Kellogg’s first attempt at reporting leaves readers undernourished, says Jamie Rusby

It is not often that corporate responsibility reports make you hungry, but by page six of Kellogg’s first corporate responsibility report I was desperate for a second breakfast. Perhaps I needed a calorie boost to get through the next 68 pages, or maybe it was the pictures of milk-drenched cereal on almost every page that seduced me.

Kellogg’s has been making breakfast cereals for over 100 years. The company now also makes cookies, crackers, cereal bars, frozen waffles and the bizarre sounding “toaster pastries” (anyone for a Pop-Tart?) and “vegetable-based meat alternatives”.

With obesity in the headlines for over a decade and sugary cereal makers under attack from nutritionists, Kellogg’s first corporate responsibility report is rather late to the table. But from it we learn that the company is taking corporate responsibility seriously, appointing a chief sustainability officer who reports to the chief executive and a board-level corporate responsibility committee.

The report is well laid out, grouping issues under the headings of marketplace, workplace, environment and community. There are some useful charts and maps showing where Kellogg’s manufactures and the location of its employees. The design is uncluttered, but the use of many large pictures leads to a whopping 74 pages. There is a 24-page bite-size executive summary available in print, pdf and as a navigable website.

The main report opens correctly with the company’s business strategy before describing its new corporate responsibility strategy. It is, however, difficult to see how the two are related and it would have been useful if the report explored where the two strategies would complement each other, or chafe.

Kellogg’s has conducted a materiality analysis using external stakeholders and internal managers. This works well because the report covers all of the right issues (with the exception of genetically modified foods). It confronts the key issue – obesity – head on.

Frosties vs wholesome snacks

Kellogg’s stance is unapologetic – it believes all food (even sugary cereal) has a role to play in a balanced diet. But with western healthcare straining under the weight of chronic disease and obesity, the company knows inaction will provoke overzealous fat fighting regulations. It is not going to stop making Frosties (Frosted Flakes in the US), but is making them healthier and is adding guideline daily amount labels for calories, fat and sugar. It is also expanding its range of “wholesome” snacks.

The company appears to be serious about responsible marketing. The report describes the new Kellogg Global Nutrition Criteria – minimum nutritional standards for products that are aimed at children under 12. When the criteria were first set, half of the products it advertised to children didn’t make the grade. We learn that the company has either reformulated the products or stopped advertising them to kids.

We are told that the company uses worldwide marketing guidelines, but are left to guess what these might be. This is where a reference to a download on the website would be useful. A brief mention of using trademark characters to promote exercise also left me wanting more information. What are the moral and ethical challenges of using Frosties’ Tony the Tiger to promote both sugar-coated cereal and exercise?

One of Kellogg’s company values is “we have the humility and hunger to learn”, but unfortunately this does not shine through in its corporate responsibility reporting. Although the tone is fairly humble – Kellogg’s admits its corporate responsibility programme is in its infancy – there is little bad news or even stories about lessons learned. We are told about an ethics hotline but we do not know if it was used or, indeed, if there were any code of conduct violations during the year. The company’s consumer website highlights product recalls but these are ignored in the corporate responsibility report.

Bad news is good for corporate responsibility reports because it demonstrates transparency and fortifies the good news. Perhaps Kellogg’s will overcome its shyness in subsequent reports because it is clearly unafraid of disclosure: I was startled by the revelation that only 59% of employees think they are paid fairly for their work.

Given that Kellogg’s has been in the food business for over a century, it is worrying to read that it “remains in the early stages of understanding sustainable agriculture and how we can help promote its use”. Full marks for honesty and it will be interesting to see if subsequent reports will demonstrate a speedy catch-up in this debate.

Kellogg’s has produced a credible first report. The company says it is developing targets and performance indicators for its key impacts which will give its reporting much-needed snap, crackle and pop.

Snapshot

Follows GRI?
GRI checked B. Includes a GRI table in the pdf report.
Assured
No.
Materiality analysis
Yes. Analysis conducted involving managers and external stakeholders.
Goals
Under development.
Targets
For environmental issues only. Targets for other areas under development.
Stakeholder input
Only internal stakeholders.
Seeks feedback
Contact details given.
Key strengths
Covers most of the big issues; easy to read; some good data in the workplace section.
Chief weakness
Corporate responsibility not linked to the business strategy; doesn’t admit failures; key performance indicators and targets not yet in place.
Pleasant surprise
Section on the importance of breakfast.

Jamie Rusby is a senior consultant at Context.
jamier@econtext.co.uk
www.econtext.co.uk