profile of innovation

Key Ideas

The story of Hubbard Foods Ltd. of New Zealand represents an innovative approach to Sustainability Reporting (SR). Traditionally, SR is seen as an adjunct, or secondary, reporting process for a company, often performed for external stakeholders and marketed for general public as a means of PR. Hubbard Foods Ltd decided to use their SR process as a means for sustainability implementation – in other words, as a part of their overall change management process.

As a result, a new set of Key Performance Area Drivers and Indicators have been devised and integrated into core operations of the company.

Innovation

Hubbard Foods Ltd was established in 1988. The company is privately owned by its shareholders, Dick and Diana Hubbard, and since early 2001 has been governed by a Board of Directors. The company employs approximately 150 people, manufactures an extensive range of cereal from its factory in Mangere, Auckland and had a 2001 turnover of approximately NZ$27 million. The company sells its cereal in New Zealand and exports to the United Kingdom, Asia and Australia. The profile of its CEO and founder, Dick Hubbard has been synonymous with social responsibility in New Zealand for a number of years. This has earned the company a solid, positive reputation.

Hubbard Foods spent 2.5 years preparing a Sustainable Development (SD) Report, and it was released in August 2001. A summary of the report was placed as a full-page advertisement in major New Zealand newspapers while the full report was available on the company’s website and a limited number of published reports were available from the company.

Hubbard Foods Ltd undertook a number of activities towards preparing their first SD Report. These include:
• A survey of stakeholder perceptions using the Murphy Stakeholder Audit Model.
• An environmental audit through the Auckland Environmental Business Network
• A CO2 emissions audit conducted by Landcare Research.

The stakeholder research highlighted some important issues that the organization was unaware of, and this enabled future action to be targeted towards these issues. The questions were specific and focused for each stakeholder group, and the analysis of results enabled accurate comparisons between the groups. The stakeholders’ perceptions research also revealed the need to supplement the data with other pieces of information. While perceptions can be valuable, the company felt that stakeholders are not always in a position to be able to recognize and judge what actually occurs within an organization. The company also debated the merits of disclosing financial information. As a private company, there is no obligation to report this information publicly – but this needs to be considered in light of demonstrating accountability to the community. In the end, the company, with no regrets, felt accountability was the most important consideration – and profitability information was released.

Building on this initial activity, Landcare Research provided a number of recommendations based on their Key-PAD model about Key Performance Area Drivers and Indicators and stakeholder identification and engagement.

Driver 1: Vision, values and goals: Given the company’s vision, values and goals, what areas of performance would stakeholders expect to see reported upon?

Driver 2: Stakeholder: Given their own values and needs, what performance areas would the stakeholders expect to see?

Driver 3: Risk management: How does the company identify and manage risk in its environmental and social performance, and the potential impact of environmental and social issues upon itself?

Driver 4: Internal management: What management systems exist and how well do they perform in translating the vision, values, and goals of the company into sustainable performance?

Driver 5: Global issues of sustainable development: What impacts does the company have on society and the environment in terms of the major global issues? What impact do those issues have upon the company, both now and in the future?

Driver 6: Strategic elephants: What are the most uncomfortable issues of sustainable development for the company and how is it addressing its performance?

Driver 7: Influencing potential: What opportunities does the company have to positively impact on the sustainability performance of its stakeholders and where is it currently using this influencing ability?

Driver 8: Compliance, checklists, and existing frameworks: What regulations must the company meet, and what existing checklists, scorecards, or other frameworks can be used in reporting upon its performance?

Producing an SD report highlighted to Hubbard the importance of viewing SD Reporting in a broader context of sustainable development, and also that SD Reporting is more than just producing a report. The experience has highlighted for the company’s management that reporting needs to be viewed as part of a continuous process in an organization - the findings of the process have generated areas for improvement, and action will take place to address these.

The issues covered in a SD report need to be integrated into decision-making at all levels of the organization and in all decisions that are made. The principles of SD need to become an automatic reflex in the organization. This has become a key area of focus for Hubbard and has resulted in the development of a Social Responsibility Strategic Plan.

From the perspective of a member of the organization driving the reporting process within the organization, the process underscored the importance of:
• Securing the full support and buy-in of the CEO as essential for generating the quality and depth of information that was required to produce a quality report.
• “Holding on tight” to the overall objective and the end result of the reporting process – it is easy for the process to be sabotaged by those that don’t fully understand the process or its objective.
• SD Reporting is a valuable strategic tool - the insights generated provided additional perspectives about the company, which enabled risks to be managed. It has also highlighted some important issues that hadn’t been noticed before.

Impact

Stakeholder Feedback
Hubbard Foods developed a feedback questionnaire for the electronic version of their SD Report. During September 2001 the following themes emerged from those that responded to this questionnaire:
• Most respondents found the information to be “just right” in terms of level of detail and to be at least “credible”
• Most respondents read most of the report, and all respondents thought all companies should produce reports such as these.
• Intentions to purchase on the basis of reading the report, demonstrated strong support for the business case for SDR.
• The company’s existing reputation seemed to be an important factor in the positive responses associated with the report.

Inspiration

It is not sufficient however just to talk about Triple Bottom Line as a “nice, warm, fuzzy” concept. For those of us who see this concept as the way of the future it is also necessary to “walk the talk”. So this is it - the Hubbard Foods Ltd Triple Bottom Line Report – a first attempt to translate this concept into the
reality of running a business such as ours.

Dick Hubbard
Managing Director
21 August 2001