Expert commentary 2005
Tatiana Guseva
We are pleased that two independent experts have provided us with their opinions of our CR Review this year and, with their permission, we have included their critiques here.
It is not our intention to derive credibility or authority from their personal comments, but to provide expert input into our continuous improvement processes. Just as they express their disagreements with some of the statements we have made and approaches we have taken to suit the particularities of our business, so we would wish respectfully to disagree with some of their comments. As with the comments of previous expert reviewers, we do not provide our own point-by-point commentary on their personal views.
Tatiana Guseva is a Professor of D. Mendeleyev University, Moscow and a consultant in the fields of corporate responsibility and integrated management systems. Her clients include multinational companies and regional small-to-medium enterprises. Within the framework of international projects, she collaborates with various consulting companies and non-governmental organisations (NGOs) such as the International Network for Environmental Management, the Agency for Social Information, Mott MacDonald and Arcadis Euroconsult. She is a co-author of guides used extensively by Russian-speaking practitioners, namely A Practical Guide to Environmental Management Systems (2004) and Practical Recommendations on the Development of Corporate Reporting (2003).
The 2005 CR Review is the third review issued by Imperial Tobacco Group (ITG). It reflects ITG’s performance and activities for the financial year, which runs from October 2004 to September 2005.
The 2005 CR Review is very well structured, allowing readers easily to find information they need. It is a timely-issued document that is nicely presented on paper, the Internet and as a credit-card-sized CD ROM.
SGS United Kingdom Limited has verified the occupational health, safety and environmental information and performance data, using protocols based on the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines (2002) and the AA 1000 Assurance standard (2003). Though it is clearly stated that ITG believes that its voluntary social and environmental reporting should be based on a more flexible approach than that recommended by the GRI, ITG does not disagree with key GRI reporting principles.
It is necessary to mention that GRI reporting principles are essential to producing a balanced and reasonable report of an organisation’s economic, environmental and social performance. This is why it appears to be reasonable to comment on the Review using the framework of GRI principles. This analysis is presented below.
Transparency
Full disclosure of the processes, procedures and assumptions in report preparation are essential to its credibility.
The 2005 CR Review meets this criterion to a reasonable extent, although explanations of assumptions, approaches and procedures used in the Review are somewhat spread in its text.
Inclusiveness
The reporting organisation should systematically engage its stakeholders to help focus and continually enhance the quality of its reports.
This issue was addressed by experts who provided independent comments on previous reviews. The 2005 CR Review clearly states whom ITG sees as its major stakeholders and reflects activities aimed at their engagement in the report development. During the current reporting period, ITG also obtained and assessed the views of NGOs on the corporate responsibility practices of multinational groups. This included well-known international institutions such as the International Labour Organisation, Business in the Community and the Institute of Business Ethics and organisations such as the Charities Aid Foundation, Christian Aid, Greenpeace, Living Earth, WWF and Transparency International. The only suggestion in this field is that ITG explores further opportunities for the development of contacts with national and regional NGOs in the countries of ITG operations. This seems to be reasonable both in terms of environmental and occupational health and safety performance and community investment discussions.
Auditability
Reported data and information should be recorded, compiled, analysed and disclosed in a way that would enable internal auditors or external assurance providers to attest to its reliability.
The 2005 CR Review contains a paragraph stating that occupational health, safety and environmental information and performance data have been verified by SGS United Kingdom Limited using protocols based on the GRI Sustainability Guidelines (2002) and the AA 1000 Assurance standard (2003). Therefore the report meets the auditability criterion and there is also an intention to consider, as already mentioned, other GRI criteria.
Completeness
All information that is material to users for assessing the reporting organisation’s economic, environmental and social performance should appear in the report in a manner consistent with the declared boundaries, scope and time period.
This is the most complicated position for most CR Reviews. Yes, information presented in the 2005 CR Review is consistent with the declared boundaries, scope and time period. But the Review would gain much if it was focused sooner on clear and bright examples of targets set, actions undertaken and results achieved. Those chapters where such examples are given benefit much from it, although could still be improved with discussion of progress made, not only actions taken. So far the feeling is that descriptions of priorities, policies and intentions prevail and that these discussions go into seemingly unnecessary detail. The figures provided hardly help to illustrate statements made, especially because the data graphs are provided in a different section.
Relevance
Relevance is the degree of importance assigned to a particular aspect, indicator or piece of information, and represents the threshold at which information becomes significant enough to be reported.
Experts who commented on previous CR Reviews suggested providing more information on issues affecting the sector as a whole, for example public smoking and youth smoking prevention. This is why the 2005 CR Review contains a larger section devoted to environmental tobacco smoke, public smoking and youth smoking prevention. It is interesting but the views taken and statements made do not appear to represent a balanced view and ITG seems to take a rather defensive position on some of these issues. Where the reporters address regulations and bans to smoke in public areas, they are close to losing their temper and therefore undermining the overall logic of the report. In the future, such descriptions should either be kept more neutral and substantiated, or minimised to avoid repetitiveness and to provide balanced views.
Sustainability Context
The reporting organisation should seek to place its performance in the larger context of ecological, social or other limits or constraints, where such context adds significant meaning to the reported information.
Although sustainability is neither mentioned in the title of the Review nor addressed in the text, many issues of sustainable development are raised and several actions described. Moreover, certain Key Performance Indicators (KPIs) reflect the GRI Sustainability Reporting indicators. ITG’s approach should not be criticised since it appears more open and realistic than pseudo-sustainability reports containing nothing but beautiful words. In future ITG may choose to examine and discuss in the report the role it plays in sustainable development in various regions where it operates, especially in tobacco-growing regions.
Accuracy
The accuracy principle refers to achieving the degree of exactness and low margin of error in reported information necessary for users to make decisions with a high degree of confidence.
The 2005 CR Review meets this criterion to a good extent. In some cases attempts to present precise figures (such as 561,121,934 kWh and 165,168 tonnes of carbon dioxide) look a bit odd because such figures are rather difficult to read and evaluate when they are separate from graphs, explanations and discussions.
Neutrality
Reports should avoid bias in selection and presentation of information and should strive to provide a balanced account of the reporting organisation’s performance.
This issue has already been addressed while discussing relevance. It is undeniably difficult to provide balanced text throughout the CR Review and in some cases (such as the description of ITG’s disappointment by the attitude of an international NGO that refused to collaborate in the field of HIV/AIDS prevention, or discussions of strict smoking regulations in Italy and Malta) the balance is nearly missed. On the other hand, the figures provided and facts disclosed prove that ITG is prepared to discuss explicitly its performance and follows the principle of continual improvement in its open reporting.
Comparability
The reporting organisation should maintain consistency in the boundary and scope of its reports, disclose any changes and re-state previously reported information.
It may be too early to speak of comparability as the whole culture of open reporting is very young. Previous Reviews set a good basis for further development and the 2005 CR Review contains information that allows analysis, discloses major changes and provides a rationale for new decisions made (for example in the case of CO2 emissions targets).
ITG performance is reported primarily through key performance indicators (KPIs) in the ‘our performance’ section. This is a very good approach helping to improve comparability and clarity of the Review. A system of special marks demonstrating gradual achievement of targets is very useful and helps understanding even without thorough reading of the text.
Clarity
The reporting organisation should remain cognizant of the diverse needs and backgrounds of its stakeholder groups and should make information available in a manner that is responsive to the maximum number of users while still maintaining a suitable level of detail.
The 2005 CR Review reflects a very serious intention to present information serving the various needs of very diverse stakeholders. All information presented is arranged to describe four groups of priorities (product stewardship, OHS&E management, social performance and robust processes). Possibly due to the assumption that different stakeholders would focus on different chapters of the Review, some, mostly policy-related points are repeated in several chapters. This is why it sometimes appears difficult to read the text, though facts and figures presented in each chapter are rather interesting themselves. Another suggestion is that descriptions of results of scientific investigations and approaches used, could sometimes have been shortened or kept in attachments.
In general, future CR Reviews could be shorter with more exact Internet addresses for those who wish to look for further information, not simply www.imperial-tobacco.com
Timeliness
Reports should provide information on a regular schedule that meets user needs and comports with the nature of the information itself.
This criterion is fully met and ITG does everything to make reports available soon after the completion of the financial year.
In summary, the 2005 Corporate Responsibility Review leaves a very good impression and makes readers understand that international tobacco companies can develop and disseminate factual, straight and open reporting documents containing important information on their policies, objectives, targets, activities and results achieved. Gradual improvement in this field is characteristic of ITG Reviews and this is why it is undeniable that, in the future, stakeholders of this international tobacco company will get access to even more interesting documents.
T. Guseva
