External Commentary
Corporate Responsibility Report 2009 - Online Version
External Commentary by Corporate Citizenship
Corporate Citizenship is a specialist corporate responsibility consultancy advising businesses who seek to improve their social, economic and environmental performance. We provide external assurance services for several companies in the FTSE 100. Standard Life has commissioned us to provide external commentary on its 2009 Corporate Responsibility Report, together with assurance of selected performance data. This is the fourth year that we have commented on Standard Life’s reporting. Our findings are outlined below.
In forming an opinion, we have considered whether the report presents an account of a company which adopts an inclusive approach to its stakeholders, where the most important ‘material’ issues are addressed and the interests of stakeholders are responded to. Our work included interviews with a cross-section of managers from relevant functions and a review of best practice reporting by other financial services sectors. Our work has not extended to assurance or audit, except as noted below for the assurance of environmental and community data.
Standard Life is on an ambitious journey to become an outstanding corporate citizen and to put customers at the heart of its business. We believe this 2009 report demonstrates a good step forward on all five of its material issues, achieved through specific actions in its responsible business programme and raised awareness across the company.
Inclusiveness
Standard Life is a complex multinational organisation with a wide portfolio of activities and numerous stakeholders. Following our feedback last year, we welcome the inclusion of clear and detailed accounts of stakeholder engagement activities and feedback in this year’s report. This reflects the investment made on strengthening the engagement process and giving stakeholders a chance to contribute to Standard Life’s corporate responsibility decisions.
In addition, Standard Life is taking steps towards presenting a clearer and more transparent overview of its business operations, with a dedicated section in the online report. The accessibility of this information helps stakeholders to understand the opportunities and challenges facing Standard Life on its responsible and sustainable business issues.
Given that 29% of Standard Life employees are based outside the UK, we believe that presenting a global picture of Standard Life’s corporate responsibility is a key factor for completeness. This year’s report features more case studies from international markets, and for the first time, environmental targets were set for all wholly-owned markets. This could be further strengthened by showing how each market’s individual sustainability opportunities and challenges are taken into account and how markets contribute to developing the company’s overall corporate responsibility approach.
With approximately 1.5 million shareholders, we also believe that the specific interests of Standard Life investors as stakeholders should be directly addressed in future reports, as they relate to responsibility and sustainability issues.
Materiality
Following the identification of the five focus areas last year, Standard Life remains committed to addressing its most important impacts. The slight re-organisation and rewording of the five pillars shows that the company’s integration of stakeholder feedback has evolved, without affecting the overall commitments.
The question of rebuilding consumer trust has been a burning issue for the financial services sector in 2009. This is a particularly relevant for Standard Life given the difficulties with the Pension Sterling Fund and subsequent FSA fine. The comprehensive description of Standard Life’s new “Treating Customers Fairly” actions, including details on individual teams’ responsibilities, addresses stakeholder concerns with regards to this. However, given the importance of third parties in both the pensions and life and investment management businesses – including financial advisers, employers and institutional investors – we believe future reports should address responsibility and sustainability issues as they affect this customer group too.
Responsible investment is also a critical issue for Standard Life, as the company plays a key role in influencing wider business practices to create long-term investor value. This comprises Standard Life’s whole range of investments, including the property portfolio, which is clearly articulated in this year’s report. Standard Life has a strong approach on engagement with companies in which it invests on behalf of customers. We believe stakeholders would benefit from practical examples of the results this approach is achieving and of how Standard Life’s approach differs from others in its sector.
Responsiveness
As a result of strengthened stakeholder engagement and feedback, new stakeholder expectations are becoming visible. The challenge now is for Standard Life to demonstrate how it is addressing these various issues.
With regards to Standard Life’s role in public policy, this report is providing greater detail on its various positions and engagements with government and regulators. This is particularly welcome given the continuing debate about financial services regulation in the UK and elsewhere. Moving forward, we encourage Standard Life to provide more detailed information on the full range of issues raised by stakeholders, such as executive pay and bonuses, human rights protection, and the economic impact of Standard Life’s operations in its main marketplaces, including tax payments.
Looking Forward
We look forward to future reports showing how the company is building on its good performance on responsible investment and fair customer dealings to develop leadership in the sector. This could include setting clear long-term targets on all material issues, developing strong working partnerships with stakeholders, and transparent reporting on shareholder activism engagements.
Corporate Citizenship
7 April 2010
