Company:
ING is a global financial institution of Dutch origin
that offers banking, investments, life insurance and retirement services. With
more than 84,000 employees, ING serves over 61 million private, corporate and
institutional customers in over 40 countries in Europe, the Americas, Asia-Pacific
and the Middle East. ING has been reporting on CSR for many years.
Content:
At first
glance, it is a very complete report, covering all relevant topics which one
may find in a CSR report. However, the report is quite big (94 pages) and does
not contain many visuals, graphs and tables.
Let’s start
off with some feedback on the content of the report. As said, the report is
complete with regard to the topics covered. Furthermore, I always appreciate it
when companies, like ING does, adopt and include their progress on guidelines
like Global Compact and the Millennium Development Goals. I assume that the
report was drafted in accordance with application level A+, which at least
indicates that the report is complete in terms of the GRI guidelines. The GRI Application
Level Check on page 5, however, is illegible and the application level is not explained in the
report. Also the GRI table does not contain the Disclosures on Management
Approach (DMA). As a side-note: to me, an A+ report is not necessarily better
than a B or C report, as the application level does not say anything about the
relevance and materiality of the report. Given the amount of information
included, I expect that this report, again, will score quite high in the Dutch
Transparantiebenchmark (I would expect a top 20 position).
You can
read and feel that this report is focused on stakeholder expectations (I really
like the ‘economic contribution to stakeholders’ table on page 11, by the way).
In the 2011 report, ING included a comprehensive stakeholder map listing the
most relevant issues for each stakeholder group. In the 2012 report, these
issues have been translated into nine focus areas. These nine focus areas seem
relevant for the business and for ING’s stakeholders. Moreover, the nine focus
areas are internally assessed on their potential impact on revenues, costs and reputation.
This provides clear insight into the ‘how’ of reporting and managing those
focus areas. I have, however, two remarks. Firstly, it would have greatly
improved the report if the stakeholder dialogue and stakeholder map had been updated
for the 2012 report. Secondly, in my view, the assessment of materiality is not
complete when only internal prioritization has been performed, without gathering
the expectations of external stakeholders. Such an exercise should result in a
materiality assessment or materiality matrix. In such a matrix, all topics would
be plotted based on their importance to ING on the one hand and their
importance to stakeholders on the other hand. After finalizing the materiality
assessment, I would expect it to have implications for both the content of the
report (what is included and excluded) and the strategic choices and ambitions.
Following
the recommendation by the accountant (it is a big plus that KPMG still includes
recommendations in its assurance reports, please also refer to ‘credibility’),
I would expect ING to have defined a more dedicated strategy. From the topics
included in the report, one can deduce what ING’s strategic choices are, but a
dedicated (or integrated) strategy is lacking. This strategy should ideally be
linked to the mission and vision of ING and should depict what ING wants to
achieve in the coming 3 to 5 years. To be fully complete, the strategic pillars
should be translated into KPIs, which would help both ING and its external
stakeholders to monitor the progress towards targets. To become 2.0 in CSR, ING
could also consider to use the value chain as a basis and research what impacts
are made in the different stages. This would certainly impact the current
topics in the report, especially when (environmental and social) impacts were
to be monetized, following the PUMA example. I have high hopes for the renewed
frameworks for 2013-2016.
Currently,
ING reports transparently on the progress towards ambitions and targets in Section
3.2 of the report. In case targets have not been reached, this is disclosed as
well. Unfortunately, not many targets are actually SMART, and it is sometimes
difficult to grasp the reasons why a certain goal (e.g. actively market sustainable
products and services) has been achieved. ING is also quite transparent in the
disclosure of external issues and its position, as can be seen on pages 23-26.
For me, as a stakeholder, this answers many questions and provides clear
insight into the vision of ING on important topics. I would even recommend to
include the analysis in the aforementioned materiality assessment.
Even more
transparency is found in the elaborate disclosure of information in the ‘Better
business’ chapter. Almost all information included is deemed relevant. I
especially favor the tables on pages 38-40, which disclose the coverage of the Environmental
and Social Risk (ESR) framework, combined with the position of ING on issues
depicted on pages 40 and 44. Also, the information regarding the application of
the equator principles on page 41 and the corresponding screening results on
page 42, offer the reader much insight into ING’s position on the environmental
and social risks in financing.
Communication:
The report can
be easily found on the website, and it is very readable (not too much jargon) and
easy to navigate. The different hyperlinks are a big help in finding the
relevant topics both in the report, the annual report and on the website. The
corresponding website is also easy to navigate and lists all relevant topics
and information. I also favor the short movie included on the website. The GRI table
is very extensive and provides all relevant considerations. Unfortunately, the
DMAs are not included. The report holds quite a number of pages, which negatively
affects its readability. I do understand, however, that it is always a big
challenge to balance having a concise report and making sure to report
according to GRI A, score high on the applicable benchmarks and include all
relevant information of a company as diverse as ING. One recommendation for the
readability of the report would be to include more visuals, graphs and tables.
Also, a (separately downloadable) factsheet containing all quantitative
information would be a plus. In this report, data are included in the text and they
are not always compared with performance in earlier years and/or performance in
the sector. Also, not all trends in the data are explained or elaborated on.
Currently, the report is not yet integrated. On page 4 of the report, we can
read the efforts ING has undertaken to integrate CSR and financial reporting,
and ING’s ambition to have an integrated report. Although ING reports
transparently on external factors, internal policies and corresponding
dilemmas, the report would greatly improve if a ‘lessons learned’ (please also
refer to the new BP report) or a ‘what still went wrong’ (refer to the DSM
report of 2011) section or chapter were to be included.
Credibility:
Companies
have the possibility to (voluntarily) have their reports assured by an
independent external assurance provider. Such external assurance greatly
improves the credibility of the report. ING has recently switched from Ernst
& Young to KPMG as its external assurance provider. For several years now,
ING has been engaging an external assurance provider to provide external
assurance on its reports. This is a true added value for the reports!
Additionally, it is a big plus that KPMG is willing to include a recommendation
in its assurance reports for the public to read. Unfortunately, KPMG is the
only assurance provider active in the Netherlands including such a
recommendation (PwC used to include a recommendation, but no longer does).
KPMG has provided
limited assurance in accordance with the guidelines as set out by the
international auditing standard ISAE3000. I have two remarks on this. Firstly,
I would expect that a mature reporter such as ING would be ready to increase
the level of assurance to reasonable assurance (the higher level of assurance)
for at least the most important KPIs. Secondly, it is remarkable that the
ISAE3000 standard was adopted instead of the Dutch COS3410n standard, which was
specifically designed for assurance of CSR reports.
In my opinion,
the legitimacy of the report would improve if the assurance were to be enriched
with stakeholder involvement. This could be achieved by setting up a
stakeholder panel (refer to Shell and several reports in the US and Japan).
Also, ING could consider including the more stakeholder-oriented AA1000
guideline (issued by AccountAbility: www.accountability.org) in the engagement with KPMG. I would also expect the supervisory board
(or a dedicated committee) to be more closely involved than is disclosed in the
report.
Regarding
the data included in the report, it has come to my attention that not all data
have a high FTE coverage (e.g. carbon, 75% coverage). Also, data related to
carbon have been extrapolated, while the reasons for and the basis of
extrapolation are not completely clear (p. 57). Apart from this, most trends
seem plausible and the limited number of restatements are very well explained.
Recommendations:
1. Further emphasize the link between
materiality, stakeholder dialogue, CSR Strategy, KPIs, and targets.
2. Increase the relevance of assurance (e.g.
AA1000) as well as the level of external assurance.
3. Further integrate the annual
reporting and increase the report’s readability by using more visuals.
Nick de Ruiter is one of the partners of Sustainalize (www.sustainalize.nl), a global CSR consulting firm which specializes in CSR, CSR reporting,
CSR strategy, performance monitoring and external AA1000 assurance.
