Benchmark season is coming!

While most of us are still busy finishing up our annual reports, invitations are already starting to roll in for benchmarks like the Carbon Disclosure Project (CDP) and the Dow Jones Sustainability Index (DJSI). With a well-deserved break within reach after the long days and short weekends that accompany the reporting months, suddenly the benchmarking season starts and you need to start running again.

But it doesn’t have to be like this. To help you, here are our 5 tips for a more relaxed benchmark season.

Tip 1: Start now

We regularly see companies starting too late with their benchmarks. This puts a lot of pressure on the organisation. At the very last moment the hunt for crucial information begins and you are depending on colleagues that don’t have benchmarking at the top on their priority list. Favours are asked and given, frustration builds, and the information obtained is often of a low quality. Just before the deadline, the sustainability officer is processing all the input, editing the questionnaires, and trying to add as much information as possible. Once again facing long days and short weekends.

So why not do it differently? Think of announcing the opening of benchmarking season early in the year. Organize a working session with key people in the organization during which you celebrate last year’s success and look ahead. Emphasise the value of involved colleagues’ contributions and provide insight into their role. Set up a detailed planning schedule and communicate continuously on deadlines and input. Doing so makes sure everyone can prepare themselves for their involvement in the project.

Tip 2: Involve higher management and the board

To obtain a high score, you need to depend on the specialists in risk management, carbon management and health & safety matters, to name just a few. Although the entire company benefits from a higher rating or score, most colleagues probably won’t be too eager to participate. They will need a little nudge in the right direction and it surely helps if a senior decision maker creates a sense of urgency. Additionally, in many cases the board is keen on a high positioning in the ratings and benchmarks, but doesn’t get involved enough. Make sure to focus on senior management involvement and creating that sense of urgency. It gives an almost direct improvement on the scores and makes the lives of sustainability officers a little easier.

Tip 3: Integrate and combine

We know that larger corporations have to deal with many different ratings and benchmarks. Just think of CDP, DJSI, FTSE4GOOD, Oekom, Vigeo, Sustainalytics. You may feel as if you keep asking your colleagues for the same information over and over, for different purposes. And that’s exactly the case!

Luckily, the overlap between the different rating schemes is increasing.  For instance, your CDP questionnaire can be uploaded to DJSI and different benchmarks are tying their questions to the GRI G4 indicators.

It may be  a useful exercise to make a complete overview of all the information you’re going to need and how it relates to G4. You can then arrange that the requested data and content for the annual report can also be used for benchmark purposes. You’ll only need to ask for information once instead of multiple times, you’ll be more efficient, and you’ll also keep your colleagues happy!

Tip 4: Establish a data trail

Most of the time the information you need to provide to the rating schemes is about 80% to 90% the same as the year before. Policies, procedures, key risks and important programs probably don’t change on a yearly basis. It’s therefore worthwhile establishing a data trail of the information you have provided to the different rating schemes. Simply secure basic details such as which department provided what information and how data was gathered and consolidated. This allows you to quickly gather base information for the benchmark or rating you are complying with and to build from there.

Tip 5: Don’t be the judge!

Too many times we see companies not sending in useful information to rating agencies because they doubt if it is good enough. Yet for most of the rating schemes it is not very clear how the criteria are to be interpreted,  so making such a call is dangerous. It’s better to work within a broader interpretation of certain requirements, send in information you think is relevant and let the rating agency judge. This allows for more specific feedback from the rating agency on the information provided and you’ll know where to improve and how.

Conclusion

While the administrative burden of complying with benchmarks and ratings is still considerable, we believe that with some changes the life of your sustainability officer can be made easier. Getting the right people involved, working according to predefined procedures, and the ability to provide valuable information are important prerequisites. After all, it would be a missed opportunity if your company’s sustainability performance was not reflected and recognized fully in the important benchmarks and ratings.

Nick de Ruiter is a partner at Sustainalize. He is a specialist in CSR strategy setting, benchmarking and performance monitoring.

Wouter van ‘t Hoff is a consultant at Sustainalize. He specializes in a variety of areas including sustainability benchmarks and ratings such as CDP, DJSI, and the Dutch Transparency Benchmark. 

Buckle up, 2016 has something sustainable in store for you!

2016 has officially kicked off. We expect that this year is going to be a great year for organisations that invest in sustainability and corporate responsibility. From ambitious new targets to trending tools: read on for our predictions for 2016.

-          COP21

The international climate change conference held in December 2015, COP21, has led to an international agreement that aims to limit global warming to 2 °C. In response, governments will likely start formulating policy measures on a national or even regional scale. We expect that more stringent energy targets will be set in 2016, demanding more from businesses in the near future. See our December blog for what your business can expect from the COP21 outcome.

-          The Netherlands as EU president

The Netherlands holds the presidency of the European Union from January 1 to June 30, 2016. Innovation and a forward-looking climate and energy policy are just a few of the topics that the Netherlands wants to focus on during its presidency[1]. The aim is to create a more future-proof model for sustainable growth. This will provide opportunities for business to benefit from this momentum by jumping on the bandwagon of sustainable innovation and energy management.

-          Sustainable Development Goals

In 2015 the United Nations updated their Sustainable Development Goals (SDG). These human development targets have been renewed for the 2015-2030 timeframe. In particular in Belgium, the SDGs are increasingly being used to frame sustainability efforts. We expect that the popularity of the SDGs will increase even further in 2016 and that they will also make their entry into the Dutch CSR arena.

-          IIRC - Integrated reporting and strategies

Integrated Reporting is gaining ground in corporate reporting. In a relatively short period it has changed the reporting landscape and connected the report more closely to the company that is behind the report. It has also become a starting point for integrating sustainability within the core business strategy of organisations. We believe that in 2016 integrated reporting will become the standard for how most businesses communicate their (non-financial) performance. We expect more value chain reporting, more integrated and interconnected information, and more forward looking and strategic reporting.

-          Impact Measurement

An important element of integrated reporting is the focus on creating value and having a positive impact. More organisations will be judged by their stakeholders on the value they create, in particular social and environmental value. As already described in our November Blog, insights into the impact of your organisation can create substantial benefits for business. In 2016, organisations will continue to develop and use various methods in order to map the value they create for society. 2016 will be the year in which we expect several more ‘Puma-cases’ of impact monetization and environmental/social profit and losses.

-          Big Hairy Audacious Goal

Companies taking sustainability serious tend to set mega-targets or ‘Big Hairy Audacious Goals’. We expect that more companies will formulate BHAGs and follow frontrunners such as Unilever and Philips in developing a bold vision statement. In our client base, we see many companies considering such a target. Most organisations see a BHAG as the most inspirational means to clarify their goal. It is not important whether you accomplish the goal or not, it is more of a unifying focal point for a company’s effort. It is a true differentiator and lifts your external communication, marketing and reporting to a next level.

Conclusion

2016 has something sustainable in store for you! With all these trends for 2016, it appears that sustainability will continue its trajectory of becoming a more mainstream element of doing buisness. This is a good development for society at large, but it will become more challenging to stand out from the crowd. Luckily, there are numerous methods and tools that you can use to tailor your sustainability strategy. Be it inspiring BHAGs or outstanding sustainability performance. Use this to your advantage and try to keep in mind the following message: distinguish your business from the others - be a leader in something!

Nick de Ruiter is a partner at Sustainalize. He is a specialist in CSR strategy setting and performance monitoring.

Mart van Kuijk & Marcella van Steenbergen are consultants at Sustainalize. They specilize in CSR reporting and impact measurement and -monetization. 

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[1] http://english.eu2016.nl/eu-presidency/input-and-priorities

Act now: Take the initiative for COP21

Should businesses wait for explicit targets from policy makers in order to start mitigating climate change? No. From November 30^th to December 12^th, 2015, the 21st Conference of Parties (COP) took place in Paris. For 12 days representatives of nations and various organisations gathered in Paris to formulate a universal agreement on climate mitigation and adaptation. This agreement aims to restrict the maximum warming of the global temperature to 2 degrees Celsius. However, past conferences have not brought what the world was hoping for: a concrete, global carbon emission policy. Companies are therefore increasingly taking matters into their own hands and setting up ambitious projects. And so can you!

What does my company have to do with COP 21?

Diplomats and heads of state recently gathered in Paris and, for the first time, each of the represented nations listed concrete proposals for future climate policy. For example, the European Union and its Member States are committed to a binding target of at least a 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990[1]. The United States intends to achieve an economy-wide target of reducing its greenhouse gas emissions by 26-28% below its 2005 level in 2025[2]. Although democratic institutions are not usually known for their decisiveness, The COP21 agreement aims to achieve a significant decrease in carbon emissions.

The intended decrease in carbon emission can have a wide range of implications at a company level. Countries can make laws on energy efficiency, they can come up with taxes on carbon intensive products (including fossil fuel use), or they can impose increased import tariffs on unsustainably managed forestry etc. The impact of these measures differs per type of business and per sector, but it most certainly has an impact, either direct or indirect.

Be a frontrunner, not a laggard

In the light of these important developments, companies are realising that the outcome of COP21 may affect their business proposition. But instead of waiting for politics to unfold, the business world is using the momentum created by the Conference to show initiative. Corporations like Danone and Unilever are voluntarily pledging to stringent emission targets[3]^,[4]. Furthermore, the CEOs of 78 major companies, including Siemens and HSBC, have called on world leaders to include carbon pricing in a global climate deal at COP21[5]. Even major oil and gas companies (BG Group plc, BP plc, Royal Dutch Shell, Statoil and Total SA) have, Taking the summit in Paris into consideration, set out their position in a joint letter to introduce carbon pricing systems[6].

These companies have already started recognizing and identifying the implications of a changing climate on their business proposition. By anticipating the outcome of COP21, they are taking a pre-emptive approach to prevent any potential damage in the future, or to improve their position in the market by grabbing the first-mover advantage. Those who move quickly may generate not only a head start on their future targets, but also a competitive advantage from a boost in reputation or increased efficiency.

So what can you do?

For companies that want to anticipate on a changing climate, there are several options for a climate change strategy. For an organisation that wants to get involved with climate change action, it is sensible to formulate a clear strategy plan. Should the focus be on mitigation or adaptation? What targets do you want to set? Here it can be useful to first map the impact on your business so that you know where the easy wins and biggest challenges are. With this knowledge, you can build a strong plan to act on.

A second step in corporate climate management is measuring your impact. CO₂ footprint, Life Cycle Assessment, and impact monetisation are all methods that can be used to gain an insight into the impact of your business practices. Not only do they measure the impact on the climate, but some also provide data on other environmental factors, which could prove to be valuable information in reducing your impact, or, costs.

To harness the beneficial effect on your business’ reputation, it is vital to report on your efforts. Reporting is a great tool to track and communicate progress. On the topic of climate change, numerous big corporations take part in the Carbon Disclosure Project (CDP). The CDP requires an organisation to report on its climate performance, risks and opportunities, and strategy. The outcome is a dual score: one for the actual performance of the organisation, and one for the quality of the disclosure. The performance score is relative to other organisation in the specific industry, making it easy for a organisation to compare itself with its competitors.

Jump on

While bureaucracy is typically a slow-paced environment, companies are much better equipped for fast change. In fact, as an early mover, you can prepare yourself for future regulations while you reap the benefits of being progressive. So don’t wait for the COP21 outcome. Use this momentum to get your company in the leading group in the battle against climate change now.

Nick de Ruiter is a partner at Sustainalize. He is a specialist in CSR strategy setting and performance monitoring. 

Misha Elkerbout is a specialist in life cycle analyses, impact monetization and CSR performance improvement.

Marcella van Steenbergen is intern at Sustainalize with a profound interest in CSR, CSR strategy setting, impact measurement and CSR reporting.

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[1] Latvia/1/LV-03-06-EU INDC.pdf

[2] U.S. Cover Note INDC and Accompanying Information.pdf

[3]http://www.danone.com/uploads/tx_bidanonepublications/DP_DANONE_Climate-Policy_EN_091115.pdf

[4] http://www.theguardian.com/environment/2015/nov/27/unilever-to-stop-using-coal-for-energy-within-five-years

[5] https://agenda.weforum.org/2015/11/open-letter-from-ceos-to-world-leaders-urging-climate-action/

[6] http://www.shell.com/global/aboutshell/media/news-and-media-releases/2015/oil-and-gas-majors-call-for-carbon-pricing.html

It’s all about the money: Turning non-financial indicators into financial impact

‘Accountants will save the world’ was what Peter Bakker, president of the World Business Counsel for Sustainability (WBCSD) in 2013[1] stated about how companies should measure and compare their sustainability performance. Although he didn’t say how, he was right. This is reflected in an upcoming trend; the emergence of different methods to measure and compare non-financials such as the environmental and social impact of organisations. These methods are often based on quantifying the outcomes of an organisation in financial terms, better explained or popular named as the monetisation of impacts. Considering the early development phase in which these methods are currently positioned, a variation in design is apparent, and no ‘dominant design’ has evolved yet. Therefore, to get a clear view on these developments, this blog outlines the current state of monetisation methods and will explore why monetisation of impacts is important to organisations.

Why monetise impact?

Valuing impact can create several opportunities to organisations, as they gain insight into the organisation’s impact on society and the environment:

• Better overview of risks, which can be foreseen in an earlier stage.  This can prematurely mitigate potential problems and greatly improve decision making.
• Comply with the growing demand from stakeholders that increasingly ask for a larger focus on non-financials.
• It can reduce costs because of a better understanding of the internal processes (e.g. allocating resources and the impacts of safety and energy reduction), and could foster new innovations.
• From an external perspective, there is an opportunity for improved communication as society requests more transparency. 
• Consumers and future employees are increasingly appealed to buy and work for ‘responsible’ and/or ‘sustainable’ organisations.

Integrating Impact

Our world is full of societal and environmental challenges, and it seems obvious that we are in need of a system that is able to provide us with insight into the actual impact of our choices. This is also echoed by the International Integrated Reporting Council[2], which states that the value that an organisation creates is based on four stages. Namely, the input-, business model-, output- and outcome stage (more information on this value creation model is provided in our last blog on Integrated Thinking[3]). These four stages eventually result in the impact an organisation has on the environment and society. But how can organisations translate different impacts into a monetary value? A lot of organisations are experimenting with methods to monetise their impacts. Although there is no leading method yet, monetisation seems to have great potential for organisations to improve their performance. Therefore, some assistance is needed. At this moment, only several experts are able to provide this service. Albeit the market for providing this service is still relatively small, it is growing and shows a promising future. Should your organisation be on the sideline waiting for this market to move forward or engage in an active manner by experimenting with this method?

Best practices

Several organisations are experimenting with new methods of monetising impacts. Currently, they differ largely on their scale of application, namely by product, project, region or organisational scale. PUMA was one of the first organisations that monetised the environmental impact of its product. They used a method that calculated the true costs producing a pair of shoes by incorporating environmental costs into its production costs. Based on this information PUMA has made drastic changes and now aims to find alternative substitute leather types. The PUMA case dates back to 2011, however other have followed since then, such as Natuurmonumenten. This is the largest nature conservation society in the Netherland. The organisation monetised its impact of societal services such as CO₂ storage, particulates storage and natural water purification. With this method they found out that nature conservation does not halt economic development but instead is an important carrier for economic recovery, which strengthened the organisation’s license to operate. On a more regional scale, Heineken aimed to quantify the effects of its activities by performing socio-economic impact studies in several East African countries. This greatly helped the organisation’s management to make better business decisions based on actual facts on the impact it has on society. This study also gave insight in how Heineken could help to increase the yields of small-scale farmers, which indirectly improved their sales and income. These organisations have benefited from monetising impacts, but we believe many more organisations can benefit from this approach.

Monetization will repay your efforts

The main goal of impact monetisation for organisations is to better allocate resources in order avoid or decrease negative impacts and/or to increase the positive impacts. This is endeavoured by taking into account the different values of these impacts in different contexts, and thereby gaining a more comprehensive view of the total impacts of an organisation on society. It should however, be noted that monetising and valuing an organisations impact is not an ‘one size fits all’ approach, is organisational specific and requires a high level of insight in an organisation’s impact. Nevertheless, despite the initial effort that the monetisation of impacts requires for organisations, these are in our opinion most definitely outweighed by the benefits.

Nick de Ruiter is a partner at Sustainalize and has produced several Integrated Reports. He is also a specialist in CSR strategy setting and performance monitoring.

Mart van Kuijk is intern at Sustainalize. He is writing his master thesis on impact measurement and impact monetization.

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[1] https://hbr.org/2013/03/accountants-will-save-the-worl/

[2] IIRC, 2014 (http://integratedreporting.org/wp-content/uploads/2015/03/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf)

[3] Integrated thinking: how to smartly visualise your unique selling points (http://cr-reporting.blogspot.nl/2015/10/how-to-smartly-visualise-your.html, 2015, 2015

Integrated thinking: how to smartly visualise your unique selling points

Recent developments in integrated thinking aim to strengthen the emphasis on the unique qualities of an organisation. Business strategies containing merely a standard set of social, environmental and economic aspects fail to add real value. The International Integrated Reporting Council (IIRC) and the Global Reporting Initiative (GRI) nudge organisations to include aspects which are material and have an actual impact on the organisation. Besides including material aspects in the strategy and report, it is important to establish the actual added value of your organisation.

Integration is key

When it comes to sustainability the focus is often put on the (integrated) report. Although the report is an excellent tool to communicate to your stakeholders, it is merely a tool and not the goal. As the IIRC explains, the purpose of integrated reporting is “to explain to financial capital providers how an organisation creates value over time”[1]. In order to actually reap the benefits of integrated reporting and creating actual value, an integrated strategy is required. Organisations should be able to clearly answer the following questions: how does your organisation distinguishes itself, how does it add value to your stakeholders, and how will your business model sustain in the future. Answering these questions and defining the value creation process can help your stakeholders to understand your value proposition, legitimises your business and smoothens the process of strategy setting.

The struggle continues

Many organisations however struggle with the value creation process. A common practice is to solely add a visual of the value chain in the report. Unfortunately, this approach fails to fully capitalise the value creation process into an integrated, profitable long-term strategy. Not to mention that it ignores to provide stakeholders with the ‘bigger picture’. In the end, the current practice might have the opposite effect of what was intended to be a helpful tool to strengthen businesses.

As the struggle continues this raises the question, how to integrate the process of value creation optimally? Below we describe a couple of important actions which are helpful in creating and integrating the process of value creation in the decision making process of an organisation:

·         If you reflect on the inputs,…

Which inputs are essential to your organisation, what do you need to keep your organisation running? Financial instruments are the first aspects that come to mind, but usually these are only a small fraction of the total inputs. A financial institution such as ING, depends most on human and financial assets. A chemical manufacturer such as AkzoNobel, on the other hand, dependents utmost on natural resources and innovation. Most organisations employ several assets simultaneously (both tangible and intangible). By further specifying and, if possible, quantifying these inputs (e.g. the number of employees, the financial investments or the amount of materials bought), the organisation will be able to internalise the first step of the process of value creation.

·         …describe the business activities and the unique properties of your organisation,…

Once established which inputs are needed to keep your business going, it is time to reflect on the business model. The aim is to describe the business model by identifying what distinguishes your organisation from its competitors. In order to do so, one should be able to reflect on the unique properties of the organisation. In other words: what makes your organisation unique? ROCKWOOL for example uses product differentiation by providing a high quality product with better results than competing products, namely non-flammable stone wool as isolation material. Another example is Interface, it differentiates itself by its Mission Zero, which sets out that Interface is to be the first company that is fully sustainable. Interface aims to achieve its mission through innovative thinking such as producing sustainable yarn, using methods to recycle yarn and reinventing its service by also leasing carpets.

·         …the outputs and outcomes follow naturally.

Essentially, what goes in, must come out. Thus explaining the outputs i.e. key products and services provided by your organisation. The assets as described in the first (input) stage are retrieved and translated into outputs. Subsequently, these outputs should be converted into outcomes. Outcomes describe the actual (positive and negative) impact the organisation has on its surroundings. This also includes internal and external consequences, and preferably outcomes which are quantified or even monetised. Both TenCate (page 20-21) and Avalex (page 12) provide valuable examples of a translation into (qualitative) outcomes in their latest annual reporting.

·      Integrating these insights increases the potential of an organisation

As described above the process of value creation and the corresponding value chain should be internalised and custom made to your organisation. The aim is to specify what distinguishes your organisation from its competitors, and how your business adds value to both its stakeholders and yourself. By focusing on the unique strengths and areas in which your organisation has the most important impact, it can improve its decision making process. Namely, the organisation is better informed on the relevant financial and non-financial indicators. Moreover, being fully aware of the value your organisation creates, will help to create a competitive advantage, may improve the resilience of your organisation as it improves the awareness of its strength and weaknesses, potentially increases sales, and boosts your reputation because now you have a coherent and clear story to tell.

Nick de Ruiter is a partner at Sustainalize and has produced several integrated reports. He is also a specialist in CSR strategy setting and performance monitoring.

Alissa Daurer is consultant at Sustainalize and is a specialist in value creation, the assessment of materiality and GRI G4.

Sustainalize (www.sustainalize.nl) is a global CSR consulting firm that specializes in CSR, CSR reporting, CSR strategy, performance monitoring and external AA1000 assurance. Sustainalize’s client base consists of larger corporations across all sectors.

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[1] Source: The IIRC. (2015). “Get to grips with the six capitals”. Retrieved from: http://integratedreporting.org/what-the-tool-for-better-reporting/get-to-grips-with-the-six-capitals/

Better government decisions through the integration of non-financial information

Although much has been said about the public sector lagging behind in terms of integrated reporting, research shows that integrated information and stakeholder engagement enable public sector pioneers to make better decisions, attune strategy to society’s needs and consequently create more public value or a better balanced budgeting system.

Integrated reporting was one of the topics of the conference on THE ROLE OF PROVINCIAL/REGIONAL AND LOCAL GOVERNMENT IN MAKING GOVERNANCE MORE EFFECTIVE, ACCOUNTABLE AND INNOVATIVE, held by the School of Public Leadership, Stellenbosch University, South Africa, August 19-21, 2015. 

Public need for understanding the creation of public value 

In many governmental organizations, much effort has been made to improve the quality of public administration. Attempts from different perspectives, but with the same underlying goal. In order to improve governance, much effort is aimed at developing organizational structures and leadership role models to support improvements in policymaking and decision-making. The increasing importance of governance has been a trend for several years. Linking outcomes to organizational activities as a basis for effective governance is a complex matter. It is often referred to as “an ongoing challenge" to be able to demonstrate a logical and explanatory relationship between public sector activities and societal outcomes. Simply linking outcomes and activities is not sufficient for a comprehensive understanding of the creation of public value. 

Integrated information improves the creation of public value 

With case studies and practice reviews, Hans Bossert (School of Public Leadership, University of Stellenbosch) and Lianne Dijkstra (Sustainalize) substantiated that integration of non-financial information improves government decisions. Their study confirmed the hypothesis that integrated information leads to better government decision-making, i.e. decision-making that is more focused on the process of public value creation and stakeholder engagement.  Use of information on the effectiveness of the organization’s strategy and policies as well as its efficiency and legitimacy leads to more efficient and productive allocation of capital for public value creation. 

Improved management decisions through stakeholder engagement 

Bossert and Dijkstra’s case studies regarding the 2014 annual reports of Avalex and the NOM also showed that stakeholder involvement in the reporting process plays a crucial role. For one, involvement will result in better management decisions, due to a better understanding of what stakeholders expect of government organizations’ creation of public value. In addition, providing stakeholders with integrated information facilitates better understanding and articulation of governments’ strategies, which in turn will improve stakeholder engagement.

Integrated reporting enables government organizations to better attune strategy to society’s needs 

Comparative case reviews of subnational government pioneers in integrated reporting show a clear correlation between the business model, the outcomes and the impact on society. In their annual reports, the cities of Melbourne, Warsaw and Johannesburg claim that by managing and disclosing both their financial & non-financial performance data, their strategies will be better attuned to society’s needs. Furthermore, the case reviews show that (subnational) government organizations apply leading protocols and standards on governance and integrated reporting (King III, GRI-G4, IR) in order to link outcomes to their business strategies and provide internal and external stakeholders with insight into how they intend to address sustainability issues.

Conclusion: the results of the study call for (subnational) government organizations to follow in the footsteps of public sector pioneers and private sector organizations in terms of integrating non-financial information and being transparent and accountable regarding their public impact.

Lianne Dijkstra is consultant at Sustainalize (www.sustainalize.nl). A globally active consulting firm that specializes in Integrated Reporting, CSR, CSR Reporting, CSR Strategy and performance monitoring in the private and public sector. 

Bavaria: well on their way

Company:

Bavaria is the biggest independent brewery in the Netherlands, and the only brewery with its own source of natural mineral water. Bavaria is a 100 percent family-owned business, and currently run by the 7^th generation of the Swinkels family. Its roots date back to 1680. Bavaria produces 6 million hectoliter of beer a year, of which 65 percent is exported to more than 120 countries. Besides beer, Bavaria also produces malt, soda, cereal extract and water. Its net sales exceed €500 million and Bavaria employs about 1,000 employees. Bavaria’s headquarters is situated in Lieshout, the Netherlands, and it has 4 subsidiary companies in Spain, France, Italy and the UK.

Content:

At first sight, Bavaria’s 2013 CSR report looks good, especially as it is well organized and easy to read. It is clear that Bavaria is aware of its impacts on the (business) environment, and takes a proactive approach. A good example is the project “Boer Bier Water”, for which Bavaria works closely together with local parties, such as farmers, to address local issues like draughts. Although I applaud Bavaria’s good intentions to demonstrate the importance of stakeholders, it is a bit unusual to elaborate on the stakeholder engagement even before introducing the company and the report itself. I do not know whether this was done intentionally, but it seems a bit superfluous, as Bavaria shows its stakeholder dedication throughout the entire report.

Although I believe that the report is already quite far developed, I feel there are some opportunities to help bring the report to an even higher level. One point for improvement ceould be the completeness of reported data. Bavaria chose to solely report data of Dutch operations, since it only brews its beer in the Netherlands. However, as a globally active company, one could imagine that this scope can be expanded. Take for example the new developments in Ethiopia, where Bavaria bought a 54% share in a new brewery called Habesha. What is interesting about this arrangement, is that the other 46% belong to almost eight thousand local investors. It would be nice if Bavaria were to report on these kinds of topics in their next report.

Bavaria explains that it is currently working on a new “Master plan” for its sustainability strategy. This plan includes further development of its ambitions and goals, and, among other things, incorporating a materiality analysis. Firstly, such an analysis can bring the strategy (and report) to a higher level by strengthening its focus on key issues. Furthermore, even though I believe that Bavaria is already addressing most of the important issues, a materiality analysis can produce surprising new topics. Moreover, the materiality analysis can stimulate Bavaria to make choices with regard to its objectives, especially as out of the 8 current themes, Bavaria developed 29 objectives. Managing that many objectives automatically results in a loss of focus. In addition to a materiality analysis, I would encourage Bavaria to include more information on its value chain, and in particular to add a visual of this value chain. Describing the value chain would depict what Bavaria’s business model is and how added value is generated for stakeholders. Also, reporting on the value chain would also result in closer alignment to the principles of GRI G4 and the International Integrated Reporting Council (IIRC).

Communication:

Finding the Dutch report online proved to be easy, unfortunately this is not the case if someone is looking for the English report. The fact that the report seems to be only available in Dutch appears odd, considering that Bavaria is active in over 120 countries.

While the report is easy to read, my impression is that it consists mostly of ´dry´ text. I would recommend Bavaria to add more visuals throughout the whole document. Visuals increase the attractiveness of the report. They invite the reader to read the actual text, while at the same time clearly show what is most important. Moreover, although Bavaria presents several overviews with figures in the appendices, not all of these figures are of great relevance. The materiality analysis can also help with this aspect, by selecting the most relevant issues and reporting on Key Performance Indicators (KPIs).

Credibility:

Bavaria has engaged Lloyd´s Register Quality Assurance (LRQA) for the assurance of its sustainability data. I particularly enjoy the fact that the assurance statement is written as an advisory report, because this is easier to understand for the general public. However, some confusion arises by the verification approach, which is compiled of principles and best practices of: AA1000AS, ISAE3000 and the Dutch NIVRA 3410n. As a combination of three standards is used, it is rather difficult to retrace the actual verification approach. The CSR report also raises several other questions regarding the transparency and completeness. For example, the fact that CO₂ and NO_x emissions data were excluded from LRQA’s verification and verified by another consultant.

Recommendations:

• As a globally active company, consider expanding the scope of the report by including the other countries of operation as well;
• It is our recommendation to bring further focus in the report by performing a materiality analysis;
• We would suggest to include information on and  a visual of Bavaria’s value chain;
• Bavaria could ask LRQA to improve the transparency of the verification approach.

Nick de Ruiter is a partner at Sustainalize (www.sustainalize.nl), a global CSR consulting firm that specializes in CSR, CSR reporting, CSR strategy, performance monitoring and external AA1000 assurance.