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Ajinomoto: Needs more protein

By Elaine Cohen (beyond Business) on October 29, 2010 at 2:25pm.
Content:

The Ajinomoto report for 2010 covering fiscal year 2009 seems to be quite true to the company core business it is built in sections just like the amino acids (the building blocks of protein) that Ajinomoto produces. By this, I mean that there are many individually important core sections which are all valuable in their own unique way, but the report as a whole hangs together less well.

For those not familiar with this long standing and well respected Japanese company, which celebrated its 100th birthday in 2009, Ajinomoto has revenue of around $21Bn, 70% of which comes from Japan. The company employs over 27,000 people and manufactures seasonings, frozen foods, edible oils, coffee and a range of amino acids as food ingredients and other specialty chemicals. They operate from a total of 107 plants in 15 countries. Ajinomoto's global sustainability program focuses on three overarching issues: global sustainability, food resources and healthy living. In each of these areas, Ajinomoto sets directional objectives, but not specific targets, which is an omission. Each issue is addressed in a full page with some relevant context. Global sustainability refers to water and energy resources and Ajinomoto's core amino acid processes, which are now using more biomass-based carbon-neutral processes. Food resources is about improving the performance of food crops etc through increased performance of Ajinomoto nutrients. Healthy living is about combating malnutrition and providing tasty and healthy food care solutions. Whilst these issues are vital and Ajinomoto has a good basis to consider them material, the treatment of these issues in the report is rather superficial and glosses over the company's actual impacts in these areas. This is not true universally - space is devoted to advancing nutrition, with several pages on Ajinomoto's global nutrition project which started in 1999, including case studies from Malaysia and Ghana.  

There are some nice elements. The report opens up with an interview of Ajinomoto President Masatoshi by a prominent journalist who cuts straight to the chase, asking about compliance issues that have tarnished Ajinomoto's reputation in the past year a recall of an amino acid ingredient sold by Ajinomoto and a fine for inadequate accident reporting procedures at Ajinomoto's Tokai plant. In response to both of these incidents, President Masatoshi offers "sincerest apologies" and promises to change procedures to prevent recurrence. Both incidents are fully disclosed in the early section of the report. Neither of these incidents were dangerous to people, but frank inclusion of them in the report is a good move.

Another nice element of the Ajinomoto report is the open reporting of stakeholder dialogues. The company reports on four stakeholder dialogue sessions, with diverse representatives of targeted stakeholder groups, listed by name. One page per session is devoted to each of these dialogues in this 40 page summary report, and includes core questions discussed, opinions raised by stakeholders and Ajinomoto responses, and a summary of key points. The four dialogues were on the subjects of: improving the quality of life; conserving biodiversity; securing food resources and recycling resources; and providing environmental education for a low-carbon society. All of these are issues are at the core of Ajinomoto's sustainability efforts, aligning broadly with the three major issues that Ajinomoto advances in their sustainability program. A final page includes input from two more external experts on how Ajinomoto is incorporating stakeholder feedback into strategic planning to 2013. Not only is this thorough treatment of stakeholder engagement far beyond what we find in many other reports, the feedback is actually quite direct and often not complimentary. This is dealt with well by Ajinomoto. 

Communication:

This Ajinomoto CSR summary report is built around a materiality structure with the core three issues providing the backbone of the report. The standard reporting themes (managing CSR, health and safety, people and workplace, governance, risk and more) are all bunched together at the back of the report. There is no index, and though the UN Global Compact principles are listed, the themes are not cross-referenced in the report. The report does not follow the GRI framework. It's not easy to find your way around this report if you are looking for something specific. The contents list provides only bare headlines.

Environmental issues are covered in a very basic way in this Ajinomoto CSR report, as the company issues a separate annual environmental report in line with GRI guidelines. The 2010 environment report for 2009 will be published in November 2010, 4 months after the 2010 CSR report. It is not clear why Ajinomoto choose to issue two separate reports. A brief look at the 2009 Environmental Report, which is not part of this review, does reveal very comprehensive environmental disclosures.

The Ajinomoto online report site contains more detailed information on CSR issues such as community activities and more workplace information, though I was still unable to locate specific performance targets for future years.  

Credibility:
 
Ajinomoto clearly has a high consciousness of sustainability issues and many important themes are reflected in their reporting. Open stakeholder dialogue is a major plus. There are some downsides to the Ajinomoto approach. The first is the fragmentation of the report - the full picture is presented across two reports and a website, which are not synchronized chronologically, making it very hard to get a complete picture of the company's overall sustainability performance at any given time. Selected material issues seem to be appropriate, but there is no evidence of these having been prioritized in any way through the stakeholder dialogue process. There are gaps, such as details of supply chain practices in a company operating out of so many different plants. Marketing practices and consumer safety are also shortchanged. The report seems to be more of a testimonial to Ajinomoto's good citizenship than a critical assessment of the company's impacts. The report is not assured which reduces credibility. I believe Ajinomoto's reporting will mature when the company moves out of the amino-acid mindset and starts to see all parts as contributing to an integrated whole, and looks to asses impacts rather than activities. What we are looking for is the protein, not the amino acids.

Recommendations:

1.    More to a single report reflecting all areas of CSR and sustainability in a more logical structure.
2.    Deliver greater depth in reporting on material issues and define performance goals and targets.
3.    Provide an index GRI, UNGC or keyword to assist navigation.

elaine cohen a CSR consultant and Sustainability Reporter at BeyondBusiness Ltd, www.b-yond.biz/en, CSR writer and blogger and author of "CSR for HR: A necessary partnership for advancing responsible business practices" published by Greenleaf.