The NZBCSDSustainable Development Reporting

Guide for New Zealand Business

A report prepared by the New Zealand Business Council for Sustainable Development, June 2001 with support from the Ministry for the Environment.

If you have any comments regarding this report please e-mail these to office@nzbcsd.org.nz

Dedicated to Making a Difference

What is the NZBCSD?The New Zealand Business Council for Sustainable Development (NZBCSD), established in May 1999, is a coalition of leading businesses united by a shared commitment to sustainable development via the three pillars of economic growth, environmental protection and social progress. Membership of the Council is listed on page last page of this guide.

The NZBCSD is a partner organisation to the World Business Council for Sustainable Development (WBCSD), a coalition of 150 international businesses with members drawn from more than 30 countries and 20 major industrial sectors. We also benefit from the WBCSD’s global network of 30 national and regional business councils and partner organisations, involving some 700 business leaders globally.

Our MissionTo provide business leadership as a catalyst for change toward sustainable development, and to promote eco-efficiency, innovation and responsible entrepreneurship.

Our AimsOur objectives and strategic directions, based on this dedication, include:

Business leadership – to be the leading business advocate on issues connected with sustainable development.Policy development – to participate in policy development in order to create a framework that allows business to contribute effectively to sustainable development.Best practice – to demonstrate business progress in environmental and resource management and corporate social responsibility and to share leading-edge practices among our members.Global outreach – to contribute to a sustainable future for developing nations and nations in transition.

What is Sustainable Development Reporting?Sustainable Development Reporting (SDR) is defined by the WBCSD as public reports and information communicated by corporations that provide internal and external stakeholders with:

1.a clear picture of corporate values and principles, with a link to business objectives and strategy ;

2.a transparent picture of performance information on economic, environmental and social dimensions

3.a description of the corporation’s contribution to the sustainable development of society

4.the management response to performance - the commitment to improvement.

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Table of Contents Visions for Sustainable Development Reporting 4

Purpose, Process and Acknowledgements 7

How to Use this Guide 8

Section One – Why Report: An Introduction to the SDR Business Case 9

Section Two – How to Report: Developing a SDR Process 12

Section Three – Examples of the Process: NZBCSD Case Studies 27Case studies of businesses that have begun the SDR process 28

Sanford 28BP NZ 30Hubbard Foods 32The Warehouse Group 34

Case studies of businesses with no experience in the SDR process 36City Care 36Interface Agencies 38Telecom 40Urgent Couriers 42

Further Resources 44

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Visions for Sustainable Development Reporting

Stephen Tindall, Chairman, NZBCSD and Founding Director, The Warehouse Ltd. The NZBCSD is dedicated to making a difference in creating a sustainable New Zealand. This vision creates for us all an important challenge and SDR is an integral part of helping to ensure reality reflects the promise of this vision.

As part of our leadership in this area, the NZBCSD is actively engaged in contributing to the national agenda on sustainable development and sustainable development reporting. For example, we’re involved in providing business input for New Zealand’s contribution to the Rio +10 World Summit on Sustainable Development to be held in Johannesburg in 2002. Our partnership with the Ministry for the Environment has enabled us to facilitate further ‘learning by sharing’ with the case-studies and research into our member companies experiences with SDR.

All NZBCSD member companies are committed to producing sustainable development reports within three years of becoming a member. This guide reflects the leadership being taken by member companies, and serves as an example for other businesses to follow.

I believe that SDR is good business practice. At The Warehouse, we’re actively engaged in the SDR process, and it’s clearly been a valuable learning process – a way for us to learn and to improve. I commend this guide to all business leaders and encourage you to use it in developing your approach to SDR in order to make a difference for a sustainable New Zealand.

Denise Church, Chief Executive, Ministry for the Environment - Sustainable development is the way of the future for New Zealand, for its environment, its society and its economy. How will we know how we are progressing on that journey towards sustainable development? Only through measurement and reporting, and that is where “sustainable development reporting” or “triple bottom line reporting” can make a significant contribution.

The Ministry for the Environment has as its mission “making a difference through environmental leadership”. This partnership with the New Zealand Business Council for Sustainable Development, to carry out case studies of reporting with key New Zealand businesses, is a model of leadership for the rest of New Zealand, both public and private sector. We are very pleased to be able to contribute to this project now, so as to begin realising the gains that triple bottom line reporting can bring.

Developing the eight case studies and actively promoting the outcomes provides a powerful mechanism to enable shared learning about triple bottom line reporting. Having a range of case studies of New Zealand experiences is invaluable. Similar organisations, both large and small will be able to learn from these case studies and be better equipped to prepare their own reports. Adoption of triple bottom line reporting enables greater accountability for comprehensive organisational performance to be provided to all stakeholders.

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We hope that by having the eight case studies and the guide widely available there will be an accelerated uptake of triple bottom line reporting. Through quality reporting we will be better able to document progress in our environmental, social and economic performance, both as individual organisations and collectively, as a nation.

Denise ChurchChief ExecutiveMinistry for the Environment

Andy Pearce, Chief Executive of Landcare Research - Our business is research for sustainable management of land-based resources - in other words, sustainable development is our business. So it was clear to us that we should become a founding member of the NZBCSD. And it was also clear that we should take a leadership role in developing Sustainable Development (Triple Bottom Line) Reporting as a key tool for improving the sustainability of businesses. I am proud and pleased to be a personal champion of the NZBCSD's core project on Sustainable Development Reporting (SDR).

We are not just exhorting others to use SDR - we report this way ourselves. Our first report was published a year ago, and was ranked 14th in the Global Reporters 2000 benchmarking of 202 sustainable development reports from a wide range of international business.

The case studies reported in this guide show how New Zealand businesses are progressing towards SDR. Such case studies can inform, encourage and influence other businesses to take this rewarding, challenging journey. We have learned much from our journey, and from working with other companies such as The Warehouse, Telecom, Hubbards Foods, Orion, Macpac, Snowy Peak, Interface Agencies, and City Care, and with public organisations. All of us have found opportunities for financial benefits from improving our environmental performance.

I applaud the businesses covered in this report for starting the SDR journey, and encourage you to follow their leadership and start the SDR journey for your own business.

Nick Main, Chief Executive, Deloitte Touche Tohmatsu Deloitte Touche Tohmatsu is a strong advocate for Sustainable Business Development Reporting. Our Global Environmental and Sustainability Group works with leading companies in over 20 countries, and the firm has been recognised as a Centre of Excellence in Environmental Reporting by the United Nations Environmental Programme.

Our firm is a member of the World Business Council for Sustainable Development (WBCSD) and holds the position of co-chair of the Sustainability Reporting Working Group. We are also involved in the Global Reporting Initiative (GRI), International Audit Practice Committee and the promotion of many environmental reporting award

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schemes.

Through working with these groups and partnering with industry we have developed a number of Sustainable Business Development Reporting strategies, best practices and systems, including a corporate environmental scorecard for the purpose of benchmarking reporting.

In New Zealand, we leverage off the knowledge, experience and partnerships developed by the Global Firm and we belong to several local organisations including the New Zealand Business Council for Sustainable Development (NZBCSD), New Zealand Businesses for Social Responsibility (NZBSR), and the ICANZ Sustainability Working Group/Special Interest Group.

We have formed a specialised group of professionals who focus on Sustainable Business Development Reporting. As one of New Zealand’s premier business advisory services we promote the benefits of SDR and encourage our clients to take up the initiative because we believe that good social and environmental behaviour can give rise to more profitable business as well as achieving wider objectives for the community.

Our New Zealand firm is committed to producing its own report within two years, and we are currently increasing awareness of Sustainable Business Development initiatives amongst our people which will be a catalyst for producing positive change within our organisation.

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Purpose, Process and Acknowledgements

Dr Rodger Spiller, NZBCSD Executive Director

Purpose – Sustainable Development Reporting (SDR) is a key tool for businesses committed to achieving a triple bottom line of environmental and social as well as economic performance. The purpose of this SDR Guide from the NZBCSD is to respond to a need identified by our members for a comprehensive resource to help them and other New Zealand businesses to more effectively measure and therefore manage their triple bottom line. It provides unique New Zealand insights from a range of organisations both large and small and a variety of sectors. It is intended as a tool to help make the case for SDR and provide guidance for developing a SDR process.

Process – The project team began by reviewing the work of the World Business Council for Sustainable Development (WBCSD) that has a substantial parallel SDR project with which I am involved as the New Zealand representative. The WBCSD project is not due for completion until mid-2002 however NZBCSD members required a guide in the interim. New Zealand businesses also require adaptation of international best practice to local conditions. So we drew upon the WBCSD work to-date, such as the SDR definition provided earlier, and international literature such as the Global Reporting Initiative and AccountAbility 1000. To relate this to New Zealand we created a case study group of eight NZBCSD businesses who worked with facilitators to help them progress their sustainable development reporting work and produce a summary of their SDR process and insights. This was complemented by interviews with CEO’s of the case study businesses and a questionnaire to all NZBCSD member businesses. The results have been summarised in this guide and the detailed case studies are reported in the NZBCSD SDR Case Studies report.

Acknowledgments – On behalf of the NZBCSD I wish to acknowledge the contributions of the SDR project team – Colin Higgins who worked as Project Officer assisted primarily by Ray Skinner and with input from Peter Lee. Thanks also to the case study businesses for their leadership example and willingness to share their stories and to the facilitators, Landcare Research and URS(NZ) for helping to progress these stories and tell others about this important work. Special thanks to the Ministry for the Environment for their vision and commitment in partnering with the NZBCSD to encourage sustainable development reporting in New Zealand businesses.

As the NZBCSD Executive representative on this project I look forward to reading the sustainable development reports produced by our member businesses and learning of the increased economic, social and environmental performance that results from this activity. I encourage you to use this guide and our website as a basis for developing your Sustainable Development Reporting process and I wish you all the best in your journey towards contributing to the realisation of the vision of a Sustainable New Zealand.

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How to Use this GuideThe guide is divided into three sections: Why Report: the Business Case for Sustainable Development Reporting, How to Report: The Sustainable Development Reporting Process, and Examples of the Process: NZBCSD Case Studies.

Section One – Why Report: the Business Case for SDR: This section provides an introduction to why businesses undertake SDR and describes some of the reasons for businesses to implement SDR. Section Two – Developing a SDR Process: The focus of this section is on describing the key aspects of the SDR process. The details given in this section will enable business people to implement their own process.Section Three – Case Studies: This section profiles the eight case study NZBCSD member businesses and presents a summary of their SDR process and insights. Detailed case studies are provided in the separate publication entitled: NZBCSD Sustainable Development Reporting: Case Studies.

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Section One – Why Report: An Introduction to the SDR Business Case

SDR is an integral part of sustainable business. In order to be able to manage and continue to improve triple bottom line performance, a business must be able to measure its current performance and set measurable goals for the future. Just as financial accounting and reporting have become an integral part of business without which it would not be possible to account and report for financial performance, so too has SDR become an integral part of sustainable business.

SDR is a tool for assisting businesses to think about sustainable development and to incorporate the triple bottom line of business thinking into their operations. The SDR process is also valuable for businesses that are already undertaking a number of sustainable development initiatives and want some way of measuring their performance and sharpening their focus.

The majority of businesses already undertake a number of initiatives that contribute to sustainable development. International and New Zealand experience reveals, however, that a number of these initiatives are considered and implemented in an ad-hoc way. The SDR process helps to integrate and progress these initiatives.

There is a wide range of good business reasons for companies to implement SDR. The list below is not exhaustive but does reflect many of the benefits that leading business people report as their rationale for embarking on and continuing the SDR process.

1. Increased financial return and reduced risk for shareholdersSDR can demonstrate to financial institutions and shareholders that the business is mindful of wider issues that could become risk factors if not understood and properly managed. Accordingly, the existence of a comprehensive, externally audited, sustainable development report can assist with reducing borrowing costs and lowering insurance premiums. The improved risk-to-return ratio creates increased value to shareholders and investors.

“It hit us between the eyes when those two incidents (disposal of the Brent Spar oil platform and the execution of Ken Saro Wiwa in Nigeria) to which Shell was linked became front-page news around the world. Both were glaring examples of the need to communicate clearly with all audiences. In both cases we simply didn’t. We had developed blind spots for emerging stakeholders and important issues. Simply we had lost the ability to listen. And to act effectively on our principles and values.” Ed Johnson, Chairman, Shell New Zealand.

Maximising the financial return on sustainable development requires an integrated strategic approach. The SDR process enables businesses to implement such an approach and can result in the business bringing together disparate threads for the business to achieve increased performance.

2. Attracting and retaining employees

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It is frequently stated that a company’s greatest asset is its staff. Research has shown that businesses with a reputation for committing to sustainable development are better placed to attract and retain high-quality staff.

A SDR can demonstrate to existing and prospective employees how the business is making a difference and how the commitment to sustainable development is reflected in the business.

"The very strong company-wide staff support surprised us. For many the SDR process is a tangible benefit in working for Meridian."Meridian Energy.

3. Improving customer sales and loyalty A SDR can potentially enhance the reputation of a business and strengthen its brands. Increasingly customers, particularly internationally, are demanding that the businesses they purchase from produce a SDR to demonstrate their environmental and social performance.

"A necessary process to measure company against company and thus ensure a level playing field".Living Earth

4. Growing supplier commitment Businesses committed to sustainable development will look further than just their own business – they will often work with their suppliers and encourage them to develop a sustainable approach. This results in these businesses being more familiar with the performance of their suppliers. There have been many high-profile cases where activities of suppliers have damaged the reputation of business. For example, the use of child labour and sweatshops has caused major consumer boycotts and damage to businesses reputation, profitability and share market performance.

5. Strengthening community relationsA SDR can inform stakeholders about a company’s management values and approach to business. SDR enables the company to profile the positive contribution it is making to the community and communicate about how it is addressing areas of concern to stakeholders. SDR can also strengthen the relationship between a business and the government. The New Zealand government has stated its commitment to sustainable development and the improvement of New Zealand’s environmental performance:

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“New Zealand takes environmental issues very seriously both at home and at the international level. The government's efforts internationally are matched here in New Zealand by strong resource management legislation, by a commitment to preserving our unique biodiversity, by a very active community of environmental NGOs, and by the emergence of the New Zealand Business Council for Sustainable Development which is also committed to promotion of the triple bottom line to ensure that environmental and social considerations are weighed in decision making alongside the economic considerations.

”The government is presently working on a formal sustainable development strategy for New Zealand. There is already considerable promotion of the concept in local government through its planning processes. In the private sector, here and abroad, leading edge firms are finding that social and environmental responsibility goes hand in hand with brand image and market positioning in the twenty-first century.”Prime Minister, Helen Clark.

6. Contributing to environmental sustainabilitySustainable development reports provide information about businesses environmental performance and the expectations and perceptions of its shareholders. SDR can assist businesses in identifying opportunities for reducing waste, and thereby costs, and improve processes so that businesses are able to increase efficiency and reduce impacts on the environment. This striving for eco-efficiency can lead to an increase in innovative thinking and practice in businesses.

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Section Two - Developing a SDR Process

This section of the guide highlights the key milestones businesses will encounter when developing a SDR. Rather than being a step-by-step guide, the focus is on sharing the key aspects of the SDR process for businesspeople to consider and integrate into existing structures and systems. While the following guidelines are presented in a linear way, the process is actually cyclical.

Developing a SDR process1. Generate commitment and develop a steering group2. Plan the sustainable development report contribution3. Seek out examples and assistance4. Map out a process and define scope5. Stakeholder engagement6: Select appropriate and meaningful indicators7. Reflect, set targets and assign accountabilities8. External verification9. Communicate findings1. Generate commitment and develop a steering group While many businesses have a commitment to sustainable development and undertake a number of sustainable development initiatives – most businesses do not yet report on their performance in meeting sustainable development challenges.

In-depth interviews conducted with NZBCSD case-study businesses reveal a number of barriers and constraints, which help to explain this lack of reporting:

o Lack of internal resources – particularly timeo Questions about the details of what to measure and how to

measure ito Limited pressure to get startedo Still need to be convinced of the ‘business case’ for SDR o Need for more internal stakeholder management to take

place around SDRo Some businesses revealed that their SDR progress was

limited by the need to ‘sell’ SDR to senior managers and also more broadly within the business

o Reservations about whether external pressure for SDR was likely to continue.

One of the key catalysts for SDR in a business appears to be a culture supportive of, and underpinned by, notions of sustainable development. Often there is a founder or leader in the business with a vision for sustainable development – and SDR becoming a natural outcome of that philosophy.

In other businesses, there is still more work to be done on accepting the case for SDR. In these situations, it is important for those who accept the business case for sustainable development to identify other committed individuals and present a sound case to senior management to support SDR. Insights from the case-study businesses and reflections from international research reveal that those businesses that have produced a SDR, and found the exercise valuable have a sponsor at the senior level in

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the business.

Developing a steering group is one suggestion for assisting with the internal stakeholder management required, and also for overcoming some of the other limitations – especially time. In addition to this, sustainable development is about integrating economic, social and environmental thinking throughout the business. Responsibility for sustainable development cannot be the sole responsibility of one person or one function of the business. Instead, the steering group, which should reflect the way the business is structured, will ensure staff participation. In some of the NZBCSD case-study businesses, steering groups included representatives of the following functions:

• Strategy• Human resources• Communications/Public Relations • Finance • Operations.

In smaller businesses where responsibility for these functions fall on one person, a project manager could be assigned to develop, plan and implement the SDR process. The important point is that responsibility for the SDR process is assigned.

In addition to considering an appropriate breadth for the steering group, it is also important that an appropriate level of seniority is reflected in the group’s composition. The purpose of the steering group is to plan, champion and integrate the SDR process throughout the busines.

2. Plan the SDR contributionSDR is a tool for assisting with an organisation’s contribution to sustainable development, and for incorporating “sustainable development thinking” into the business – it is not going to turn the business into a sustainable business overnight.

Insights from the NZBCSD case study businesses reveal the following expected benefits to be gained from SDR:

• SDR will assist with the management of sustainable development – Businesses face a number of important choices and issues to do with sustainable development, and SDR is a way of helping to consider the myriad of social, economic and environmental initiatives already underway within businesses. Bringing all of these activities together in one reporting mechanism enables a business and its stakeholders to assess what is working well and where improvements need to be made.

• SDR will help to improve communication – SDR is a way to raise the profile of social, economic and environmental initiatives and impacts both inside and outside of the business. It is important that the stories from the many activities undertaken are shared to help raise awareness of issues and to build trust and generate dialogue with all stakeholders. The SDR process is a way of demonstrating what a business is doing – and to address important and emerging issues.

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• SDR will enhance sustainable development credentials in the marketplace

Businesses need to carefully consider how SDR will fit with what they are already doing and where the sustainable development information needs lie. The SDR process can provide a catalyst for getting started on sustainable development thinking. It can also be used as a mechanism for continuous improvement, by identifying areas of the business where sustainable development is not yet integrated. SDR can also provide a way of measuring performance and communicating existing sustainable development performance to stakeholders.

SDR needs to be linked to the businesses strategy and particular issues that the business faces. Landcare Research, one of the facilitators for the NZBCSD/MfE project, has developed the Key Performance Area Driver model to assist with this.

The Key Performance Area Driver (Key-PAD) model starts with the issues facing a business, which drive the indicators and targets to be included in a sustainable development report.

Step 1: Key Performance Area Driver

Helps select

Step 2: Key Performance Area

Which are used to develop

Step 3: Key Performance Indicators and Targets

Which are included in

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Step 4: Sustainable Development Report

At this stage it is important to consider how the SDR process can build on existing mechanisms the business already has in place. Is there already a staff satisfaction survey? Does the business already communicate with other stakeholders? Considering these issues will enable the business to plan the aims and purpose of the sustainable development report.

3. Seek out examples and assistanceOnce the aims and purpose have been decided on, the business must develop a process for managing SDR. At this stage it is important to consider which elements will be included in the report and what will be communicated in the report. Most businesses that have produced a sustainable development report, and found the experience valuable, have actively sought information from a wide variety of sources, such as other sustainable development reports, external facilitators and consultants, networks of like-minded businesspeople, and existing guidelines on SDR.

Other sustainable development reportsNearly all of the NZBCSD case-study businesses had begun to collect a variety of sustainable development reports from around the world, and in many cases it was possible to find examples from businesses operating in the same industry.

External facilitatorsExternal facilitators are a useful source of assistance when starting out, or developing the SDR process. Facilitators are able to bring a breadth of experience from other businesses, and are also able to provide an initial process for getting underway.

External facilitators assisted all the NZBCSD case-study businesses. Many of the case-study businesses that had some experience in SDR had used external facilitators at a variety of points throughout their experience. Both the external facilitators and the case-study businesses agreed that the success of the relationship was dependent on careful, thorough and committed communication and involvement on both sides. Committed engagement is necessary so there is a good ‘fit’ between the SDR process and aims the business has for the report.

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External facilitators were also important at various stages along the SDR process, and these will be detailed under the appropriate headings later.

NetworksOrganisations such as the NZBCSD, Businesses for Social Responsibility (BSR), Environmental Business Networks (EBNs), Energy Efficiency and Conservation Authority (EECA) and the Institute of Chartered Accountants of New Zealand (ICANZ) Sustainability Working Group are all useful sources of information for getting started on the SDR process. The networking available through these groups provides opportunity for learning about different aspects of the SDR process.

Existing guidelinesThere is an extensive array of international guidelines on producing sustainable development reports. These have been developed from a variety of perspectives and are worthwhile considering for initial insights about the SDR process, and for considering the role and scope of sustainable development reports. It is important to remember that there is no ‘best way’. Experience does reveal that initial frameworks are useful, but once the process is underway these require reflection and adaptation to suit individual businesses needs.

The guidelines that have been developed are generally either process guidelines – those that specify the types of activities that are important in developing a SDR process; or content guidelines – those that specify the type of material that should be included in a sustainable development report. The two guidelines that are currently receiving the most attention are the AccountAbility 1000 (AA1000) process standard and the Global Reporting Initiative (GRI) content standard.

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The AccountAbility 1000 (AA1000) standard was developed by the Institute of Social and Ethical Accountability (ISEA) and launched in November 1999. THE AA1000 PRINCIPLESThese principles identify characteristics of a quality SDR process. 1. Scope and nature of the organisation’s process

i. Completeness - include and externally audit all appropriate areas of performance in the social and ethical area

ii. Materiality - include all information that is important to stakeholders and deemed necessary by them to make judgements and assessments

iii.Regularity and Timeliness - the process should be undertaken regularly and in a timely manner.

2. Meaningfulness of the informationi. Quality Assurance - the process and the information reported should be

audited. ii. Accessibility - each stakeholder group should be able to access the

material communicated easily and cheaply iii. Information Quality - the information provided should be: comparable,

reliable, relevant and understandable. 3. Management of the process on an on-going basis

i. Embeddedness - the process needs to be integrated into the organisation’s operations, and not a one-off activity to produce a report

ii. Continuous improvement - the process should be undertaken with a view towards continuous development

THE AA1000 PROCESS STANDARDSThe AA1000 process standards detail specific processes that businesses should follow in order to be accountable. These are:• Planning – defining and reviewing organisational values and social and

ethical objectives and targets.• Accounting – collecting and analysing information and developing

performance targets and improvement plans.• Auditing and reporting – preparing reports on the company’s systems and

performance, subjecting these to external verification, distributing the report to stakeholders and receiving feedback.

• Embedding – developing systems and structures to integrate the process into the business.

• Stakeholder engagement –each stage should involve stakeholder interaction.

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The Global Reporting Initiative (GRI) was developed by Coalition for Environmentally Responsible Economics (CERES) in conjunction with the United Nations Environment Programme (UNEP) and is a voluntary standard providing businesses with guidelines for reporting on their economic, environmental and social activities. The GRI sets out the issues to be reported, and principles and practices for reporting. The issues to be reported are divided into economic, social and environmental categories and are further subdivided into generally applicable indicators and organisation-specific indicators. The indicators are designed to provide consistent information about reporting entities, but as yet these have not developed into benchmark indicators. The organisation-specific indicators provide flexibility for reporting organisations to report on particular aspects relevant to their organisations and/or industries. The following table provides some examples of the generally applicable indicators provided in the GRI. The full GRI standard is downloadable from http://www.globalreporting.org.

Social Economic EnvironmentalEmployee retention rates Net profit/income Total energy useRatio of lowest wage to national legal minimum

Research and development Use of recycled materials

Ratio of training budget to annual operating costs

Value of goods and services outsources

Quantity of waste returned to process or market

Mentoring programmes for minorities

Performance of organisation in honouring contracts

Incidences of non-compliance with standards

In addition to these indicators, the GRI also provides a framework for preparing the sustainable development report. The major sections suggested to include are:1. CEO Statement2. Profile of reporting organisation3. Executive summary and key indicators4. Vision and strategy5. Policies, organisation, and management systems6. Performance

• Environmental performance• Economic performance• Social performance• Integrated performance.

A number of other guidelines have also been developed. Some have come from outside the business community (various NGOs, the OECD, and various bodies within the UN) in an attempt to hold businesses accountable for their actions on a local and global scale. Others have come directly from the business community – often from a collaboration of like-minded individuals who want to bring a more principled approach to business practice. More recently, collaboration between business, civil society and government has resulted in the development of guidelines.

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The NZBCSD case-study businesses all referred to the AA1000 and the GRI in their SDR planning. The GRI was considered useful for providing a checklist of report content and for providing insights on particular indicators. In some areas the GRI was less useful as fully integrated sustainability indicators have not yet been developed and the social, economic and environmental elements are still largely treated as three distinct silos. Additionally, some key aspects of sustainability for the case-study businesses are omitted from the indicators. For example, the important issues surrounding the potential for businesses such as Telecom and the Warehouse to influence thinking and concern for sustainable development. The GRI guidelines are also largely quantitatively based and some businesses, such as BP, see value in also reporting narrative, qualitative measures of performance.

In terms of the AA1000 one of the main issues is lack of awareness. Access to the AA1000 requires membership of the Institute for Social and Ethical AccountAbility and, therefore, the approach is unfamiliar in New Zealand. The AA1000 does, however, provide useful guidelines for integrating stakeholders into the organisation’s process, and also for highlighting the importance of planning and verification. Some of the case-study businesses, particularly the smaller businesses felt that the AA1000 was too rigid and complicated for their business – being a small business necessitated a much more informal approach to stakeholder dialogue. Some of the facilitators felt the AA1000 also placed too much emphasis on both the reporting aspects of SDR and on stakeholders. Landcare’s model, on the other hand, recognises stakeholders as one of only eight drivers and considerations in the SDR process as SDR has an important role in internal behaviour change as well as accountability to stakeholders.

4. Map out a process and define scopeOnce businesses have considered the role that SDR will play in their contribution to sustainable development, and sought some outside assistance and examples, they may feel that the SDR process is long, complex, potentially time-consuming and possibly expensive. The case studies presented in the next section, a cross-section of large and small businesses, demonstrate that this is not necessarily the case. Notwithstanding this, however, it is necessary to consider carefully the way in which the various guidelines are applicable to each business, and what can be achieved in the short and long term. It is important to consider the scope of the sustainable development report and to map out a long-term plan of achieving the purpose.

Traidcraft, a United Kingdom-based organisation that sources products from artisans and craft people in developing countries and sells them in their UK retail stores, has a five-year SDR cycle. Dealing with a large number of producers in developing countries requires an enormous commitment to stakeholder dialogue and engagement that requires a long term process. Traidcraft can’t possibly cover all of their stakeholders comprehensively annually, so they set a five-year timeframe for covering all of their stakeholders and issues comprehensively.

A possible suggestion is to start small. Select one stakeholder group to focus on in the first year, or concentrate on selecting and developing indicators for the environmental aspects of the business. This will enable the business to experiment with alternative

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methodologies and to make changes as experience with the process increases. Considering the overall picture will, however, make this task easier.

It is also important to consider the scope of the sustainable development report. How far should the business extend collection and reporting of activities? BP considered this issue during the NZBCSD/MfE SDR project.

BP International has been producing global sustainable development reports for some years, and while New Zealand contributes considerable data to the international report, the New Zealand measures are very small in relation to the overall global figures, and are also included in the ‘rest of world’ numbers. BP is now producing a local, New Zealand report that will provide stakeholders with information on BP NZ’s environmental and social performance, and what the business wants to achieve and progress towards. While the focus of the New Zealand report will be on local operations, it will be consistent with, and relate to, the other country/location reports produced internationally and also the overall global report.

5. Stakeholder engagementA key aspect of SDR is stakeholder engagement. Stakeholder engagement can be useful and important during at least three stages of the SDR process. These are:

i. Development of key indicators of performance - some aspects of sustainable development impact directly on stakeholders and in many cases engagement with stakeholders is one of the best ways of generating indicators that measure performance in their eyes.

ii. Providing perceptions of the company’s performance – where stakeholders are engaged to develop key indicators of performance, it is useful to also gain their perceptions of how well the business has performed against those stakeholder-defined measures.

iii. Engaging in constructive dialogue to improve performance - stakeholders are often able to provide new insights and suggestions for improving performance and meeting performance targets.

Interface Agencies said in relation to stakeholders “what we want to know in particular is what is important to (our stakeholders) in relation to our performance. We may also want to know what their perception is of our performance in this area and possibly involve them in the development of KPIs for the report”

While the involvement of stakeholders is considered fundamental, it is also an area where significant issues and problems exist. One of the most significant issues is the practical question of who the stakeholders are, and what the best ways of engaging with them to provide real meaningful and useful data are. While the AA1000 provide some useful guidelines on engaging with stakeholders – it is important to consider:

• The reason for stakeholder engagement (development of indicators, measuring performance, or constructive dialogue)

• Existing mechanisms of stakeholder interaction (for example, staff surveys, customer research)

• The level of knowledge and awareness of issues amongst stakeholder groups • The level of trust between the business and stakeholder group.

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A number of basic techniques are available for interacting with stakeholders (interviews, questionnaires, focus groups) and it is advisable to seek assistance from facilitating organisations, market research organisations and/or university academics in developing the right instrument for purposes of the business. Some stakeholder groups will require extensive planning, preparation and engagement, while others will be relatively simple to engage and interact with.

One of the key challenges raised by Dick Hubbard of Hubbard Foods was the identification of the ‘community’ stakeholder group. During the early phase of Hubbards’ SDR process, questionnaires were developed and sent to stakeholders to gauge their perceptions of Hubbards’ performance against a number of criteria. While it was relatively easy to identify and disseminate questionnaires to staff, customers, suppliers, and shareholders – the question of the ‘community’ posed some issues. In the end Hubbards’ chose a selection of people in the neighbouring community and groups that have received support from Hubbards’.

Another important issue to be aware of with stakeholders is the weighting that should be given to stakeholders’ perceptions. Sometimes perceptions of stakeholders do not accurately reflect what is actually happening in a business around sustainable development. What’s more, it is always difficult to get a fair and balanced representation of stakeholder views. Therefore, while stakeholder engagement is fundamentally important, it needs to be carefully planned and also supplemented with other indicators of performance.

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6. Select appropriate and meaningful indicatorsOne of the key issues to remember when selecting indicators and measures is to ensure that the indicators selected are meaningful and add value to you and your stakeholders. One of the purposes of producing a SDR is to enable informed decision-making. While it is relatively easy to select a few generic indicators and to produce a SDR the result will be of limited value. It is important to develop indicators that get to the heart of the sustainable development issues facing the business.

Richard Lauder CEO of City Care, selected indicators such as:• Working conditions• Training• Civil emergency response• City Councillor satisfaction• Innovation.

The Global Reporters, the first international benchmark survey of corporate sustainability reporting produced by UK-based consultancy SustainAbility, report that some sustainability reports produced tend to overlook central sustainability issues affected by a company’s activities, such as:

• Impact of fossil fuel use for an oil company• Continued growth in air travel for an airport operator• Role of consumption in a world increasingly saturated in the North

and increasingly poor in the South

There has been a tendency to think of measures and indicators as being quantitative, but there is value in thinking about measuring performance using qualitative comments reflecting stakeholders’ views. It is also important to use indicators that will be meaningful and understandable by a wide range of stakeholders.

Overall, it is important to consider the indicators selected and developed in relation to:

• The vision, values and strategy of the business• What stakeholders would expect to see in relation to performance• Critical sustainability issues facing the business.

City Care has the following Statement of Corporate Intent that helped in selecting their indicators and measures:

• Operate the business in a way which generates strong financial returns and dividend streams to the shareholder.

• Be a good employer in providing a work environment that recruits, fosters, and retains competent, motivated, committed, and productive employees.

• Be committed to excellence in health and safety management.• Be a good corporate citizen in the community meeting our social

obligations.• Act in an environmentally responsible manner and progressively

implement environmentally sustainable practices to its method of operation.

• Ensure all business activities comply with legal requirements

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7. Reflect, set targets, and assign accountabilitiesThe importance of the SDR process is in the new action, new behaviour and new directions that happen within businesses as a result of the process. The key outcome of the SDR process is not a report, but changed behaviour. The results of the SDR process must be used, the results must be given the same level of attention in the business as the financial results, and the results of the process must feed into existing systems of decision-making and control.

The findings of the SDR process will reveal areas where improvement is needed, and where attention and resources should be focused. There will be some surprises. Some stakeholders will reveal issues that the business was not aware of. Consideration of key indicators of performance will reveal impacts that fall short of what is desirable. This information needs to result in new targets for performance, and these targets must have accountabilities attached.

To ensure this process has been undertaken, URS, one of the facilitating businesses for the NZBCSD/MfE case studies, has developed the Plan, Do, Check and Act model that emphasises the importance of generating action.

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8. External verificationExternal verification is listed as one of the key features of excellent reports in international academic literature and surveys of best practice SDR. External verification provides assurances to stakeholders that the information contained within the reports is credible and reliable.

There are some issues with external verification, however. Many small businesses consider the cost of external verification prohibitive and others consider the idea philosophically inconsistent with notions of accountability and social responsibility. One of the key pillars of SDR is to build trust with stakeholders – and this trust should be two-way – so if stakeholders trust a business, the need for external verification should be reduced. However, there is still a degree of scepticism about businesses and their commitment to sustainable development. External verification is one way to help raise the profile of responsible and sustainable business and to provide some credibility to the initiatives underway.

External verification goes deeper than an auditor’s sign off on the content of the report. The nature of SDR necessitates much more committed involvement on the part of verifiers. For example, in order to assess the validity of the performance measures derived from stakeholder engagement, verifiers need to be involved right at the coalface of stakeholder engagement.

Some of the case-study businesses commented that external facilitators, who are familiar with SDR processes and have worked with their business, can be valuably used as the external verifier.

Verifying Reports

Verifications can be for internal purposes only, or may be for a report published for external readers. Furthermore, the business can seek verification for the entire report, or for specific sections.

The value of verificationA verification statement can add value through:• Added credibility• Certification that the report fulfils the requirements of the

criteria/guidelines followed• Increased assurance to company management that what they say externally

is supported by evidence• Additional check to assure the plausibility of collected data and to

eliminate errors in data aggregation• Increased strength and quality in the report preparation process • Additional processes to facilitate and provide support for reporting units

The process of verificationThe first step in the verification process is to clearly define the scope, which determines the style and content of the verification letter. When undertaking verification recognised standards are considered to ensure a level of professionalism, consistency and comparability. Examples of such standards include the Engagement Standards issued by the Institute of Chartered

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Accountants of New Zealand or the Guidance on Verification, contained in the Sustainability Reporting Guidelines, issued by the Coalition of the Environmentally Responsible Economies (CERES).

Similar to the financial audit process, verification of sustainable development reports includes visits to the company’s locations to conduct interviews with management and staff, to obtain information about the preparation of the report and to perform reviews on corporate records and other relevant documentation.

To perform verifications in a cost effective manner, the verification process is often combined or structured alongside other complementary audits, such as relevant internal audits, environmental audits or health and safety audits. Careful planning when determining the scope of the verification will ensure costs are minimised without compromising the process or the outcome for the business and its stakeholders.

9. Communicate findingsThe production of the sustainable development report is one of the final steps in the process and it serves a number of useful and important purposes. It is important to reiterate, however, that reporting is only the tip of the iceberg as far as the SDR process goes. As the above steps illustrate, there are a number of activities that feed into the sustainable development report and the process requires effort and commitment.

Simon Zadek, an international writer and consultant on SDR argues that the reporting forms a key part of the dialogue and communication that surrounds the SDR process. The communication of sustainable development data provides an opportunity for the business to communicate aspects of their performance and invite feedback and engagement from stakeholders about performance.

There are a number of important issues to consider including the content of the sustainable development report, how the results can be presented, and how the report can be distributed.

In terms of the content of the report, some businesses recognise the risks of ‘warts and all’ reporting. There is the potential for the reporting of poor performance to be misunderstood. Increasingly, however, international examples have demonstrated the costs of not recognising and disclosing sensitive issues can pose even greater risks.

In a review of sustainable development reports, the WBCSD identified the best reports having: explanations and discussion around the indicators and measures are reported, findings are put in context, reports include benchmarks against which performance is measured, there are internal targets set, and there are competitors and/or industry comparisons. In addition to this, the best report made it clear how the various indicators and targets were linked to the policies the business has in place around sustainable development.

While the notion of SDR implies the production of a physical report there are a number of other ways a business can go about communicating the results of the SDR process. The internet is becoming a popular way of communicating sustainable

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development information, this is a more cost-effective way of reporting, but it is important to consider how stakeholders will know the report is available. Some of the NZBCSD case-study businesses are also considering publishing a summary report of their results as full-page advertisements in major newspapers.

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Section Three – Case Studies

All NZBCSD businesses are required to produce a sustainable development report within three years of becoming a member. To help businesses understand the process that should be undertaken, eight NZBCSD member businesses, including four that had not begun planning for a sustainable development report and four that had already started the process, were chosen as case-study businesses. These eight businesses were assisted by facilitators to reach the next in creating their own SDR plans. The case study group committed to ‘learning by sharing’ to help other NZBCSD businesses.

The case studies presented in this section are a cross-section of large and small businesses, in order to provide lessons for most New Zealand businesses.

NZBCSD businesses Landcare Research and URS were facilitators for the eight case study businesses and worked with them to scope the work required to reach the next stage of their SDR.

Detailed case studies are provided in the separate publication entitled: NZBCSD Sustainable Development Reporting: Case Studies. Full reports from each of the businesses will soon be available on the NZBCSD website.

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Case studies of businesses that had begun the SDR process

Case study: Sanford Facilitator: URS

Sanford, a founding member of the NZBCSD, is a large and long-established fishing business. Its business is harvesting, farming, processing, storage and marketing of New Zealand seafood. The business has about 1,500 employees nationwide and has processing plants, aquaculture operations, fishing and freezer fleets and offices all over New Zealand. Sanford is also the only actively trading fishing/seafood business listed on the New Zealand Stock Exchange. Sanford supports the sustainable utilisation and management of seafood and wild fisheries from New Zealand’s unique marine environment.

The business prepared its first sustainable development report in 2000. The report was a standalone document and separate from the Annual Report for the same year. It provided information on Sanford’s economic, social and environmental performance, according to the following set of policy commitments: • Ensuring that operations are sustainable• Maximising positive social outcomes from both the employee and general

community perspectives• Maximising the economic growth and prosperity of the business for the benefit of

shareholders, staff, customers, suppliers and the general community.

Sanford considered the report as an important first step towards incorporating sustainable thinking into its operations, performance evaluations and reporting. The company is currently working towards its second sustainable development report, for 2001. The main objective of the case-study work was to provide URS input into the development of this second report.

Sanford’s business case for its SDR is multifaceted and includes: • Contributing to the sustainable management of New Zealand’s fish resources• Supporting Sanford’s Sustainable Seafood Logo• Meeting Customer Expectations

The existing SDR plan is described in the “Triple Bottom Line Report” 1999/2000 as a Draft Sustainability Strategy. The first version of this Sustainability Strategy contained the company’s initial commitments with respect to future sustainability goals and potential indicators to measure whether these had been achieved. It was intended that both the goals and the indicators would be further developed in subsequent reports. Potential indicators were initially developed for the following five areas – representing the important elements of sustainability from Sanford’s perspective:

• Corporate Governance;• Shareholder Value;• Stakeholder Satisfaction;• Employee Orientation; and• Environmental Performance.

Sanford has experienced widespread internal and external support for their initial Sustainable Strategy, and publication of their first report. In addition, more internal ownership and participation in the strategy has been experienced since the

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publication of the first report. The senior managers have developed a better understanding of sustainability principles and objectives for both the strategy and the report itself.

The following has been recommended to Sanford, to move them to the next stage of the SDR process:• Refine corporate governance policies and performance targets for board,

management and individuals• Agree on scope and boundaries for the report (e.g. internal only, not suppliers,

contractors) based on an analysis of the sectors which Sanford has jurisdiction or other influences over

• Discuss all proposed policy statements, performance objectives and indicators with management team to establish collective “buy-in” and provide education on the range/types of parameters that data is required for

• Consider some discussion of the policy statements, performance objectives and indicators with other key stakeholders, in particular shareholders and overseas customers

• Edit staff questionnaire according to agreed list of parameters established from management feedback and targeted stakeholder discussions

• Circulate questionnaire and compile data• Present data in recommended format (Appendix 2) that clearly links policy,

performance objectives and actual data• Prepare remaining sections of the report according to the general GRI format

(CEO statement, Profile of Reporting Organisation, Vision and Strategy, Policies, Organisation and Management Systems, Performance)

• Evaluate benefits of verification and options for completing this exercise• Print report and circulate with an attached stakeholder feedback form• Depending on stakeholder engagement achieved during 2001, develop targeted

stakeholder consultation programme for 2002.

"Reasons for considering SDR include competitive advantage, enhancing reputation, shareholder value, improving sustainability culture. These include aspects of risk management.

"Warts and all" is an issue, but the sooner an organisation is faced with reporting, the sooner it is faced with fixing them up. Warts and all increases creditability - we have realised there is an issue(s) we do not like it and so we are actually going to do something about it - but without painting the organisation "lily white". If going to do SDR credibly, organisations will have warts. If there are big warts the sooner these are faced up to the better."

"We have received positive payback for our investment in SDR and implementing ISO 14000 in the parent company and all subsidiary companies."

Eric Barratt Group Managing Director, Sanford

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Case study: BP Oil New Zealand (BP NZ). Facilitator: URS

BP NZ’s core business is the supply, distribution, and marketing of fuels and lubricants as well as convenience retailing. The New Zealand operation, which includes Castrol, employs about 300 staff and generates a turnover of 1.5 billion. There is a network of over 400 BP/Castrol petrol stations throughout the country and the business accounts for more than 25 percent of the market share, on total products.

BP has a strongly embedded culture of health, safety and environmental performance, coupled with responsiveness to community and staff needs. BP NZ’s business case for developing a sustainable development initiative is summed up this quote from the CEO, Peter Griffiths:

“Our objective is to bring a creative, progressive, distinctive and responsible approach to sustainable development challenges, and to do so in an ethical way in line with our core values and business policies. In particular we regard the greater transparency and accountability associated with sustainability as an opportunity for leadership and innovation.”

SDR began globally for BP in 1998, and in 1999 was integrated into the financial report for that year. BP is now committed to yearly reporting on its HSE (health, safety and environment) and social performance as well as its financial performance.

BP NZ has been working on the development of the New Zealand report for some time and is proposing to have the document finalised and published in October 2001. An initial draft report was prepared in 1999. Despite the wealth of available corporate information on sustainable development practices and reporting, BP NZ has struggled to complete the process. During the facilitation process, which was undertaken as part of this case study project, they learnt the following lessons:

• The scope and boundaries of the New Zealand report must be clearly established from the outset, and reflect the New Zealand operations as opposed to trying to fully cover all of the global environmental and social issues

• Despite the restricted scope with respect to specific policies and performance indicators, the report must reference key global issues, and summarise BP’s policy and actions in relation to these. Examples include climate change, alternative fuels

• Once the scope and boundaries of the report are defined, a list of narrative and quantitative performance indicators should be selected

• Non-technical performance indicators (for example corporate governance) are as important, as the technical indicators (for example emissions)

• Internal resources need to be clearly defined to enable policies and performance indicators to be established and reported on.

Findings from the case study highlighted possible future directions that could be taken by BP NZ to enhance its SDR development. These have been grouped into three key SDR processes - planning (including development of policies and performance indicators), corporate governance and stakeholder engagement. A methodology has also been recommended to facilitate BP NZ’s movement to the next stage in the SDR process.

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The following was recommended for moving BP NZ to the next stage of the SDR process:1. Establish an internal project team and agree on the methodology to be used

(including any need for stakeholder input), resource requirements, overall timeline, need (if any) for external input

2. Agree on the scope and boundaries for the report3. Agree on all BP NZ policy statements, narrative and quantitative performance

indicators and any targets that can be committed to 4. Allocate sections of the report to individuals5. Prepare the draft report6. Prepare the scope of verification by a third party. The verifier should be asked

to ensure that:–The report presents a comprehensive evaluation of BP NZ economic,

environmental and social data–The policy statements and performance commitments appropriately

reflect the underlying management philosophy, culture and behaviours of BP NZ staff–The information and data provided is accurate

7. Obtain independent verification of the report8. Print the report and circulate within BP NZ with an attached feedback form9. Depending on stakeholder engagement achieved during 2001, begin developing

a targeted stakeholder consultation programme for 2002. "Sustainability is an integral part of BP and the BP culture. Internationally this has come about due to the responsibilities associated with the growth of the company, the responsibilities associated with operating in the oil industry and recognising the tension that comes with operating within this industry and the important and emerging issues surrounding sustainable development.

"BP are interested in participating in this debate to see how the current Western lifestyle can be preserved, while also being sustainable. The company is also interested in protecting the reputation that has been built up – as well as seeking differentiation within the oil industry. BP sees themselves as leaders in this area." Peter Griffiths, CEO, BP NZ

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Case Study: Hubbard Foods Facilitator: Landcare Research

Hubbards is a privately owned business that has been making cereal since 1988. The company employs approximately 100 staff and currently manufactures all its cereal from its factory in Mangere. Turnover is approximately $27 million and it manufactures a wide range of breakfast cereal, which is sold in New Zealand, the United Kingdom, Asia and Australia.

The profile of its CEO and founder, Dick Hubbard has been synonymous with social responsibility. This has impacted on the reputation of the business and is reflected in the company’s membership and representation at the executive of Businesses for Social Responsibility and the NZBCSD.

The business has commissioned engagement with its stakeholders through the Murphy Stakeholder Audit Model. It has also undertaken an environmental audit through the Auckland Environmental Business Network (AEBN), and has had a CO2 emissions audit conducted by Landcare Research. Some of this information has been used in the preparation of its sustainable development report.

Hubbards has been committed to preparing a sustainable development report for two-and-a-half years, and will be releasing its first report on 31 July 2001. Despite the intention to report, the company had no detailed plan in place prior to this case study project.

Hubbards will now undertake a step-by-step process to complete its sustainable development report. The company must ensure that all sustainability issues are identified, even the tough issues. It is important to ensure the report shows a balanced view, rather than a rosy picture of the business, or one driven by readily available data.

Stakeholder analysis is a key aspect of Hubbards’ SDR. What Hubbard’s want to know is what is important to each stakeholder group in relation to the company’s performance. It may also want to know the stakeholders’ perception of Hubbards’ performance in each area, and possibly to involve stakeholders in the development of key performance indicators (KPIs) for the report. The aim of using stakeholders as a driver for the sustainable development report is to ensure the report is relevant to the stakeholders. Much of Hubbards’ reporting in the past has included what the business considered important, with little consideration for what was important to stakeholders.

The following methodology was recommended for moving Hubbard’s to the next stage of the SDR process:1. Review purpose of reporting2. Determine scope of report3. Perform a gap analysis on corporate values, mission, and policy, to highlight

where sustainable development principles are not reflected4. Review the key performance area drivers to determine the content of the

‘performance’ section of the sustainable development reports5. Determine the way the key performance areas (KPAs) will be addressed in the

sustainable development report

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6. Develop KPIs for those KPAs that will be measured. 7. Develop targets and accountabilities8. Develop measurement systems9. Decide on structure of report10. Decide how to deal with verification and credibility issues 11. Practical report issues – web, distribution etc 12. Feedback – address how feedback on report will be obtained 13. Embed learning and continue to learn and improve.

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Case Study: The Warehouse Group Facilitator: Landcare Research

The Warehouse Group was established in 1982. It now comprises three trading operations: Warehouse Stores (74 stores, the “Red Sheds”) selling general merchandise in New Zealand, Warehouse Stationery (32 stores selling small office and home office products), Australian business (116 stores). The product range in New Zealand exceeds 90,000 lines, reflecting a very large number of individual suppliers both domestic and overseas. The company sells a number of own-label products, together with an increasing range of international brands.

The Warehouse and its founder, Stephen Tindall, are both household names in New Zealand. Stephen Tindall, although no longer the CEO, has maintained an active role and continues to act as champion for sustainable development initiatives.

Within The Warehouse a number of initiatives have reflected its founder’s commitment to sustainable development: • People First was adopted as a philosophy, focusing attention on the five key

stakeholder groups: customers, team members, suppliers, shareholders, and the community

• A Supplier Code of Conduct was introduced in 2000, which, in addition to dealing with the rules of commercial engagement, begins to impose standards of environmental and social performance on suppliers

• A “Zero Waste” philosophy exists in the business.

The company, a founding member of the NZBCSD, is also involved in many sustainable development projects and groups around the country.

Since 1998, The Warehouse’s annual reports have included a couple of pages on environmental initiatives. These reports have not included performance measures or data. The company is now committed to SDR, and is developing a report structure and deciding upon priorities for content. It recognises that performance data may not yet exist for many aspects of sustainable development and measurements will need to be established.

The Warehouse believes SDR will provide the following opportunities:• Better manage corporate risk through a comprehensive assessment of social and

environmental performance• Internal discipline, influencing what the company does, and forcing it to do better• A platform for influencing stakeholders, especially others in the New Zealand

business community, to improve their own contribution to sustainable development

• Build enduring stakeholder support for The Warehouse through shared values, trust, and demonstrated integrity

• Build brand awareness and reputation in a society where values are shifting towards greater sustainability

• Show how The Warehouse itself has benefited by implementing sustainable development thinking and technology

• Acknowledge issues of concern to stakeholders, and talk about what The Warehouse is doing to address them

• Achieve greater resource-use efficiency and reduced operating costs

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• Encourage innovation in product and service lines and marketing to enhance the company’s advantage gained from applying sustainable development principles

• Benchmark the business against others reporting in the sector around the world

Some of the issues that this case study project highlighted for The Warehouse in developing their sustainable development report included:• Need to achieve buy-in from the senior management team• Developing a reporting team with a champion and suitable representation• Few models exist for the retail sector• The risks in SDR - The Warehouse is committed to a “warts and all” report of its

performance

The Warehouse, which is already working towards their sustainable development report has undertaken the following process:• Ensure top-level commitment to SDR and allocation of the necessary resources

(Done)• Select the SDR champion (Done)• Prepare a system for documenting the decision process and activities in

producing the sustainable development report (Incomplete)• Decide on the reporting entity, scope, and time period covered by the report

(Done)• Identify stakeholders and what they would expect of the report. Develop a

programme for engaging key stakeholders which clearly indicates which groups will be engaged, when, and the reasons for including or excluding specific groups. (Incomplete)

• Identify key performance areas on which to report using the Key Performance Area Driver model or similar framework

• Document the reasons for selecting the key performance areas (KPAs) on which to report (Incomplete)

• Assign key performance indicators (KPIs) to the KPAs, ensuring balance, comprehensiveness, and objectivity (Incomplete)

• Build on existing scorecards and performance measures but avoid presenting a report skewed towards internal priorities (Incomplete)

• Document internal management processes and identify gaps in policies, accountabilities, planning, and monitoring (Incomplete)

• Where appropriate, set performance targets for the next reporting period (Incomplete)

• Select approach to report verification and stakeholder comment (Incomplete)• Develop the report content, format, illustration, and dissemination, taking care to

reflect the values of the company (Incomplete).

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Case studies for businesses with no experience in the SDR process

Case Study: City Care Facilitator: Landcare Research

City Care, previously a unit of Christchurch City Council, was formed as a council-owned Local Authority Trading Enterprise in December 1999. City Care’s principal objective is to operate a profitable, sustainable, and innovative business in order to maintain a strong market presence in all areas of construction and maintenance of the infrastructure and amenity assets owned by the shareholder, Christchurch City Council. The second objective is to grow the business profitably with other customers and in other regions.

The CEO and Board of City Care agree that as a publicly-owned entity, City Care has an ethical obligation to report publicly. Furthermore, the company’s statement of corporate intent states that reporting publicly extends to all aspects of performance.

City Care’s sustainable development report will be comprehensive and integrated, setting out the objectives set for the year and the levels of performance achieved. The CEO believes the sustainable development report will provide opportunities to:• Build enduring stakeholder support for City Care through shared values, trust and

demonstrated integrity• Better manage corporate risk through a comprehensive assessment of social and

environmental performance• Build brand awareness and reputation in a society where values are shifting

towards greater sustainability• Develop new markets for City Care by demonstrating the contribution of its

services to sustainable development• Promote innovative thinking and technology as solutions to the challenges of

sustainable development• Show how City Care itself has benefited by implementing such innovative

thinking and technology• Acknowledge issues of concern to stakeholders, and talk about what City Care is

doing to address them• Influence stakeholders to improve their own contribution to sustainable

development• Benchmark the business against others reporting in the sector, nationally and

internationally.

City Care is at an early stage in its SDR planning and will produce its first report in 2002. The CEO has prepared a draft set of performance indicators including: economic performance, environmental performance, social impact, relationship with key stakeholders and organisational health.

Issues that this case study project highlighted for City Care in developing their sustainable development report included:

• Shareholder commitment: need to achieve buy-in from the board • Key staff need to be familiarised with principles of sustainable development and

its implications for corporate sustainability• Need to ascertain which sustainable development issues City Care can have the

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greatest influence over• Need to decide on boundary issues and accountabilities for services provided by

City Care• Need to decide on the phasing of content of the report • Need to prepare the audience/stakeholders through consultation on the issues,

report content, and medium of presentation.

"The board has fully supported sustainable development – some members because they feel that it is the appropriate thing to do due to the organisation’s statement of corporate intent and some believe that it is what an organisation such as City Care should do.

"The role of SDR will be to provide a total and integrated reporting structure for the organisation. The report will detail what objectives were set for the year and what was achieved. This report, as with the current annual report, will be publicly available." Richard Lauder, CEO, City Care.

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Case Study: Interface Agencies Facilitators: Landcare Research

Interface, a flooring importer and distributor, is the smallest member of the NZBCSD, with just eight employees. It is a privately held business owned by Robb and Christine Donze.

The company’s commitment to sustainable development is a result of the personal beliefs of its CEO, Robb Donze. The small size of the business makes it easy for this value-set to permeate the entire business. An extremely important concern for Robb is the risk of ‘green-washing’ the business through the SDR process. This has impacted on the process and content of the report. In particular, the SDR must show a fair picture of the business – the good and the bad, ’warts and all’. The CEO has a strong desire to provide sustainable development leadership, particularly in the construction industry, and he intends this report to support such leadership. It is therefore important to him that this process seems accessible to those businesses that are thinking about going through the process.

Interface has proceeded some way down the path of preparing a sustainable development report in the short space of this case study project, and aims to release the first report on 31 August 2001. In order to do so, Interface has reduced the formality of SDR to take account of the size of the business. The business has come up with ways of making progress with the minimum amount of cost and time. The ‘keep it simple’ rule has permeated the process with Interface.

The business plans to undertake a 13-step process to develop its sustainable development report:1. Review purpose of reporting2. Determine scope of report3. Perform a gap analysis to highlight where SDR is not reflected4. Review the key performance area drivers5. Determine the way the key performance areas (KPAs) will be addressed in the

sustainable development report6. Develop key performance indicators for those KPAs that will be measured7. Develop targets and accountabilities8. Develop measurement systems9. Decide on structure of report10. Decide how to deal with verification and credibility issues11. Practical report issues – web, distribution etc12. Feedback – address how feedback on report will be obtained13. Embed learning and continue to learn and improve.

“I believe that our experience will be a great asset as a large portion of New Zealand businesses is similar in size to Interface Agencies i.e.- small (10 people or less). If in future, it becomes standard to submit Triple Bottom Line Reports or if it becomes mandated, our experience will become very relevant for a large number of small independent businesses.

Because it is important to me and the credibility of my company, I am trying to ensure that our first Triple Bottom Line report does not preach and has information that gives a true snapshot of where we really are at in regards to sustainability. I also want our report to clearly state that this is a first step, and be sure that our stakeholders understand that we are asking them to help us become sustainable and hold us to account by setting

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benchmarks that we will be measured by in future years. Small business needs to understand that this is a journey, not a destination.

Robb Donze, CEO, Interface Agencies.

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Case Study: Telecom Facilitator: Landcare Research

The Telecom group provides a full range of internet, data, voice, mobile and fixed line calling services in New Zealand and Australia. In New Zealand, Telecom provides network access and other services to 1.3 million households and more than 100,000 businesses. In Australia, the group’s AAPT voice and data business serves more than 850,000 customers.

Telecom’s goal is to be the best performing customer-focused online and communications business in Australasia. The company is committed to creating value for shareholders through the provision of valuable services to customers. Telecom is also committed to making a positive contribution to these economies.

Telecom fully recognises the responsibilities arising from its size and reach as one of New Zealand’s largest enterprises. Telecom is the second largest funding provider for schools in New Zealand (after the Government) and provides substantial support for many community and sporting activities. Telecom is also dedicated to maintaining good relations with its stakeholder groups.

Until recently, Telecom has not consciously focused on sustainable development in its business strategy. However, it does have several programmes to support communities and disadvantaged groups, has been developing an environmental policy and is a major contributor to the economic performance of New Zealand.

Telecom is committed to building on its excellent reputation for reporting to shareholders by exploring the best, most meaningful forms of SDR to other stakeholder groups. The company sees additional benefits and opportunities presented by SDR:

• Build enduring stakeholder support for Telecom through shared values, trust, and demonstrated integrity

• Better manage corporate risk through a comprehensive assessment of social and environmental performance

• Build brand awareness and reputation in a society where values are shifting towards greater sustainability

• Develop new markets for Telecom by demonstrating the contribution of the “online” world to sustainable development

• Promote innovative thinking and technology as solutions to the challenges of sustainable development

• Show how Telecom itself has benefited by implementing such innovative thinking and technology

• Acknowledge issues of concern to stakeholders, and talk about what Telecom is doing to address them

• Provide a platform for influencing stakeholders to improve their own contribution to sustainable development

• Achieve greater resource-use efficiency and reduced operating costs• Benchmark the business against others reporting in the sector around the world.

Telecom has established a reporting team, encompassing diverse professional and

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technical competencies. There has been an unprecedented response to the SDR case study project within Telecom.

The following was recommended for moving Telecom to the next stage of the SDR process:• Ensure the top-level commitment to SDR and allocation of the necessary

resources• Select the SDR champion• Prepare a system for documenting the decision process and activities in

producing the sustainable development report• Agree on the reporting entity, scope, and time period covered by the report• Identify stakeholders and what they would expect of the report• Identify key performance areas (KPAs) on which to report using the key

performance area driver model or similar framework• Assign key performance indicators (KPIs) to the key performance areas,

ensuring balance, comprehensiveness, and objectivity• Build on existing scorecards and performance measures but avoid presenting a

report skewed towards internal priorities• Document internal management processes and identify gaps in policies,

accountabilities, planning, and monitoring• Where appropriate set performance targets for the next reporting period• Select approach to report verification and stakeholder comment• Develop the report content, format, illustration, and dissemination, taking care

to reflect the values of the business.

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Case Study: Urgent Couriers Facilitator: URS

Urgent Couriers is a specialised one-hour courier service with 74 owner-drivers operating in the Auckland area. Formed in 1989, it is a privately owned business with two directors Allan Bonnici and Steve Bonnici.

Urgent is at a very early stage of preparation for the sustainable development report but the business did produce an Environmental Report in 1997. As part of the case study project Urgent and URS developed the plan for the sustainable development report – including a timeline, anticipated resources required and the processes that should be used. Urgent believes that the sustainable development report, which it aims to complete by 31 August 2000, will have several important benefits including: providing leadership and setting new standards within the courier industry; providing a resource for communicating with stakeholders; and facilitating the review of its management processes and performance indicators.

When preparing the report Urgent will need to address issues relevant to all small, privately owned businesses preparing sustainable development reports. The case study identified the following small business issues:

• Ensuring the report is simple and relevant• Selecting information that can be made publicly available, by choosing

economic indicators which convey meaningful information without compromising necessary commercial confidentiality

• Adopting a flexible approach to the structure of policies and management systems

• Providing leadership to improve performance against all SDR performance measures, by motivating staff and contractors

• Recognising that year to year continual improvement against all SDR performance measures will not be possible

• Using existing informal networking to consult with external stakeholders • Adopting methods to prepare and publicly circulate the sustainable

development report without incurring significant external costs.

The report, which will involve input from both internal and external stakeholders, will be made publicly available on Urgent’s website. No hard copies will be printed, to reflect Urgent’s commitment to progressively move to electronic business, as well as being consistent with environmental and economic targets.

Urgent will prepare the report using internal resources, with a designated project manager, but will be dependent on continued collaboration with other NZBCSD members. Urgent also plans to seek independent verification of the report, perhaps from another member of the Auckland Environment Business Network.

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The following was recommended for moving Urgent to the next stage of the SDR process:1. Direct contact with both internal and external stakeholders, informing them of

plans to prepare a sustainable development report, and requesting suggestions for policies, performance indicators and success stories

2. Prepare policies and objectives, and check these with key stakeholders3. Collect information to enable performance to be described against performance

indicators 4. Chose appropriate success stories.A draft sustainable development report would be completed following these steps. This would be circulated to key stakeholders for comment. The next draft of the SDR will be submitted to an external verifier and the final steps will depend on the responses from the external verifier.

"Sustainable development reporting is a natural follow-on from the company taking initiatives to improve its performance in the environmental and social areas and the natural step from there is to report it.

"A good thing is that Urgent Couriers action is stirring things up. Urgent Couriers are 'setting the standard for the courier industry'. So if the company is setting the standard and other firms believe they now, then that is good. It is a start and maybe their employees and couriers will be interested and push them along.

"Sustainable development reporting is something which does differentiate Urgent Couriers from others. The sustainable development report will help the company attract contractors. Having a document to be able to give to prospective couriers will show a difference from other companies. They will have to be part of performance measures." Steve Bonnici, CEO Urgent Couriers.

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Further Resources

World Business Council for Sustainable Development

The WBCSD has substantial resources available for businesses wanting to progress their work in sustainable development, including:

"Sustainability Through the Market - seven keys to success”

“Corporate Social Responsibility - making good business sense"

Both of these guides can be downloaded from the WBCSD’s website, where further information is also available, www.wbcsd.org

New Zealand Business Council for Sustainable Development

The NZBCSD produced its first guide on the subject in 2000. The guide, "Corporate Reporting on Sustainable Development”, is available by phoning 09-529-0678. An SDR project area, and copies of this current report, are available on the NZBCSD website, www.nzbcsd.org.nz.

The Institute for Social and Ethical Accountability

The Institute developed the AccountAbility 1000 (AA1000) standard. Further information about this standard and the Institute can be obtained from their website, http://www.accountability.org.uk.

The Global Reporting Initiative (GRI

The GRI is a a voluntary standard providing businesses with guidelines for reporting on their economic, environmental and social activities. The full GRI standard is

downloadable from http://www.globalreporting.org.

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