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Exceptional transparency for technocrats and activists

By Elaine Cohen (BeyondBusiness) on March 09, 2009 at 11:59am.

Content:

adidas have made a serious step-change in their reporting approach this year. The intro states: "This year our review starts with questions and comments from our stakeholders about the key issues raised in 2008."  A promising start. The report has three main sections: stakeholder issues, performance data, progress against targets. This is potentially a great report. adidas have carefully selected what they report, forcing on things they think matter. 

adidas define 6 core stakeholder issues: Beijing Olympics, workers’ rights in Indonesia, Play Fair 2008 campaign, university factory visits, government outreach, multi-stakeholder collaboration.  Each issue is discussed in high-resolution and presented in a balanced way (at least, it appears so to me), including the failures and the difficulties. Take the Indonesia story – there’s a description of the interaction with Oxfam campaigners, with supplementary data on the web, and admission of a failure to make progress and a promise to "redouble efforts" in 2009.  The issues around the Beijing Olympics include adidas's position on the Darfur situation and even the Group's approach to the political drive to Free Tibet. Some impressive accounts of adidas's commitment to supporting local employment in Indonesia, El Salvador and Bangladesh.  Wonderful transparency, some of the best in the reporting world. What bothers me, though, is that I don’t really get how adidas selected these issues. Some are ones where adidas clearly have been attacked and their report is a tool to set the record straight. Some are issues in which adidas feel they have been particularly proactively responsible. But the selection of these 6 issues seems to be less of a reflection of stakeholder pressure and more of a reflection of what serves adidas to report. There are gaps. Nothing on customer service, economic impacts, employee dialogue and satisfaction, ethics, for example. I miss a connection to business strategy.

The Performance Data section is 21 pages of data. Far too much data if you ask me, presented clearly but it's not easy to get to the core data quickly. Endless tables of how many factory audits, warming letters, visits, numbers of factories… it's really not all so necessary. Included as a section in its own right, the performance data provides only limited context. adidas deal with over 1,000 in-house and contractor factories, plus another few hundred licensees. Over 1,000 factory audits in 2007. Quite a complex operation.  But rather too many trees and not enough forest.

The ‘Progress Against Targets’ section is structured around each sub-target, approach, reason for the target, barriers, progress and new targets. Whilst there are lots of explanations about everything, it's so boring that I had to skim it. Progress levels are stated in %, but I had a hard time understanding what has actually been achieved. 50% of what? 75% of what? I find this reporting difficult to follow. Take target 2 on talent planning in the employees section. I see what they wanted to do, why, how, which, when and where. I just don’t know how many managers were actually identified as "talent" and how many were promoted, dismissed, developed or just ignored.  All the targets related to environment contain no specific commitment to quantified environmental impact improvement. 2009 targets are wishy-washy... review... align… assess… update… extend… nothing absolutely quantifiable. But then, given the average performance against 2008 targets, in which only 4 out of 30 targets were fully achieved, maybe adidas decided to play it safe.

Communication:

This report is easy enough to navigate if you are looking for headlines, but without any form of index, you have to plough through quite some pages to get to the data. The lack of a GRI (or any kind of) index is quite painful. I looked for the carbon footprint. Nothing in the PDF search, and though I found lots of data on emissions, I couldn’t find a total carbon emissions level for the group. I looked to see what the financial scope of this business is – had to go to the web to check their annual report.  I actually find the online report much more navigable than the PDF, which is unusual.  I sense this is a report for activists. The level of detail is not for the lay-person, certainly not for the customer and I doubt more than a handful of adidas's 30,000+ employees could grapple with this technocrat report. I suspect activist groups in various countries will be the ones who read the detail that relates to their cause.

Credibility:

This report does not follow a GRI structure and the GRI framework is not referenced – a departure from 2007 which was a ‘C’ application level report. But the report leaves me wondering what adidas has achieved – I see what they did – I just don’t see the outcomes of what they did. The lack of assurance always bothers me as even bona fide errors can change the content of the best report. I am quite disappointed not to be able to write millions of superlatives about this report. I feel the intent is there, and the transparency absolutely exceptional. And there is much progress. The earnest desire to focus is exactly what more reporters ought to be doing. I wish I could be more positive. But the presentation is hard to follow and difficult to digest, which detracts from the effectiveness of this report.  It just doesn’t all hang together very well.

Recommendations:

1. Index it. One way or another.
2. Balance the resolution. Focus with context.
3. Report on outcomes as well as inputs. 


Elaine Cohen is the Joint CEO of BeyondBusiness Ltd, www.b-yond.biz, 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.