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Crisp, comprehensive and high-transparency

By Elaine Cohen (BeyondBusiness) on March 11, 2009 at 11:54am.

Content:

This is an outstanding, professional, crisp, comprehensive and high-transparency report.  No frills, no fancy designs, no smiling children graphics. A continuation of GSK's prior years’ reporting style.  A straightforward, down-to-earth, readable report packed with a multitude of extra-report references form the GSK website. It 's a pleasure to read. No surprise from the company which consistently ranks highest in pharma sector and general CR rankings. This is one of the few reports in which the CEO's letter is not a just a bunch of platitudes and contains relevant insights, such as advances in new drugs or new environmental commitment.  Throughout the report, the chairman of GSK answers questions (or at least, someone does) on the GSK approach. These are the bits for people who tire easily of too much detail. GSK's disclosures on Public Policy and External Affairs is outstanding. By the time they  disclose the fact that they spend $8 million lobbying in the US alone, you at least understand why they do it. Discussion of material issues starts with GSK's contribution to global health "How we respond to society’s healthcare needs is the most important responsibility issue for GSK. It is also central to our commercial success", and continues with the crucial issue of access to medicines, and R&D practices. GSK disclosures relating to these material issues are preceded by insightful background which puts the GSK position into perspective and explains the response to stakeholder demands. GSK have a pricing policy for medicines to developing countries which are not for profit but costs are covered, so this approach can be maintained, but only if GSK makes an adequate profit in wealthier countries – sort of a Robin Hood approach – quite a frank disclosure.
Subsequent sections cover ethics, supply chain, employee practices, environment and community. GSK's carbon footprint increased in 2007. Interestingly 65% of the carbon footprint stems from inhalers used by patients. Whilst CFC's have been phased out, replacement gases HFAs (hydrofluoro-alkanes) still have global warming potential, and non-emission dry powders are limited in their use.  I use this as an illustration of a core issue that this highly specialized industry faces, and the detailed nature of reporting required. Having said this, other aspects of GSK's CO2 emission reduction are not all that impressive – many individual actions but little overall benefit.   I admit that the GSK report provides me with my first understanding of reverse vending machines for bottle recycling. Great development.

The stakeholder engagement section is a little weaker than the rest. No description of the selection process of the way stakeholder input shaped material issues, or which significant issues were not addressed, and though it does appear to me that GSK have covered pretty much most of the bases; things like disposal of expired drugs, patient disputes and claims, complaints and quality issues etc don’t figure.

Communication:

This report is well indexed and easy to navigate. The language is crisp, no superlatives, just details and explanations. All relevant sections start with a descriptor which makes it clear what it all about. There is no mistaking the GSK position which is stated precisely in each section. A nice touch – the report index is hyperlinked so you can jump easily from section to section. I think this is a good balanced report for all types of stakeholder, including employees. It can be hard going, you need to allocate a lot of time if you are going to read it cover-to-cover, but I suspect that investors, employees, healthcare professionals, activists and the general public will all find something in it for them.

Credibility:

This is one of the most credible reports available. The report is not ‘GRI’ but it is GRI indexed and follows a GRI structure. There are very few indicators not reported. It's not full of self-praise, includes discussion of criticisms and core issues, including an apology for advertising misrepresentation of Ribena claims and an explanation of the fatalities in 2007, and provides a high level of contextual background.

Assurance is limited to ESH data by SGS and the section relating to access to medicines by Bureau Veritas. GSK explain this – "assurance is a time consuming and expensive process". However, the assurance  on access is rather unsatisfactory – the methodology lacks enough detail to enhance my level of trust in the reporting of this issue. How many interviews were conducted, how many stakeholders? How much data was verified? With such a limited scope, I would have expected more depth.  The SGS statement is more detailed although the conclusion that it is a "fair and balanced representation" is hard to understand when all SGS were asked to do was check the numbers (veracity) . Better than nothing I suppose.

Interestingly, there are no hard targets in this report with the exception of environmental targets. Each section concludes with a general statement about the future but this is more of an expectation rather than a commitment. Equally, there is no clear analysis of specific actions taken in 2007 versus previous years, though there is evidence of progress.  The report follows the prior year’s format and much of the background information is regurgitated. I suppose that's ok.

I think this report is close to a GRI A+ application level. I find it interesting that such an outstanding reporter does not use GRI reporting levels , the most widely acceptable benchmark. GSK don’t explain this. But it's not all that important. This is a truly outstanding report.  Can't wait for 2008!

Recommendations:

1. Add in a materiality matrix to explain the scope of material issues and what was left out 
2. Rethink approach to assurance

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