Telefónica’s achievements get lost in its enormous report

Telefónica has grown from being the Spanish state-owned telephone company to become the world’s number three telecommunications network with major operations in Europe and Latin America. Its services include mobile, fixed line and broadband.

They say that soviet era Russian film directors were paid by the metre of film in the can – it seems a similar reward system is operating at Telefónica. Why oh why do we need a 363-page report? It’s not even as if this is a particularly sensitive or complex business from a corporate responsibility perspective. It’s a phone company.

With its GRI A+ rating, top drawer assurance and no doubt extensive consultancy input, this has “best practice” written all over it. Except it’s not – it is in fact the best example of all that is wrong with the tick-box reporting trend championed by GRI and some in the socially responsible investment community.

The report is divided into three blocks. Block one (32 pages) is the company’s response, point by point, to the principles of UN Global Compact with the GRI checklist woven in. Plenty of companies publish these indexes but usually not at the front of their report and ideally not in the same place as the actual report content.

The more usual and preferable option is to link (by page references or hotlinks) from the index to the relevant sections in your report. By putting core content in block one, the index, Telefónica ends up repeating a lot of information.

The same materiality matrix, for example, appears three times in the report. Surely an information and communications company can think of a more efficient way of making these connections than writing things down three times?

Proper report

Block two (236 pages) is what most people would recognise as the report proper. There is a genuine attempt at disclosure here including some interesting information not often reported by other companies. The employment section is particularly impressive. When, for example, did you last read about the proportion of women taking international management assignments?

There’s more bravery in the integrity and transparency section, which includes a chart of employee responses to the survey question: “Do you consider that Telefónica acts in an ethical and responsible manner?”

We won’t spoil your fun by revealing the ending, but it’s not a happy one. Few companies would be comfortable going public with such unflattering data and it’s to Telefónica’s credit that it did not edit out the results.

Similarly the report reveals revenue and expenditure including taxes paid for every country of operation. This is a significant step towards the level of financial transparency being called for by development NGOs. It’s corporate “How to look good naked” and almost as exciting.

Block three is actually hard to find in the full report PDF. It’s disguised as chapter 9.1 and states that there will be 18 country reports online and some in print in 2010. So far there are four available, from the Czech Republic, Germany, Ireland and the UK (but not Spain). The remaining 14 countries are presumably working to complete their reports before Christmas.

Too much information

Trying to assimilate all this information is a challenge. How should we view Telefónica’s underlying commitment to sustainability? This is when one turns to the targets in a report and asks, OK where’s the beef?

Unfortunately no beef, not even a thin slice of chorizo. The section titled Challenges for 2010 is almost entirely lacking specific strategic targets. In any case a one-year vision is far too short. Despite all the fandango, Telefónica has not shown its vision for a sustainable future or its plan for getting there.

One might be tempted to be more charitable to Telefónica were it not for the degree of hubris on display. This isn’t the misguided first step of the reporting novice. Telefónica tops its sector in the Dow Jones Sustainability Index and aims to set a new reporting template for others to follow. But, it states:

“Telefónica … seeks to make the report the cornerstone of transparency and reliability.”
“Telefónica has sought to innovate in its reporting in order to offer advances which provide global companies with a new line of reporting.”

This is easily the most frustrating report we have reviewed. The effort expended to find out about the company outweighs the reward. It’s a great shame because buried beneath a mountain of misguided corporate responsibility reporting protocols is a good company trying to get out.

Simon Propper is managing director and Katie Start a consultant at Context.

Follows GRI? Yes, A+
Assured? Yes, Ernst and Young.
Materiality analysis? Yes
Goals? Yes, referred to as “milestones”.
Targets? Yes, referred to as “challenges”.
Stakeholder input? Yes, entire section on dialogue with stakeholders. Plus surveys and dialogue panels.
Seeks feedback? Yes, CR and sustainability blog encourages regular feedback.
Key strengths? Transparency in some areas.
Chief weakness? Length/repetition.
Pleasant surprise? Online CR atlas.

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