Content:

So what do you expect from a corporately social and environmentally responsible insurance company? A fair insurance deal? Great service, especially when your car is a total loss or your house just went up in flames? Great sales incentives for agents? Sensible management of funds? Yes, I guess you can expect all of that. Aviva's CSR 2009 report is strong on these direct impacts and responsible practices in the way they run the business of insurance. But if that is all you expect from the "world's 5th largest insurance group" with over 300 billion sterling of investor funds under their management, 54,000 employees, 50 million customers, and a presence in 27 countries around the world, you will be selling yourself short as an Aviva stakeholder. Because the most fascinating element of the insurance business, as with the entire financial services sector, is how the Company manages indirect impacts – how it creates changes in behavior and impacts society and environment beyond direct impacts on primary stakeholders. Aviva reports on limited success in this area such as reduced insurance premiums for holders of public transport season tickets, or for owners of lower carbon emission vehicles.

But little is said about the progress of impressive programs reported last year, for example: the Wellness for Life program of Aviva USA which was to incentivize customers for maintaining a healthy lifestyle, or for driving shorter distances and at off-peak times. There is reference to a similar product "Pay as you Drive" (benefiting lower mileage drivers), which was removed from the UK market due, apparently, to lack of consumer interest. Aviva is obviously having some difficulty with this: "The questions remain about how to stimulate the market and incentivise consumers – and who should act first in order to create demand". So well done to Aviva for making (pioneering) efforts in this area, as systemic change is the way forward. Disappointingly, this report reads as though the setback may prevent Aviva from offering more ethical and climate-beneficial programs in the future. I hope this is not the case.

Maintaining carbon neutral status is done mainly by offsetting. A chart shows that Aviva purchased 105% of offsets in 2008.  Offsetting, whilst positive, is a sort of easy route.  It's about money. I wonder if Aviva's performance in changing business behavior to reduce direct emissions could be bolder (14% emissions reduction since 2000 seems low over 8 years, emissions per employee are still much higher than in 2002-2005). Perhaps the inclusion of this in the Executive target program from 2008 may make a difference. Similarly, waste and resources usage by employee does not show any significant improvement. Paper usage reduced by around 14% in 2008.

Aviva has made strong progress on supplier engagement in ethical practices and has introduced a supplier code of conduct and screening and monitoring processes – something not typical of the insurance sector, as far as I am aware. This is not without difficulties and there appears to be a long way to go – Aviva Italy only signed up one supplier out of a total 983 who signed in 2008 (2,500 target in 2009).

Materiality is addressed through the identification of three cc's (reviewer's term!): Customer Confidence, Climate Change and Credit Crunch! However, we are not treated to any insights from the analyst roadshows or other stakeholder engagement activities and how they contributed to this material focus. Or what has been left out.

There is an unexplained piece of data – the 2008 report boasted 57,000 employees – 2009 talks of 54,000. What happened to 3,000 people who appear to have been restructured out of the UK business? 

Communication:

Aviva's on line report is nicely navigable and has a great note-maker tool that enables you to take notes and record them on the online report as you read it. This is a super, innovative feature.  The report does not follow a framework such as the GRI so there is no index of performance indicators, though the on-line report does include a site index which is moderately helpful, and the report search feature is reasonable. The report includes "spotlights" on the different Aviva regions and on country performance around the world, which is a nice touch and plays to local stakeholders, which many global reports often bypass. There is significant additional information on the Aviva website, in addition to the summary report PDF.

Credibility:

I feel there is a tendency in this report to focus on positive impacts and skim over the tougher issues. What doesn’t work at Aviva? Where are the challenges and unmet stakeholder expectations? Despite 2008 being "remembered as a year of great turmoil in financial markets", there is little to suggest how this has impacted Aviva. Aviva's report is squarely in their comfort zone, I feel. Great progress in embedding CR practices in the business are reported, and this is truly impressive, though I did plough though a 135 investor presentation on the Aviva website and NOWHERE was there any mention of CR in any strategy or plans in any region. Good KPI framework is reported showing (mainly) incremental CR performance improvement, and expansion of the CR program, such as supply chain. However, I get the sense of no stretch. Nothing beyond the comfort zone. I note that this report is made against the backdrop of major reorganization behind the one-brand focus, which I am sure has taken up much of management energy.

The Assurance statement seems to be wishful thinking. I have to use my imagination to recognize this report in the statement: "this is a fair and balanced representation of Aviva's CR performance", and the statement that the report "does not shy away from discussing the challenges faced by the financial crisis" and what Aviva has done to address these  just doesn’t gel – there is NO discussion of these issues in the report (except for one reference to a Safer Street project to improve home security resulting from increased crime rate as a consequence of the credit crunch). Further, the Assurer does not address recommendations in the prior year statement which have not been addressed in 2009 (and continue to remain outside the comfort zone).
 
Recommendations:

· Use the GRI framework or provide a comprehensive index
· Include more reporting of outcomes 
· Re-examine potential for indirect impacts and reporting against them
· Get out of the comfort zone – report more in a more comprehensive and balanced way

Elaine Cohen is the Joint CEO of BeyondBusiness Ltd, www.b-yond.biz, a leading CSR reporting and consulting firm in Israel, specializing in a wide range of consulting services for the development of social and environmental responsibility of businesses. Elaine Cohen is an independent reviewer and has no relationship with the reporting company.