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Permier Farnell: Nicely packaged

By Elaine Cohen (beyond Business) on June 28, 2010 at 10:21am.

Content:

Premier Farnell are sailing against the tide with this first standalone CSR report for 2009/2010 and, frankly, I like the approach, and the execution is not bad at all. In previous years, the Company has included a CSR report section in their Annual Report & Accounts. This time, they have gone the full stretch with a GRI C+ level, UN Global Compact table, AA1000AS assured 70 page report. A little insight into what prompted this move to separate reporting when the CSR world is talking integrated reporting would have been welcome.  CEO Harriet Green, by way of explanation, cites opportunity to include greater CSR detail, reduced printing of Annual Accounts and the fact that "Our printed Annual Report and Accounts, a document principally intended for the Company’s shareholders, focuses on the most important details of our key impacts" as benefits of separate reporting, through whether it was interest from stakeholders or internal desire to step up transparency that actually caused Premier Farnell to go this route would be interesting to know. Whatever the prompt, this 70 page report is about three times the length of previous CSR sections in the Annual Report & Accounts and offers much greater insight into the company's activities. 
 
Premier Farnell is a global distributor of electronics components and technology solutions to a range of sectors, sourcing over 400,000 products from 3,500 suppliers to over 2 million customers. The company also manufacturers and sources fire-fighting equipment through its US subsidiary Akron Brass. Based in the UK, the Company employs around 4,100 "colleagues" and turns over around £800m.

The core business of this group is moving things around – receiving components, handling and storing, and shipping then out again to customers. What material issues might we expect from a company such as this? Premier Farnell say the right things about materiality in a section entitled "Identifying and Defining Material Issues", but do not go as far as to present a materiality matrix, or a description of a cohesive process of assessment and prioritization of material issues. The report lists many routes for dialogue with different stakeholder groups, but avoids disclosing detail of input received or actual engagement results. The more significant areas of materiality for a company such as this, I would have thought, would relate to its logistics system for distribution of products, and the indirect impacts of leveraging the Company's considerable influence with a wide range of suppliers for procurement of ethical and environmentally positive products, and to influence customer demand for these.  On the first, Premier Farnell doesn’t have much to say as all distribution is outsourced and therefore generate Scope 3 (Greenhouse Gas Protocol)  emissions, outside the scope of Premier Farnell's reporting at present. On the second, Premier Farnell has taken measures within the framework of a "Perfect Supplier" programme to drive suppliers to use recyclable packaging, though what packaging improvements this has actually achieved is not reported.  Premier Farnell has developed the rollout of a Supplier Code of Conduct, and 29 suppliers representing 16% of the business have been engaged. This is a great start. On the subject of influencing customer awareness or practices, Premier Farnell does report surveying a small selection of customers about CSR practices, but does not disclose what they said.

Internally, the good news is that Premier Farnell records a 23% decrease in total CO2 emissions since 2006, with large energy consumption reductions across the board and use of renewable electricity.   Similarly, recycling levels and reduced packaging for outbound components have made headway, including the development of a "biodegradable, static-dissipative packaging solution". Additionally, Premier Farnell reports good paper consumption reduction of over 37%, and significant business travel mileage reduction by over 50%.

Workplace impacts are covered selectively, with focus on safety, absenteeism, employee development and wellbeing. An extensive mentoring program, employee engagement survey (87% are engaged), one hour a week of personal development for all employees, Employee Assistance Program and more are all reported. Safety performance reporting is confusing and doesn’t present a clear picture, focusing on Belgian legislation and the way targets are set as reasons for below-target safety performance in Premier Farnell's Belgian operations. Noticeable though, is the absence of employee demographic data and a mention of diversity and inclusion. Harriet Green, CEO, the only female voice on Board and Executive teams which are entirely male, clearly doesn’t drive the gender agenda. A PDF search of the report brings up one instance of diversity (of customers and suppliers), one mention of the word "women" (relating to health and safety of the workforce), and one mention of the word "equal" (relating to carbon emissions calculations).

Community impacts cover the five partnerships that Premier Farnell (a Business in the Community member) maintains, with cash and volunteer time (2,300 volunteer hours). The company reports a clear correlation between employee volunteer time and engagement, with increase in volunteer time in 2009 correlating with significant increases in Premier Farnell's BITC score and CSR engagement responses in internal surveys. This is a nice insight which is not often included in CSR reports.

Communication:

The Premier Farnell report is methodically structured and covers all the important headlines. Each key section of the report includes a graphic called "Who does this affect?", describing the specific nature of impact separately for  colleagues, customers, communities, supply chain and investors. This is a nice touch, though some of the responses are rather elementary and lack substantiation by examples and data of actual impacts. Nonetheless, it demonstrates a stakeholder mindset and an attempt to address the different levels of understanding and interests of the wide range of readers that Premier Farnell may expect to view this report. The language is clear and definitions of key terms are included in the body of the report for readers unfamiliar with core concepts. 

Credibility:

The Premier Farnell standalone report is as slick and glossy as you can get. It contains all the right generic phrases in all the right places. It is rather lightweight and patchy in presentation of performance data. There are some instances of a brief mention of something that looks significant and then no explanatory follow-up for example, "element 14", "the Trust Agenda" – engagement and dialogue programmes. This said, the Premier Farnell report does contain many good performance disclosures. There is a nice "performance against targets" section, clearly reporting what has been achieved and what has not.  In fact, this report contains a good balance of reporting the challenges that Premier Farnell face and despite the glossy and generic style, the report is not purely good news. Assurance adds credibility, and the statement is clear and precise. Overall, the impression is that Premier Farnell are on the journey. The difficulty of developing and managing a comprehensive CSR program in any company, particularly in a smallish (by global standards) specialist business should not be underestimated, and this report by Premier Farnell gives us an insight into these challenges. So far, it looks like they have made good headway in reporting direct impacts. They need to ramp up transparency and take a higher level view of where this company can add real sustainable value to all stakeholders, beyond the amount of direct carbon emissions and internal employee processes. It's nicely packaged, heading in the right direction, and needs constant recharging.

Recommendations:

1. Improve reporting of stakeholder feedback and materiality
2. Consider strategy for indirect impacts and report on these
3. Report on employee demographics and diversity / gender balance

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