to people and nature. Based on the K-Cup® pod sales volume for 2015, the company has balanced nearly 80% of the water used in its beverages through a funding partnership with Raise the River, a coalition of organizations working to restore the Colorado River Delta.

 

To tell the story of the company’s continuing sustainability journey, BuzzWord crafted a suite of communications, including a full PDF report, a summary brochure and updates to the company’s sustainability webpages. Designed in partnership with Celery Design Collaborative, the report and brochure used friendly graphics, simple animation and warm imagery of employees, farmers and partners.

JPMorgan Chase Takes a Two-Report Approach to Better Meet Stakeholders’ Needs

Like many companies, JPMorgan Chase has a broad set of stakeholders interested in information about the company’s corporate responsibility and sustainability efforts. And, like many companies, JPMorgan Chase has duly issued an annual Corporate Responsibility Report – with BuzzWord’s assistance since 2012 – to provide stakeholders with the information and data they were seeking.

 

For the 2015 reporting cycle, however, JPMorgan Chase and BuzzWord decided to take a slightly different tack. Recognizing that the company’s varied stakeholders have distinct information needs, we tailored an approach to better meet those differing needs. Rather than an “all things to all stakeholders” approach, the company issued two reports: JPMorgan Chase’s 2015 Corporate Responsibility Report, which uses a lively, magazine-style format to focus on the company’s philanthropic initiatives to expand access to opportunity in communities around the world. And its 2015 Environmental, Social and Governance (ESG) Report – a GRI G4 Core report – which provides clear, concise information on the ESG issues JPMorgan Chase views as among the most important to its business and how it is addressing them.

 

This two-report approach allowed JPMorgan Chase to better target the content for each report – enabling the company to more clearly communicate its core messages and its stakeholders to more easily access the information they want.

Novelis Continues its Sustainability Reporting Leadership

Atlanta-based Novelis is the global leader in aluminum flat rolled products, which are used in beverage cans, license plates, aircraft skins and more. Novelis is also the world’s largest recycler of aluminum. With a bold vision to reduce the embedded carbon in its products by dramatically increasing its use of recycled content, Novelis is recognized as a sustainability leader. The company is also an award-winning sustainability reporter – it released its fourth annual sustainability report in December 2015 – and BuzzWord has provided Novelis reporting strategy and content development assistance every step of the way.

 

The development of Novelis’ 2015 sustainability report took place amidst a transition point in the company’s sustainability journey. After a few years in which Novelis rapidly expanded its operations and laid out a ground-breaking sustainability vision, market headwinds and a change in the company’s leadership meant that 2015 brought a refocusing of priorities toward operational efficiency and executing on its investments. The challenge for the 2015 sustainability report, then, was to clearly convey the company’s strong progress and ongoing commitment to sustainability, while also transparently communicating its refocusing of priorities and expectations about a likely moderated pace of progress in the near term. The resulting GRI G4 Comprehensive report does just that.

 

Southwestern Energy Publishes First Full CR Report

Southwestern Energy (SWN), a Houston-based natural gas company specializing in hydraulic fracturing, published its first full corporate responsibility report in late 2015. BuzzWord provided assistance to SWN – a first-time reporter – from the outset, assisting with everything from reporting strategy, benchmarking and materiality analysis to content development and GRI analysis.

 

SWN has a great story to tell, as it is among the leaders in the industry in wastewater recycling, methane capture and community engagement. The challenge was telling that story to a broader public that is often critical of the industry as a whole.

 

The resulting GRI G4 Core report includes a wealth of detail and data on SWN’s environmental performance, conservation efforts, health and safety practices, community engagement, workforce programs and more. The report moved the company from 27th to 6th in an influential ranking, conducted by the Investor Environmental Health Network, of the top 30 oil and gas companies’ reporting and transparency efforts.

Is the mobile phone killing the sustainability report?

We’ve all been there. You navigate to a company’s corporate responsibility website or sustainability report and come upon an engaging landing page. Something moves, drawing you in. You scroll through key messages and stats, maybe sample some video. Then you start to click around looking for a specific piece of information. But to mix some carnivorous metaphors – where’s the beef? You find the site is all sizzle and no steak. If you’re able to find substance at all, it’s brief, breezy and not especially candid or strategic.

 

What happened? A May-December romance between a new technology trend of fluid design (or the ability of a website to be viewed on phone, tablet or laptop) coupled with the age-old tendency of organizations toward opacity and obfuscation. Mate the two and you can end up with fluffy little communications that multiply like Tribbles.

 

It doesn’t have to be that way. A number of organizations have cracked the code and provided corporate responsibility and sustainability communications that work well on any device without sacrificing transparency and comprehensive disclosure.

 

The Ford sustainability report, which aside from an eight-page PDF summary is all online and all responsive, provides engaging top-level messages on material issues while also allowing users to drill down to details and data . Nike’s sustainable business website, designed to appeal to consumers as well as sustainability specialists, offers multiple ways to engage with key messages and data and points power users to a PDF report that offers a comprehensive look at progress against their targets.

 

It is possible to have your beef and eat it too.

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