Rexam makes metal cans for the world’s most popular beverages. Coca-Cola and the famous beer labels of Anheuser-Busch InBev are among their customers.
Founded in 1923 and headquartered in London, Rexam grew to be the largest in the industry, ahead of Ball Corp and Crown Holdings in second and third place, respectively. Rexam produced 64 billion cans in 2014 at plants across more than 20 countries. That’s enough to deliver about nine beverages to every human being on the planet.
The dominant interest inside and outside the company at this juncture is the offer by Ball UK Acquisition, a wholly owned subsidiary of the parent, to take over Rexam. Rexam and Ball account for 69% of the supply of beverage cans in Europe and 60% in North America, according to Morningstar analysts.
No one was surprised then by news of the European Commission’s statement of objections. The announcement from Brussels is procedural. It allows the merging parties to remedy the acquisition agreement enough to gain approval from the EU’s competition authority.
The companies’ managers are supremely confident. They expect to obtain all the necessary regulatory clearances to close the deal during the first half of 2016. If the transaction goes through, Ball will remain listed on the New York Stock Exchange and stay domiciled in the US.
Rexam’s disclosures are made “in accordance with” the Global Reporting Initiative’s (GRI) G4 Sustainability Reporting Guidelines. The company covers G4’s “core” information — as opposed to the alternative “comprehensive” level. A core report must address a minimum of 34 prescribed items out of 58 deemed to be basic elements of corporate economic, environmental, social, and governance performance.
Many of the items deal with rudimentary information such as the name of the organization, the location of the headquarters, and the products and services offered. But the requirements include several subjects of more substance such as how the company engages with stakeholders.
The main purpose behind the fourth version of the GRI guidelines is to get companies to deal openly with matters of significant importance for value creation and risk management. Rexam identifies a startling number of these material issues in this report: no less than 32 of them. They range from anti-corruption to water usage.
The report includes a materiality matrix along the lines recommended by GRI. The x-y axis maps the position where each material issue falls according to both its perceived influence on stakeholders’ assessments and on its impact on Rexam’s business. (Legislative initiatives are right up there at the top.) The matrix also shows whether the material issues are trending upward or are stable.
The G4’s “in accordance with” declaration requires companies to explain their management approach towards each aspect they decide to be material. Rexam does this, as well as meeting the twin requirement to report on at least one of GRI’s “specific” indicators for each material issue. These can be selected from among 91 of them described in the G4 guidelines. Rexam presents information or gives hyperlinks to sites where more can be found for 37 of these specific indicators.
In 2014 Rexam refreshed their sustainability targets through to 2020. Most of the company’s commitments are now associated with quantitative goals. Among the more definitive of them are efforts to reduce the carbon footprint of a can by 25% and to reduce water intensity by 10%. (Note: these are relative to units of production, not absolute reductions.) Progress against each is noted in a table, but only in general terms: either on track and on time, or showing a positive trend (water reduction), or behind target (50% increase in total employee hours invested in agreed initiatives).
Rexam’s information is packaged in a 61-page PDF with some hot links to the corporate web site. For example, one connects to a page containing the policies followed to embed sustainability in operations and in the supply chain.
The GRI index, mandatory for “in accordance” GRI reports, takes up 16 pages. Following the index are 11 pages of data tables for various environmental metrics and social indicators relating to employees.
Rexam usually reports biennially. But this one covers the period 1 January 2012 to 31 December 2014. The year delay is due to the materiality assessment carried out in 2014.
Rexam’s report is laid out in wide (landscape) format. The near absence of photographs is remarkable: just two thumbnail headshots of executives. The text is kept to a minimum on each page with the help of drawings, diagrams and graphs. The report is also lightened up and shortened by avoiding lengthy narrations typically published to elaborate on the companies’ good deeds.
Despite the graphic clarity and straightforward approach to the disclosures, the report is quirky. Navigation is trickier than it ought to be. For instance, when reading the PDF off line, the links from the GRI index to the page containing the content do not have a return function. Readers have to scroll down to get back to the index. When the report is read on line, the return from a link to more information on the corporate web pages pops readers back to the cover page of the report rather than to the spot they left.
A summary index of the G4 indicators helps readers find information more easily. But the abbreviated, three-page version (as well as the full G4 index) simply ignores the GRI indicators that Rexam omits. Some reporters choose to list all the indicators. They add an appropriate qualifying remark for those they left unaddressed, such as “not applicable” or “data-gathering underway”. Rexam gives readers the link to GRI’s own web site where they must sort out by themselves which indicators are missing — and guess why.
The PDF by itself does not present a complete picture of Rexam’s robust sustainability management system. It does a disservice to the report’s users, too, by banishing material to the corporate web site. Some of the information might well have been included in the report. If not, then the links to the missing content should be called out more prominently.
The helpful information on this vital site [http://www.rexam.com/index.asp?pageid=982] is found only by reading carefully and digging around diligently. It catalogues Rexam’s commitments, measures, and targets in one place. All the metrics are neatly divided into one of three categories: products; employee relations; and operations. Likewise, the link to this crucial site [http://www.rexam.com/index.asp?pageid=900] is easily overlooked. Rexam’s page contains an admirably inventive set of charts. They track future targets for each corporate sustainability commitment side-by-side with specific, quantitative measures of past performance. The information presented there really is essential.
No independent outside auditor reviewed the information in Rexam’s report. The company, though, does have external assurance for energy and greenhouse gas emissions.
In an unusual twist, Rexam considers their inclusion in benchmarking efforts like the Dow Jones Sustainability Index and FTSE4Good to be external accreditation.
The report says Rexam undertook a materiality study in 2014. It involved about 50 stakeholders representing “a broad base of internal employees, as well as customers, investors, suppliers, industry associations, and NGOs.”
Hired experts conducted the study and facilitated a workshop about their final report. In this way the company consolidated the themes and issues that stakeholders want addressed in business strategies and reporting.
GRI built the G4 framework so companies and report users will be better able to identify how sustainability initiatives impact the bottom line over the long term. Rexam goes quite a distance — but not all the way — toward making the connection between the material economic, social, and environmental issues and shareholder value.
The deficiency is evident though not blatant. One giveaway is the fact that Rexam reports against all the first 34 general standard disclosures in the G4 guidelines save one. Not present is GRI’s item G4-2. The recommendation here is to provide a “concise narrative on key impacts, risks, and opportunities.”
The purpose behind G4-2 is to have the reporter concentrate on information relevant to financial stakeholders or that could become so in the future. Rexam tackles the subject by discussing their management approaches separately for each issue. But the big picture is neglected, as are the associated challenges and opportunities. Nor is there any assessment of reasons for underperformance or over-performance.
To be fair, G4-2 is not a requirement for core level reporting. But like Rexam, Ball reports in accordance with the core level of G4. The GRI content index in Ball’s sustainability report is comprehensive. Ball’s report covers all 58 general standard disclosures, including G4-2. The company expends more effort discussing strategies and establishing a context for their sustainability activities.
Ball reports biennially as does Rexam. Ball’s report is in landscape format, too, and is more or less on the same wavelength as Rexam’s. In many ways the two reports are alike. Above all, they are utterly compatible. A seamless transition for sustainability disclosures seems guaranteed for stakeholders of both companies.
1. Assuming the buyout takes place, be sure to show Ball’s team your approach and design for charting progress against commitments and targets, and try to get them to copy it.
2. Throw a farewell party for the sustainability communications staff. Surely they’ve earned it.
William D’Alessandro is president of Victor House News Co., an independent agency reporting on law and the environment for trade publications and executive newsletters. He also edits Crosslands Bulletin http://www.crosslandsbulletin.com covering strategic corporate environmental management and sustainability issues.