You will probably know the name YKK, and be intimately involved with it in some way, they are one of those brands that is so ubiquitous we almost do not notice it as such. YKK are the worlds largest zip manufacturer (though the term fastening is preferred) in addition having Machinery and Engineering and Architectural Products Divisions.
YKK Group is a Japanese company which operates in 70 countries, with 40,000 employees. Roughly half of whom are based in Japan and half across the companies operating areas. The company first produced an Environmental Charter in 1994 and its first Environmental Report in 2000.
As with many Japanese companies (see also Canon Inc), YKK’s management approach is a conceptual one, employing its founders’ philosophy of a “Cycle of Goodness”, that “No one prospers unless he renders benefit to others”. A pretty good starting point for a corporate responsibility report you may have thought, combining the principles of interdependency, mutual benefit and humility.
In reading the report as a whole, it is clear that this founding philosophy does find its way into many aspects of the company’s operations with some very interesting management approaches. However, it is not always clear just how integrated some of these are into shaping the company’s activities.
I spend most of my time reading what I would class as “western” CSR and sustainability reports, which could be categorised as generally functional in structure and approach: “we are company X, we do the following activities, here are our resulting environmental and social impacts, here is how we manage them, aren’t we good etc”. To me it is important, when looking at reporting from other parts of the world, not to let a western reporting lens obscure the value inherent in other approaches.
This produces a dilemma, YKK’s report does not mention GRI, materiality assessment or AA1000, it barely mentions stakeholders or CSR governance structures, but do these omissions inevitably make it a bad report? My answer is yes and no.
The report is simply and attractively designed, presented and written, which is rare for non-financial reports. It uses clear typography, has plenty of white space, simple and clear diagrams and a nice use of colour. Indeed it employs ‘Color Universal Design’ which (it was new to me!) uses colour schemes that can be universally understood by people who see colour differently (of which there are over 5 million in Japan). As a result the overall look and feel of the report is simple, attractive and accessible.
In addition, the language used within the report is also simple and clear, avoiding overly technical terms and explaining acronyms.
The pdf report that I have looked at is intended to be a summary, with further details on specific performance metrics and trends available as individual downloads from the YKK Group Website. The summary report therefore provides an overview of management philosophy, the company’s priority issues for management, its medium term environmental strategy, further detail on specific areas of impact and activity and a 3rd Party perspective.
As noted above, the company’s management philosophy accords beautifully with many of the inherent themes of corporate responsibility and sustainability, and is so much more refreshing than the perhaps mechanical acknowledgements of the social context of a company that is found in many other CSR reports.
However, while it is clear that a good amount of consideration has been given to how the company’s activities relate to the environment and society, this is not always either structured or presented in such a way as to indicate true integration.
The most prominent example of this is in the development of priority areas of focus. The de-facto approach towards this is through a materiality assessment, the identification and prioritisation of environmental and social issues through their importance to the company its stakeholders. In YKK’s case there is no reference to any such process, just a statement that the company’s management focus is upon a journey (started in 1994) from legal compliance, EMS implementation and environmental disclosure to the development of eco-products, control of CO2 emissions and resource efficiency.
Whilst the recognition of such efforts as a journey is a useful approach, it does not provide particular clarity of current specific management priorities, which could, in turn, be usefully employed to structure the report. As it is, the report content roughly reflects the focus of the latter end of the journey but not particularly explicitly.
As noted above, the report does not mention a recognised approach or structure (such as GRI) that underpins its management or reporting of CSR. Nor does it go into any depth as to its stakeholder identification, management or engagement approaches.
Neither are CSR (or corporate) governance structures described in the report, which makes it difficult to assess the integration of environmental and social priorities into overall management.
Nevertheless, there are a number of indications that some areas of the business are significantly or wholly involved in the delivery of environmentally preferable products and services, especially the Architectural Products business unit, which does indicate, in a very organic way, that environmental priorities are embedded in company activities.
The report is strong in presenting the company’s values, and also in identifying the environmental dimension or implication that is related to each value.
There is a strong focus upon the efficiency of production and manufacturing processes in terms of direct impacts. There is also a refreshingly ambitious approach to the communication of environmental issues and initiatives within the organisation in order to build internal understanding and support and to encourage employee ideas and innovation.
The report does not have a formal assurance statement; however, it does include a “third party perspective” from the CEO of a sustainability management consultancy. It is not clear whether the commentary comes from a truly independent source, or whether its writer has some existing relationship with YKK. It is also not clear what approach has been used to obtain the information upon which the third party perspective is based. A clear statement of the piece’s approach, standpoint and approach would have greatly strengthened its utility, even if was never going to be as strong as a deep AA1000 AS assurance engagement.
So, if most of my review was concerned with noting what the report does not have, surely my conclusions should be pretty damning? Well, yes and no. The thing I got from this report which is often missing from other reports is some heart and soul. It is difficult to develop guidance for the integration of such things in reporting but, as a reader, you certainly know when it is missing.
This is not a technically advanced or sophisticated sustainability report, it does not follow codes, guidance or approaches that are increasingly required for such reports. As such, I could not say that it was a great report or that I really had a clear idea of the company’s net environmental and social impact. However, I did feel that it did what it intended to well, and with a lightness of touch that is seldom found.
With my stern-faced reporting professional’s hat on I am sure that I would not (could not) be recommending that this report would win an award for reporting. However I found YKK’s report charming, a quality in short supply in a world of process and guidance based, mechanical and functional reporting.
· Disclose details on the process by which material environmental and social priorities for management are identified.
· Structure the report according to material priorities.
· Communicate company governance structures and how CSR governance fits in.
· Provide greater contextualised performance data that would allow assessment against goals, e.g. how far to zero waste has YKK got?
· Move towards more formal assurance provision.
Joss Tantram, Partner – Corporate Sustainability, Terra Consult.
Joss is a specialist in sustainability management and development, sustainable corporate strategy, non-financial reporting and stakeholder engagement.
Joss is a member of the judges on the Association of Chartered and Certified Accountants (ACCA) UK Sustainability Reporting Awards and a member of the British Standards Institution (BSI) Technical Committee SDS/1 representing the UK in the development of the forthcoming international Social Responsibility Standard ISO 26000. Joss designed and implemented WWF International’s One Planet Leaders global executive development Programme and is a Programme Tutor.
For more info see: www.terra-consult.co.uk