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Orica: Moving beyond safety, health and environment reporting

By Natalie Falzon and Katherine Evans on December 22, 2010 at 12:18pm.
Content:

Orica is a chemical and mining company with operations in Australia, Asia, Europe, the former Soviet Union, Africa, the Middle East, North America and Latin America.

Since 2007 Orica has produced a sustainability report and prior to that a safety, health and environment report. While the focus on safety, health and environment remains, Orica’s sustainability reports have successively increased their level of reporting against other areas of their sustainability performance.

Similar to their 2009 report, the Orica 2010 Sustainability Report applies the Global Reporting Initiative G3 Guidelines and provides an overview of the company’s priorities, activities and performance across:
•    Governance
•    Safety, health and environment
•    People and community
•    Product stewardship
•    Economy

To assess their performance over time, in 2004 Orica developed ‘Challenge 2010’ targets and milestones for safety and health, environment and community and more recently ten actions targeting priority environmental impacts. A clear traffic light style report card sets out company performance against these and presents a summary of performance history for key health, safety and environmental indicators.

The relationship between targets, actions and the company’s safety, health and environmental key performance indicators is less clearly articulated. The reader must compare different sections of the report to identify any linkages. Key areas of performance, such as product stewardship, people and community, do not appear to be targeted through the list of challenges and priority actions.

This however may change with Orica’s review of their sustainability strategy and the development of a new sustainability strategy framework, which they will report against in 2011. It is also encouraging that they are seeking to broaden data captured in their own Sustainability Index, which provides simple comparison of their performance year on year as measured by gross margin against direct energy, waste, water and greenhouse gas impacts, and roll it out across more of its sites.

With Orica’s operational expansion overseas and into new markets, reporting on the sustainability context and issues of local operating sites should also be considered. The GRI Sector Supplement for Mining and Minerals suggests that key indicators of performance for this sector include biodiversity, land use payments, local workforce hiring and wage procedures.


Communication:

The Orica 2010 Sustainability Report is a lengthy document totalling 179 pages. In response to stakeholder feedback about the length of the previous sustainability reports, this year the company published a two-page summary, titled Sustainability Snapshot.

The main report could also be made a lot more accessible with a few minor changes to layout, design, use of diagrams and some further summation.

The report is commendably web-based and there is an opportunity to better capitalise upon internet functionality. For example, more effective use could have been made of links to internal content as well as external URLs. A hyperlinked contents page enabling viewers to easily skip to chapters and sub sections of interest would also be handy.

Hyperlinks guiding readers to content relevant to multiple chapters in the report would avoid the need for repetition (for example, the traffic light style report cards on progress against the company’s Challenge 2010 targets are found in the Our Approach section (targets and performance) and then found again later under sections on Safety and Health, Community and Environment.).


Credibility:

Some effective communications tools are used to demonstrate balanced and transparent reporting. Traffic light indicators are used to report against targets established in ‘Challenge 2010’ and performance is presented in some cases over a six year time scale. This would be enhanced by a description of trends and an analysis of changes in performance. The use of case studies for some sections of the report (Product Stewardship, Safety and Health, Environment and People & Community) feeds reader interest and provides tangible evidence of how the company is working to achieve its targets.

Orica’s 2010 Sustainability Report has been checked by the GRI to confirm it meets the requirements for B GRI Application level, but it has not been otherwise independently audited. Orica is considering the use of external assurance of future sustainability reports and is implementing recommended improvements to their environmental data collection processes identified through a 2008 internal audit (undertaken by an independent third party).

The disclosure of a summary of stakeholder feedback on previous sustainability reports and how the organisation has addressed these adds further credibility to the report.


Recommendations:

1.    Continue to expand reporting beyond health, safety and environment
2.    Consider addressing the additional sector specific items identified in the GRI Sector Supplement for Mining and Minerals
3.    Identify further opportunities to improve readability and reduce the length of the report through improved design and greater use of web functionality
4.    Seek external sustainability report assurance

Natalie Falzon and Katherine Evans are Senior Associates at Net Balance, a sustainability advisory services firm with offices in Melbourne, Sydney, Brisbane and London. www.netbalance.com