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Cooper Tire & Rubber Company 'Responsibility the Cooper Way': Not credible despite some glimmers of hope

By Alex Nichols on September 15, 2016 at 11:45am.

Context

Vroom, vroom, let’s go. Cooper Tire & Rubber Company is based in Ohio and is parent to a family of companies active in the design, manufacture, marketing and sale of car and light truck tires, with subsidiaries into medium truck, motorcycle and racing tires. Annual revenue in is about USD 3bn, profit at USD 354m in 2015; they’re the world’s 12th largest tyre company and employ 9,000 people.

They operate in the manufacturing and research end of things. The company’s name makes one think that they also operate upstream. They don’t (according to the report). They are looking alternatives to natural rubber (NR), however.

This is their 4th Report. So they’re on their ‘sustainability journey’, as we consultants like to call it. They are doing practical things such as auditing US sites, boosting process efficiencies, revising their supply chain guidance, and preparing a global sustainability review. Cooper participates in the WBCSD’s Tire Industry Project. 

2015 saw a 3.1% growth in world demand for natural rubber (NR), with 12.34m tons produced globally. NR usage is growing: 3.2% growth in 2016 and forecast 3.3% in 2017. NR tyre and tyre products growth: 2.0% in 2016 and forecast 3.4% in 2017. Over-supply and substitution are still issues. More than 70% of global NR production is for tyres, rubber gloves, condoms (all ‘safety’ goods). [Sources: World Rubber Industry Outlook, Review and Prospects to 2024, IRSG, December 2015; GMG Annual Report; National Geographic]. 

Rubber tapping is receiving significant global attention for its severe sustainability impacts. Notable issues include deforestation, land rights, illegal land acquisition, labour rights, biodiversity impacts and community safety. The recently-established ‘Sustainable Natural Rubber Initiative’, based in Indonesia, is an effort to respond. 

Smallholders are an important part of the supply chain for NR, and some programmes exist to promote responsible practices, such as the Thai Smallholding Rubber Agroforestry system. Leaf blight-resistant varieties of rubber tree are available but not widely used by smallholders in SE Asia, a key sourcing region. Excessive use of herbicides & pesticides is common against blight and snakes; the clearance of snake habitat and other plants leads to exposed soil and is a threat to soil integrity.

Shockingly, based on the expected growth in NR consumption, producer countries will need to add a minimum of 300,000 hectares of plantation each year to meet demand: that’s four times the size of Singapore, every year! [Source: HalcyonAgri Corporation Annual Report 2015]. Major tyre manufacturers are committing to zero-deforestation (great claim but impossible to achieve and then prove?). 

Content

Cooper is transitioning to a different reporting format later in 2016-17 and we get a 12 page report here, with no option to see any further detail. This leaves a little bit of a black hole in terms of disclosure and communications. (Why didn’t they do it at the same time?) 

Once the outgoing CEO’s message is done, we get a company profile summary and then a simple ‘Sustainability Overview’ about their sustainability self-assessment (using the AIAG’s Automotive Industry Guidance) audit process and the WBCSD Tire Project.

Then we’re straight into the plants’ environmental performance data. There’s no chapter or section headings. But, all good, they’re saving energy. That’s got to be done if you make tyres, hasn’t it?

Safety section next (heralded by a section header). It’s clearly a summary section. There’s some detail however, and they indicate that their systems are working and they are responding to performance issues. 

Then we get to read about their Tread Wisely product education campaign. They target young drivers to be more careful at the wheel.  

Following that is Community Engagement: citizenship, donations, and the slightly tritely named Dream it Do it program. Good cause (creating jobs, attracting future talented employees), but terrible name!

Product innovation comes next, weirdly. I say weirdly because this surely belongs at the top of the report? Cooper claims to be “the lead entity in the Biomass Research and Development Initiative (BRDI) to conduct research on developing the guayule (pronounced why-YOU-lee) plant as an alternative natural rubber source for the tire industry”.

Attached to rubber sourcing are significant sustainability issues that tyre producers need to be tackling (many are, of course). The secretariat for a recent SE Asia supply chain event in Singapore lists the top 15 issues that large companies in that region are working on, and that NGOs and scientists flagged up as important. Land rights relating to palm oil, timber, rubber are highly relevant. Rubber and deforestation is singled out alongside hot button issues such as government engagement, biodiversity, labour conditions (the latter is, I should add, echoed in the AIAG guidance).  

So, is Cooper “quietly” getting on with research, testing and development of NR substitutes? Known to be a conservative industry, are Cooper hiding something good under a bushel? Is their strategy to find a substitute (it appears to work according to track tests) and then phase out dependency on Hevea Basiliensis – the primary source of natural latex?

If so, they should say this, loudly! They certainly seem capable of achieving results: they claim that “Cooper was successful in developing technologies that exceeded the [U.S. Department of Energy’s Office advanced tire technology] project’s goals: delivering an average fuel efficiency improvement of 5.5 percent and weight reduction ranging from 23 percent to 37 percent in concept tires.” There follows a little bit of content on product awards. 

Right at the end is the bit about Cooper’s values, and how they believe in them. If I want to I can use to the contact information to reach Tom Wood, Director of Global Environmental Affairs, by email and phone (a good thing). I am guessing there is no wider sustainability remit yet for Tom, so the report is shaped with his agenda in mind. 

An Environmental Policy pdf is available on the company website.

Communication

The writing style is, at best, OK. It’s ‘Annual Report territory’, so no spark or buzz. I am not sure at whom the Report is targeted. And there is not yet any link to any social media or online channels. 

I am always intrigued when (mainly US) companies put ‘CSR and Sustainability’ in the title. So I kind of expect a report in the classic mould/mold. One that is attempting to meet the needs of the community investment team (perhaps) as well as one that is trying to streamline itself, ready for the new modern era of corporate disclosure on sustainability risk and opportunity. 

The “Power of AND” introductory piece is quite odd. If a Report can have a “tumble-weed moment” then this is it. There’s no real need for this kind of marketing editorial device (I am being polite here). It does no credit to a Report of this type. The content here should be about why this report, what are we trying to achieve with it, who is it for, how did we do it?   

So what’s going on? There is a little bit of a mix of styles and devices. It is mainly a brochure style Report, squeezed into 12 pages. There is no attention to making an appealing design. I respect a simple, design-free approach (don’t tell my design partner at AB Design Ltd, though!), but if it’s used, then the content has to be top notch.

The report is laid out in a business-like manner. It is professional, but sober (read dull). The structure is curious – why not put the most interesting and material content up front?

The imagery is in many places irrelevant and uncaptioned (eg front cover, inside front cover, page 5). 

Credibility

To be honest I was quite excited about a tyre company’s 12-page Sustainability Report!  I imagined a fine materiality process, dynamic senior vision and concise stakeholder value reporting, all coupled with an online repository for the geeky stuff and a brilliant infographic depicting performance. Alas, no. 

According to the Report, a formal assessment of what are the most material issues has not been done. They mention use of the Automotive Industry Action Group (AIAG) guidelines and customer feedback, in their sustainability self-assessment process. But this is not described as a materiality assessment. They talk about what the self-assessment ‘addressed’, but many of those topics are ignored in the 12-page Report. 

Note: AIAG is a not-for-profit founded by “visionaries from […] Chrysler, Ford, and General Motors [including in the membership] Toyota, Honda and Nissan, and many of their part suppliers and services providers”. Stakeholders include academia and government.

There is no information about governance arrangements or stakeholder engagement in the 12-page Report. They touch on the subject of ethics but it is taken no further. 

Balance: Cooper seems to be OK talking about negative aspects – eg safety in 2015 not going to plan. Some plants are better than others though.

Plant performance reporting comes across as honest. Product education performance is reported as “In all, the campaign created 85 million audience impressions”. What does that mean? Admittedly it’s tricky to assess product safety campaign results. They use auto-racing personalities to spread the word using school visits etc and they team up with other groups (eg, not-for-profits) to reach their target. 

They are about to move to a different format which is GRI G4 compliant.

So, all in all, they do not present a report that can be claimed to be credible. Its alignment with GRI is not possible to ascertain yet due to the imminent new reporting format. There is no external comment, validation or assurance.  

In the end, given the content, the design and the work behind the scenes, I am still not sure what actually is “Responsibility the Cooper Way”. Instead of being clear - as the company zooms forward in a cloud of tyre smoke - I feel a little underwhelmed and saddened as it ground to a halt all too soon!

Recommendations

Be clear about why you are reporting.

Use a formal materiality process and tell us what you did.

When you are in an industry connected with sensitive issues that is increasingly under scrutiny, use templates and data platforms with care, as part of a mix of content management and reporting tasks.

Articulate your strategy on sustainability risks and opportunities.

Consider assurance or some form of stakeholder comment.

Tell us about your sustainability governance arrangements (even if there are none in place). 

Caption your pics.

Be brave – now is the time to tackle the issues and share what you’re doing about them.

Alex Nichols runs international consulting projects for business on sustainability reporting, strategy, materiality assessment, stakeholder engagement, assurance and training. Alex is also Associate Director at Paia Consulting, Singapore, Senior Associate Consultant with IMS plc, Bristol, and a Senior Associate Consultant with Gorham & Partners mining strategy and research firm. www.alexnicholsconsulting.com   |  www.paiaconsulting.com.sg