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Coloplast: A CSR Revival

By Elaine Cohen (beyond Business) on August 09, 2010 at 3:36pm.


Content:

Coloplast, headquartered in Denmark, is a global specialized healthcare solutions supplier to hospitals, institutions and resellers, and also sells direct to consumers.  The company employs over 7,000 people, turns over $1.5 million,  and manufactures in several countries. Coloplast has a history of responsible practices and is a participant in the UN Global Compact (since 2002), operates to several ISO standards, and is traded on the Dow Jones Sustainability and FTSE4Good indices.  This report is an interesting departure from the previous practice (which lapsed in recent years) of the company including a CSR section in their annual report, perhaps because the Company has experienced a period of "declining  margins" during which time reporting was not maintained, with the exception of the ‘Communication on Progress’ to the UN Global Compact.  This is a first standalone CR report for Coloplast and hopefully, this renewed effort will be more sustained.  Certainly, there is a nice style and general feel to this report, it's cleanly designed, easy to read and demonstrates good overall appreciation of sustainability practices and progress. 
 
Despite this, the report lacks a sense of overall strategic direction with no overarching strategic statement, no assessments of prior performance against targets and no forward-looking targets. There is a nice Data Summary Table of KPIs over the past 6 years, but no quantitative indication of how Coloplast is planning to expand and advance its CSR practices. Some evidence of the internal structures established to manage and monitor CSR programs would instil confidence in the Coloplast CR revival. In each of the sections of the report, a very limited focus of activity is presented – ‘Employees’, for example, covers safety, relief from repetitive work, employee satisfaction and the lay-offs policy. Little more is said about other workplace practices, especially regarding human rights in production units in Hungary, China and Poland, relocated to reduced cost. 

This limited disclosure is also reflected in the section on end-users, which states that the company wants to "put end-users in control of their lives" but goes on to report only on quality and safety practices.  What is missing here is some form of context about the scale and scope of the intimate health problems that this company addresses and how Coloplast's product development initiatives are focused on meeting these needs. Coloplast works in such a specialized area of healthcare, with a unique focus, it would have been nice to read a little more about the environment they work in and the kind of trends, unique solutions and sustainability issues that they face.  For example, in the society section, Coloplast reports on the progress of their $8.5million three-year investment in access to healthcare, focusing on projects with ostomy (surgically created openings in the body for the discharge of body wastes), continence and wound care. The prime efforts are training and skill development with two brief examples from Mexico and China; it would have been fascinating to read more about these projects and their impacts.


Communication:

This short (28 page) report has an authentic tone about it. It is clear that thought and effort has been invested in its presentation, which  is nicely structured around the six stakeholder groups identified by Coloplast as key: these are end-users, healthcare professionals, employees, business partners, environment and society.  There is no materiality analysis or prioritization, and no extensive discussion of stakeholder engagement, though there are references to satisfaction surveys and product feedback in some  sections. The environmental focus is on energy efficiency, PVC phase-out and waste reduction. It does not seem that stakeholder input contributed to the selection of these issues.  Whilst environmental performance is improving with 4% CO2 reductions in 2008/2009, (21% when calculated per production unit) and a reduction in waste of 5%, these are the only two aspects of environmental performance addressed by Coloplast in this report. 

Credibility:

Coloplast have produced a nice report which reflects a basic level of CSR thinking and practice, and the state of play in the company as far as CSR goes, which appears to be marginally beyond compliance.  The report includes frank disclosure of areas in which the company has faced challenges. An example of this is a problem with an "anal irrigation" type of product: " .. during the year we received complaints about the performance of the water bag and the control unit." This painful (!) problem was addressed by the company and apparently resolved. The disclosure adds credibility to the report.

The opening statement co-authored by the CEO and the CFO gives a sense of renewed spirit and positive intention to further develop CSR practices. Clearly, there is much more to do at Coloplast and this includes moving CSR from a largely tactical direct-impact focus to a business approach, strategically embedded. This is evidenced in the statement “From the moment we hatch a new product idea, we think in quality and safety."  From a company which has embedded sustainability, I would expect to see societal and environmental concerns rank as high as quality and safety as the very early stages of product development.

Technically, this is a good report (GRI Application level C, just about)  which covers the most essential topics. The nature of the disclosures are well explained and referenced but minimal data is presented to substantiate Coloplast's management and policy disclosures.  The report stops just a little too short of providing real insight into where the business is gaining strategic benefit from CSR, and where it is adding value to society and environment beyond the inherent healthcare nature of the business. Interestingly, the environment section is introduced with the disclosure that: "Our efforts to make Coloplast a leaner and more competitive company are not only helpful for our business. They have also renewed our awareness of environmental standards and resulted in less CO2 and less waste." It is interesting that Coloplast describes its environmental motivation as being driven by cost. Whilst this is nothing to be ashamed of, Coloplast needs to ensure that when the focus on restructuring the business cost-base eases up, the commitment to CSR will not be diluted.

Recommendations:

1. Develop and disclose an overall CR strategy with clear action plans and measurable targets.
2. Expand reporting of workplace practices, particularly in global operations.
3. Maintain the pace.

elaine cohen is the a CSR consultant, Sustainability Reporter and HR professional . She is co CEO of BeyondBusiness Ltd, www.b-yond.biz/en , a leading CSR reporting and consulting firm, specializing in consulting services for the development of social and environmental responsibility of businesses.