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A good platform for future reporting

By Elaine Cohen (BeyondBusiness) on February 07, 2009 at 4:20pm.

One-line summary: A platform for a most consistent and comprehensive second report

Content:

Having grown up with Kellogg's conflakes as a kid in England, this report is particularly appetizing (pun intended!) It's a first report for a large corporation, so I have high expectations. Quick flick through the index. What's missing? Oh, that little thing called corporate governance. But, whew, it's there, in the CR strategy section. In fact, this is a good report, quite comprehensive, good logical flow and well presented approach to materiality. The report covers all of Kellogg's businesses with the exception of acquisitions. Good summary data which helps us get a feel for the scope of the Kellogg business. And in general, the core issues for a food business such as Kellogg are well-discussed – obesity, responsible marketing, nutritional value of cereals and other foods, malnutrition and food insecurity etc. And core supply chain issues are addressed, including food ingredient safety, traceability etc.

Kellogg global nutrient criteria include a maximum 200 calories per serving as an upper threshold of marketing to kids. Good progress. But what about how much kids eat in a serving? If they are anything like my kids, a serving is pretty much half the box. I think this is a good example an opportunity to take responsibility just that little bit further. Get some data on how much kids actually eat per meal, and think about a measuring system which helps educate them on what size a serving really is.

There is good reference to supplier raw materials safety and conduct monitoring. It would have been nice to see a little data about how many audits were actually conducted and whether any suppliers were rejected due to failing to meet standards. Just a little too much policy and a little too little data for my critical eye. However, purchasing from 300 minority or women owned businesses is a good thing, though I would have welcomed an explanation of what ‘second tier diversity purchasin’g is. Environmental data, energy, emissions, water consumption and waste are presented in absolute figures as well as per metric ton of food over three years, which gives good context. Kellogg use recycled paperboard in their carton manufacture. Another opportunity here would be to take responsibility to support consumers returning cartons for recycling. Or look at some form of refill packs? Indirect impacts.

In the community section, Kellogg maintains a strong tradition of "strategic corporate philanthropy". Cash donations. They also do something called "brand philanthropy" which is not defined. I suspect it means making charitable contributions in the name of a brand. I guess most of us would call that marketing. The community development section is about things that Kellogg did in 2008. Make you wonder what they didn’t do in 2007 (as this report covers 2007!) Some reference to 2007 would have added a little more credibility. But good stuff, in any event.

Major negative: this report was published in January 2009 – for the reporting period 2007. What took Kellogg so long?

Communication:
This report does an outstanding job of communicating in straightforward language, logical flow and appropriate commentary, supplemented by nice clean graphics of the more complex issues. The Strategy Pyramid (page 12), CR across the value chain (page 17), CR framework (page 18), and CR structure (page 19) all neatly visualize the way CR is integrated and managed.

Credibility:

The report covers mainly direct impacts, though there is reference to Kellogg's participation in industry-wide challenges in the section on external engagement activities. Kellogg's include a promise to report annually, a strong commitment to maintaining progress.
The section on stakeholder engagement and materiality analysis is weak. Kellogg's state they interviewed and met with several stakeholders, and identified several issues. But we are not treated to any further detail. This is where an assurance statement might have helped. The top-line treatment of stakeholder engagement lacks depth. Assurance might have reassured us that depth exists, even if it is not reported.

Further, whilst Kellogg's share some data on their CSR performance to date, there are no quantifiable or specific targets included in the report for future performance. Targets are a measurable demonstration of a corporation's commitment. Kellogg's talk about a target-based approach, so excluding specific targets from this report detracts from the credibility of the Company's intent.

All in all, a good first report. That provides a platform for a more consistent and comprehensive second report.

Recommendations:

1. Issue report earlier
2. Assure!
3. Include quantifiable targets for future performance
4. Explain data gaps

Elaine Cohen is the Joint CEO of BeyondBusiness Ltd, http://www.beyond.biz/en, a leading CSR reporting and consulting firm in Israel, specializing in a wide range of consulting services for the development of social and environmental responsibility of businesses.