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MTR: Credibly on the Reporting Train

By Elaine Cohen (BeyondBusiness) on October 12, 2009 at 3:11pm.

Content:

MTR (Mass Transit Railway) is the sole railway services provider in Hong Kong, boasting 1.5 billion passengers in 2008 (4.27 million trips per week), employing over 14,000 people and turning over more than US$2BN. The Company is also involved in urban planning, property investment and development, and consulting to other rail services around the world. Sector-specific material issues for a transportation and property development provider such as this would include, in my opinion, customer service, facilities for passengers with special needs, punctuality, passenger and employee safety, energy / electricity consumption and GHG emissions, alternative energy sources, green construction, station sites, impact on urban demographics and commuting possibilities and impacts on customer travel and environmental habits etc. Most of these are covered reasonably well in this report.

MTR is no stranger to CSR – this is their 9th report, and the first report after “The Merger”.  “The Merger” is referred to several times, and assumes some prior knowledge. Not being familiar with the Hong Kong railway system, I subsequently discovered via Wikipedia that “The Merger” refers to MTR’s absorption of other railway systems in HK in 2007 to become the sole provider of rail services (this was covered in MTR’s 2007 report). Clearly, ”The Merger” had a significant impact on MTR’s operations, and what is impressive in this report is MTR’s description of culture change and sustainability management in this larger, more complex organization which has double the number of staff, almost double the turnover and one third more assets. Interesting to note that all “8,000 front-line staff retained their job security as a condition of the merger”.  A responsible approach, it seems.

This report runs with the theme of “Engagement”, referring to the higher levels of stakeholder dialogue and interaction during and post the merger process. The report impressively details responses to stakeholders – though it is not clear how the list of stakeholder expectations was developed (actual articulated expectations or MTR’s view of what they think stakeholders expect?). For example, a response to an expectation from investors for greater communication states that 45,000 calls from retail investors were responded to. It would have been nice to know what the bulk of these calls were about – complaints? queries about dividends? This being said, the list of responses to stakeholder issues is good reporting practice. Whoever you are – regulator, staff, supplier, customer or community member – you will find something that MTR has done with your needs in mind. However, the lack of disclosure relating to engagement processes is frustrating – the report refers to staff communication channels including Attitude Surveys and Customer Feedback “ (surveys, hotlines, suggestion boxes, staff contact and direct correspondence)”, but there is no disclosure of the scale and scope of these interactions, and, aside from a comment about overcrowding of rail facilities at peak times, nothing tangible that we can glean from MTR’s stakeholder engagement activities.

The report describes in detail the MTR CSR approach – interesting lesson for students of sustainability – including the Sustainability Competitive Advantage Model based on Michael E Porter’s work on the value chain, a (regrettably empty) theoretical materiality matrix, a graphic Roadmap to Sustainability (also theoretical), and a (nicely complete, covering 5 years) maturity matrix using BS8900 Guidance for Sustainability Management, which shows fairly consistent progress since 2004. MTR covers risk assessment and responses well in this report, both in a specific risk report section and throughout the narrative. One interesting risk for MTR was identified as the potential outbreak of pandemics, requiring frequent cleaning practices and MTR’s solution “ application of the Nano-Silver-Titanium Dioxide Coating (NSTDC) to commonly passenger touched areas.”  Interesting.  In general, this is all evidence of action and progress, and also of an embedded approach to sustainable business practices.

The true value and opportunity that rail travel can add to quality of life is touched on in this report, for example, the mention of MTR’s property development project (“LOHAS Park delivers the future of sustainable urban living.”) and consulting activities “We are currently, by invitation, consulting with the Government on “eco-town” development underpinned by rail transport for the New Development Areas near the mainland China border.”   It will be nice to see this type of activity expanded and reported in future reports.

Surprisingly, this report is surprisingly light in two core areas: responsible workplace practices / employee development, and environment. Employee practices are discussed very briefly – there is no data on diversity or women in management, actual employee development processes and outcomes (84,000 training days is reported), or issues related to employee well-being, life-work balance, fair wages etc. Environmental issues are covered in only one page of narrative and emissions data, and conspicuously absent on other subjects such as waste management, recycling practices etc.  

Communication: 

MTR’s report comes as a 56 page download and an html website which is nicely navigable and includes a hyperlinked GRI index which is useful. The GRI Index is not included in the printed report which means you have to go online to see what’s where. KPI data is presented at the end of the report, a system which enables a viewing of data over a number of years but which leaves open questions as to the relative significance of the numbers. This is especially relevant in the post-merger situation of MTR – all data is post merger so we cannot compare MTR’s performance to prior years.
The report includes a glossary and definition of terms which explains how key data elements such as Train Punctuality are calculated or what is meant by a Train Trip. Passenger Fatalities, we learn, exclude suicides. Wonder why? (Isn’t this an area of indirect responsibility?) 

Credibility:

This is MTR’s first report at GRI level A+, following several years of reporting at lower levels of transparency. This indicates positive progress. The assurance statement is abysmal – the assurers absolve themselves of responsibility for decisions of stakeholders based on their assurance (so why assure?), the statement lists more that is not assured than is actually assured, and ends up with the negative statement “nothing has come to our attention that anything is materially misstated”. It is actually a copy paste of the MTR 2007 assurance statement almost word for word, and the 2006 report statement, and the 2005 report statement (I didn’t go further back). This is the kind of non-assuring assurance which is quite worthless (fits any report, anywhere), which in this case is a shame, because the MTR report projects great sincerity and authenticity.

It is clear from this report that MTR has continued its progress in developing CSR with the establishment of a CSR Board Committee, a new Vision Mission Values statement which includes words like “sustainable”, “engage”, “stakeholders” and “enhancing customer’s quality of life”, a new Supplier Code of Practice and additional new sustainability-minded business initiatives. A broad range of sustainability discussion is provided in this report. In my view, the report is a solid, genuine and largely credible effort.

Recommendations:

1. Demand an improved, more comprehensive assurance process and positive statement.
2. Describe the stakeholder engagement process outcomes in more detail.
3. Expand reporting on employee/workplace practices and environmental behaviours.

Elaine Cohen is the Joint CEO of BeyondBusiness Ltd, www.b-yond.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. Elaine Cohen is an independent reviewer and has no relationship with the reporting company.