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Siam Cement Group: Setting the Reporting Standard in Southeast Asia

By Rikke Netterstrom on May 19, 2011 at 11:46am.

The Siam Cement Group is a leading business conglomerate with operations in Thailand and the ASEAN region, comprising five core business units across a range of high-impact industries: SCG Chemicals, SCG Paper, SCG Cement, SCG Building Materials and SCG Distribution. All together the Group consists of over 100 companies and has 30,000 employees.

For international stakeholders, the Siam Cement Group might appear to be an obscure Asian operation. However, for sustainability practitioners, it is a beacon of light. It is one only of a hand-full of South-East Asia companies included in the Dow Jones Sustainability Index, and has indeed earned gold-class rating. It is a sector leader in the Asian Sustainability Rating.

Content

Reading the Group’s 2010 report, it is not difficult to understand why SCG has earned top marks in SRI indices across the world. SCG can hold its own against any international report. The report has what is probably the strongest strategy and governance section I have come across in an Asian context. It sets out in much detail its risk, engagement and materiality processes, and the role which these play in determining report content, making good use of diagrams to explain complex relations succinctly and clearly.

Having determined the key material issues, the report contains a host of detailed KPIs, measurements and targets across all these issues,  and the results are impressive.

The environmental sections make good use of international standards, such as World Business Council for Sustainable Development Cement Sustainability Initiative for its cement operations, and FSC for its forestry and paper operations. All key aspects of environmental footprint is documented and discussed.

Likewise for employees. There is a detailed account of career progression systems and other employee development aspects. Health and safety reporting is robust, but could do with more narrative, e.g. explaining why fatalities have increased from 4 to 13 over the past year.

The only weak area is the community section. Unlike all the other sections, this lacks clear KPIs and links to the business. There are also some gaps in the reporting of impacts, making the community investment programmes appear as philanthropy without much strategic rationale. 

Communication

The SCG 2010 report is a chunky piece of work. At 109 pages, there is a lot to take in. The layout appears to be done as a regular word document. This makes for rather heavy reading, and is likely to put off non-expert stakeholders. As a seasoned reporter with a huge amount of data-points, it might be time for Siam Cement Group to look at alternative ways of disclosure, targeted at various stakeholder groups, e.g. by using the internet for detailed data disclosure and producing a lighter report for print and PDF.

The report also contain too many remnants of the “glossy brochure” typical of Asian sustainability reports. Use of testimonials and staged photos is incongruent to the otherwise sober tone of the report. Constructive commentaries from stakeholders and more illustrative use of photos would add more value. Likewise, the many pages of awards and pictures from awards ceremonies are over the top.

Credibility

SCG’s robust and extensive use of international standards adds significant credibility on the content side. In addition, this is one of the first Asian A+ GRI reports I have seen which actually earns this level. The Group does not resort to blanket statements to explain omissions, and has a detailed overview of the data coverage of each of their subsidiaries. For first-time GRI reporters, SCG’s slightly formulaic, but robust use of the GRI can be used as an illustration of how to get it right. Also strong is the report’s detailed narrative and illustrations on identification of risk and material issues. This is a rare occurrence and is extremely helpful to readers looking to use the report as a benchmark.

Recommendations

This is a near-perfect GRI report, and provides a fantastic contrast to other reports in the region. The main weakness is on communication:
1. Address failures.  Surely, a tripling of fatalities deserves more than a paragraph in a 100+ pages  and to be addressed in the CEO statement and the relevant managers’ statements.
2. Strengthen community section. A clear rationale for community engagement with links to business strategy and measurement of community impacts would greatly enhance the completeness of the report.
3. Better presentation. Layout could be improved, and the report would benefit from a trim, by posting some data on the internet. This would provide for a lighter, and yet more focused report. SCG could learn much from Unilever who have gone down this route successfully.
4. Remove irrelevant ‘feel-good’ aspects. Cut down on number of staged photos and awards, and add more illustrations to the narrative

Rikke Netterstrom is an Executive Director of CSR Asia www.csr-asia.com a leading provider of CSR and reporting advisory, research and networking, with offices in China, Hong Kong, Thailand, Singapore,  Malaysia,  Australia and Japan.