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Thales: Maintaining a low altitude

By Elaine Cohen (BeyondBusiness) on January 25, 2010 at 2:27pm.


Content:

Thales is a technology Company serving the aerospace, defence, security and transportation markets. The company has operations in 50 countries and has 68,000 employees. 19% of revenues are allocated to R&D. This is Thales’ sixth report. Interestingly, the report follows a structure which is rather different from the standard GRI CSR reports we have become used to, and is built around what appear to have been selected as the 5 material issues for this business (Thales calls them "Challenges"): (1) ethics, governance and  risk, (2) compliance and integrity, (3) use of technology, (4) workplace practices and (5)  environment and community. Thales, by the nature of its business, operates in a heavily regulated and scrutinized sector, and not surprisingly this report places great emphasis on compliance ("rules-based management") and ethics ("values-based management") and a rather tedious shopping list of fairly generic risks ("risk management") with fairly generic answers.  Interestingly, on Governance, Thales admits "that there is room for improvement concerning the number of independent Board members" as only 4 are independent. A bold statement, I feel. There are, however, three elected employee representatives on the Board, which is a good thing.

In reporting on the first "Challenge", Thales talks about the contribution of suppliers - $6 Billion annual spend which is half of Thales’ revenues. This is clearly critical to Thales’ long-term performance, and the issue of a Purchasing and Corporate Responsibility Charter in 2008, requirement of suppliers to sign the Charter, and request for Supplier self-assessment against this charter, has now been completed by 120 suppliers. 3,000 suppliers are targeted by 2011, 80% of Thales’ purchasing volume – it’s a positive move.  The second "Challenge" reports on Thales' ways of maintaining an ethical culture, though I was not able to find any discernible differentiation from the first "Challenge" which is also about ethics. Despite these two ethical and compliance challenges, Thales says: "Between 2000 and 2001, over 2,000 employees received training in business ethics, and over 3,000 employees are expected to receive training between 2008 and 2011."  Thales has 68,000 employees (!).

Elsewhere in the report, I see little evidence, beyond rhetoric, of embedded processes and practices. For example, in 1992 Thales made a commitment to employ disabled individuals. There is no data to suggest that there are any disabled individuals actually employed. Thales’ training programs (Thales University) is said to be at the forefront of the Group’s Human Resources Development programs. There is no data about how many employees attended the University, or how many hours study were completed. Thales say that increased employee awareness of environmental issues has contributed to reductions in energy (4.5%) and water (17%) consumption, but we are not told how.  Thales reports to the Carbon Disclosure Project but emissions data are not headlined anywhere in this report. There are also serious gaps in the content scope of this report. For example, health and safety of employees, human rights, detailed environmental processes and impacts and more. What might I have expected beyond more transparent direct-impact reporting?  How about an assessment of Thales' contribution to defence systems in maintaining world security, to aviation safety and space exploration advances which advance human possibilities, to telecommunications and other technological advances in supporting crisis response etc. These issues are barely mentioned.

Communication:

This 37 page report looks to be targeted at the investor, rather than at the lay stakeholder. It reads like a textbook rather than a report, due to the vast amounts of generic and non-company or sector-specific background and platitudes ("A company’s image is one of its most precious assets", "Thales strives to make the world a safer place").  It is  jargon-loaded. Professional rhetoric abounds such as the ambition to strengthen "presence in transnational industrial and scientific ecosystems", and other gems such as "customer feedback loop" "customer-centric culture", "mission-critical information systems”, "proactive approach to environmental stewardship" and more. Equally, there are many instances of repetition within and between sections. This would be palatable if there were more substantial data to support Thales' impacts in these areas, but sadly this report remains at the level of professionally written PR copy with little substantive content. There is no content index so finding specific information is difficult.

Credibility:

This is one of those reports that give reporting its glossy brochure image. The report refers readers to the website for more information, but in fact the only additional piece of information I was able to find was the Thales Vigeo.com performance sheet. This is a top-line ranking of the company's performance, mainly for SRI Investors, which actually is not outstanding and does not support the statements in the glossy brochure. Thales appears to have good intentions, and certainly there are elements of their activities which demonstrate consideration of CSR themes in their business. However, this company has not made the leap from compliance and risk management to opportunity and transparency. The selection of material issues for this report is, in my view, superficial and misinformed and bears no evidence of process in the identification of these issues.  As a result, the decision to focus on 5 broad issues is unsatisfactory and masks the omission of other important content. Thales, master of aerospace technology, maintains a low altitude with this report.

Recommendations:

1. Commit to transparency and report accordingly
2. Thoroughly analyse materiality and report on the real material issues
3. Use a reporting framework such as the GRI and index content

 

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