Tony's Chocolonely: Raising the chocolate bar for industry change

For years, I’ve been supporting chocolate – and change – maker Tony’s Chocolonely to create their annual report. My kids and my colleagues love that I work for them. Because I always return from meetings with their yummy chocolate in funky flavors. Their bars are a treat, but what inspires me most to work with them is their commitment to creating positive change in the industry. Here’s my take on their key ingredients for positive change!

Crazy people raising the (chocolate) bar

Positive change usually starts with frustration about an issue plus people crazy enough to doing something about it. And this ccompany started just like that. Investigative journalists were shocked to find out how much child labor and slavery there is involved in nearly all chocolate. In 2006, in an attempt to prove that it could be done, they produced 5000 bars of slavery-free chocolate. As this first batch sold out in just a few hours, they turned the experiment into a company.  The company tagline says it all: “Crazy about chocolate, serious about people.”

Partners towards a common goal

A shift to more sustainable business practices is needed at all steps along the chain. From cocoa farmers, chocolate companies and governments, to retailers and consumers. The people at Tony’s understand they cannot transform the cocoa industry by themselves. Tony’s therefore developed a roadmap towards its mission: “Together we make chocolate 100% slave-free”.

The roadmap engages five key actors in the industry to work towards this common goal:

  • Strengthen farmers to increase their income
  • Engage the largest companies in the industry to take action in their supply chains
  • Encourage retailers to leverage their buying power
  • Push governments to adopt and enforce legislation
  • Enable chocofans to raise awareness and spread the message

Scaling up for real movement

To really engage partners along the cocoa chain, Tony’s knows there needs to be a business case every step of the way. Its own story and success provide lots of inspiration to get different parties to act.

At the launch event for its 17/18 annual report that scale became very clear:

  • Over 5,000 farmers benefit from the special premium Tony’s pays, nearly 1,000 farmers are involved in awareness-raising activities to prevent unwanted child labor and slavery;
  • The Netherlands’ largest retailer Albert Heijn announcedit will use Tony’s principles of cooperation for 100% slave-free chocolate for its very successful private label chocolate brand Delicata. World leading chocolate manufacturer Barry Callebaut supports the change process;
  • 5,000 chocofans joined the party, over 8,500 people support Tony’s mission as Serious Friends;
  • And the brand became the market leader in the Netherlands with a market share of 19%. Net revenue grew by 23% to nearly € 45 million and a net profit margin of 4.5%.

Relentless ambition for chocolate and change

Nice numbers for a company that produced its first bar of chocolate just 12 years ago… But they know there’s still a lot of work to be done. Therefore, Team Tony’s continues to work – and party – very hard to increase its own impact by expanding the business to other countries and continuing to drive collaboration in partnership with many others.


Developing roadmaps for reporting - for positive change

On June 22 and September 28, 2017, The Terrace held a workshop on sustainability reporting for companies just starting on their reporting journey and those eager to take their reporting to a higher level. Here are some of the key learnings from the workshop.

Start from why

We kicked off the workshop with a brainstorm on the reasons to publish a sustainability report. The participants came up with many: engaging stakeholders like clients, suppliers, and NGOs; having something tangible to prove what we claim to be doing; measuring and communicating our impact; accountability; informing and influencing employees to deliver on our sustainability strategy and more. Some are more internally focused, others are more externally oriented. Some relate to managing risks, others to identifying opportunities.

Make the complex simple

At the start of the workshop, we provided all participants an empty template for the reporting process. Using interactive exercises and group discussions, we jointly walked through the various steps in the reporting process. Here are some of the key questions we answered in the course of the workshop.

Prepare: Who's on the team? What are the tasks and timings? what budget is available? What are your initial ideas on topics to include in the report?

Engage: Which stakeholders are impacted by how you do business, and vice versa, which impact your business success? How can you engage with them effectively to understand their issues?

Focus: What are the material (or important) topics to include in your report (and in your strategy of course)? How does the prioritization of these topics compare for senior management versus the stakeholders' interests? What are the targets and measures for each of the material topics? And how will you achieve these targets?

Collect: Which sources are available to collect the information for your report? Who needs to be involved? And when do they need to deliver the information? Is it realistic to get this all ready in time for the first report?

Report: What are the key building blocks for your report content? How can you best structure this for legibility and engagement? Who will write, edit, check the report content?

At each step along the way, the workshop participants filled in parts of their roadmap.

Show the positive side of business

We closed the workshop with a brainstorm on how to make the best use of the report once it's done. All agreed that reports and their content are currently underutilized in communications. Besides sharing the report in its entirety with stakeholders and the press, the brainstorm also generated ideas like sharing parts of the report on the website or in social media, tailoring the content to engage different teams internally, training sales reps to use the report in sales calls, and - our favorite - throwing a party to launch it.

Don't be afraid

This advice came back again and again throughout the workshop. Be honest with yourself and your stakeholders and therefore also share things that are not going so well. Of course always in combination with your learnings and next steps. Or perhaps there are material topics you cannot yet measure. Again, signal that you understand this is a material topic, combined with how you will address and measure it in the coming year. A balanced, honest report that goes beyond the good news show is so much more credible! And don't be afraid to ask for help in the reporting process. A reporting consultant can add expertise and extra capacity to your reporting team at every step of the reporting journey.

At the end of the reporting workshop, the participants were certainly less afraid to get started on their (next) reporting journey. We closed the workshop by toasting to the personalized, actionable reporting roadmaps which they had each created during the workshop!

Interested in how The Terrace can support your sustainability journey? Please contact Marjolein or join one of our future workshops. The next sustainability reporting workshop will most likely take place in September 2017. Interested to join? Please let us know by sending an email to hello@theterrace.nl. We look forward to welcoming you in a future workshop!


Non-financial reporting: from comply and complain to explore and explain

In the past months, there has been quite some noise about corporate reporting. There's nothing unusual about that, as many companies publish their annual report in the first months of the calendar year. But this year, there seems to be more discussion about non-financial (or sustainability) reporting. Part of this is caused by the new EU Directive on Non-Financial Reporting. But it's also driven by the ever-increasing number of companies seeing true value from integrating sustainability factors into how they assess and report on their performance.

Complying with the EU Directive on Non-Financial Reporting

Assuming that transparency about sustainability topics will lead to better performance, the EU adopted a directive on non-financial reporting. By now, it has been transposed into national legislation in nearly all EU countries. It applies to all listed companies, banks and insurance companies with over 500 employees. As of the 2017 reporting cycle, it requires disclosure on select non-financial topics to provide stakeholders a more complete picture of a company's sustainability approach and performance. So what are the topics to be included? At a minimum, it should cover the company's approach, the risk assessment, as well as the results and key performance indicators regarding:

  • environmental matters;
  • social and employee aspects;
  • respect for human rights;
  • anti-corruption and bribery issues;
  • diversity on boards of directors.

The directive is not very prescriptive in how to report on these topics. If companies cannot (yet) report on these topics, they can simply explain why not.  And companies are free to choose how they structure this information and where they publish it. This can be part of the annual report or in a separate report. Unlike financial reporting, the data does not need to be externally assured. But the accountant does need to check whether the relevant information has been disclosed and whether any of it conflicts with other information provided.

Complaining about the reporting burden

An estimated 6000 European companies fall under this new EU directive. So perhaps you'd expect quite some sighs and complaints. Yet most of these companies already disclose their sustainability efforts on their websites, in separate sustainability reports or integrated into their financial reporting. Does this mean the directive will have no effect? Fortunately not. The voluntary practice on sustainability reporting has yielded positive results so far. But there are also quite some companies that seem to tick the box on sustainability reporting, yet have not truly integrated sustainability into their strategy. They report on what's easy to collect, or on things that at first glance may make them look good. For these companies, meeting the requirements of the EU directive could be a challenge. As they may not yet have policies, targets, and results in the areas listed above, the new legislation does indeed increase their reporting burden.

Exploring the value of integrated thinking

Many of the companies embarking on the transparency journey have found opportunities to improve their impact and their companies in parallel. The companies that benefit most are the ones that really try to understand what their materials topics are. These are the topics to include in their reporting, but more importantly, to focus on in their strategy. In a materiality assessment, a company assesses the impacts - both positive and negative - that their business can have on society at large. From their own perspective, but also through the eyes of their stakeholders.

From this analysis, they begin to understand how the relevant social, environmental and economic factors work together, ideally to create value for shareholders, stakeholders, and society simultaneously.  An in-depth materiality analysis provides the foundation for an integrated strategy with clear focus areas, each with their own goals and action plans. This strategic integration exercise is useful for all companies, not just the ones covered by the EU directive.

Explaining your focus, dilemmas, and results

Once you've chosen the focus for your strategy and reporting, be ready to explain and communicate it. This may include why you've decided not to include some of the topics included in the topics listed above. In your reporting cycle (and most likely elsewhere), get ready to share the achievements from your integrated strategy, yet also be ready to share what dilemmas you've faced and on which topics you've not yet reached your goals. An honest account of your performance will build trust with your external stakeholders and is a great way to engage your internal stakeholders - your employees - to celebrate success and to find better ways to reach your business and sustainability goals.

Interested in finding out what non-financial or sustainability reporting could do for your company or in getting started with sustainability reporting? Find out more in our upcoming reporting workshop on June 22, 2017. Find out more via this link. Does the EU Directive apply to your company and would you like a quick-scan on whether your reporting is compliant with the new EU directive? Please get in touch with Marjolein via marjolein@theterrace.nl.

Written by Marjolein Baghuis (@mbaghuis) for The Terrace, published simultaneously on changeincontext.com. 


The Terrace boosts reporting practice with Marjolein Baghuis

Marjolein is an expert and thought leader on corporate accountability, sustainability reporting and communications. At The Terrace, she will lead the reporting practice and support companies progress reporting from a burden to an inspiring communications opportunity. She will also be involved in sustainable strategy and communications projects.

The Terrace founder Leontine Gast: “We are pleased to add Marjolein's specific knowledge and expertise to our team. Her enthusiasm for positive change fits perfectly with the values of The Terrace. Together, we have all the skills to support companies in their ambitions to deliver positive change”

Through her work for the Global Reporting Initiative, Innate Motion and Change in Context, she has supported companies and people to create clear strategies and reports for positive change. Marjolein is the founder of Change in Context, an online platform for change towards a sustainable economy, which hosts her well-read blog. She also teaches sustainability at Nyenrode Business University. Previously, Marjolein worked for Procter & Gamble, Synovate and Greenpeace.

She is an active board member for the Nyenrode Alumni Circle for Sustainability and the regional Amstelland library. In addition, she serves on the advisory board of eRevalue, a British service provider in the area of ESG/sustainability big data, and speaks regularly at conferences on sustainability, accountability, and reporting.


Top tips to cut the crap: tips to help you and your organisation improve reporting

In the last decade, transparency and corporate reporting progressed tremendously, allowing society access to performance information that is usually not available in financial reports. Sustainability (or non-financial) reporting enable stakeholders – like investors, regulators, employees, NGOs, communities, partners, etc. – access to information about a company’s social, environmental and economic impacts, directly from the source.

But it’s not all good news from the reporting field, as many sustainability reports still consist of a hundred (or more) pages, difficult to navigate and to extract what matters. Many look just like glossy magazines and some even offer the same shallow content. They often present an overly positive, distorted picture of reality. They risk being considered greenwashing and useless for people intending to use the information to take decisions. Or to evaluate the readiness of an organization’s management to deal with social and environmental issues.

So ... it's time to cut the crap!

High-quality reports are clear, balanced, and focused on key issues. Corporate reports that are difficult to navigate, overly positive and/or unfocused do more damage than good for a company’s reputation. When not clearly showing the efforts, dilemmas, and results in tackling concrete societal issues, such reports just add to the overwhelming amount of useless information that surrounds us nowadays.

The European Union Directive on Non-Financial Reporting requires thousands of companies to start integrating sustainability topics to their annual reporting cycle, from the 2017 report onwards. This is a great opportunity for all involved in corporate reporting to make a step towards better reports. Cutting the crap in reporting helps experienced and new reporters generate more focused reporting. It improves the quality and reduces the cost of reporting - just what you need!

Here are our tips on how to cut the (reporting) crap!

Charming, but irrelevant

Reporting is not a beauty contest. Sustainability reporting standards, such as those provided by the Global Reporting Initiative (GRI), do not require a specific design or format. These standards offer guidance on how to prepare high-quality content. Well-organized, clear information is what really counts. If in addition, you want to make it look pretty and the visuals support clarity and navigation, that’s great. But well-structured, relevant content comes first. Always.

Random and unfocused

Don’t get distracted! Create focus through materiality analysis, an important step in the process to create a high-quality sustainability report. It helps to define the topics to focus on to sustain the company’s future in connection to society’s needs. These topics are selected by combining management’s strategic vision with inputs from strategic stakeholders’ representatives like employees, clients, regulators, and communities.

If done well, the analysis generates a focused, short list of topics that expresses the issues of high concern for society directly related to the strategy and core business activities. Once you have your material topics list, you are ready to think about which indicators (and other disclosures) best help you to tell your report readers what the organization is striving for and achieving on these topics. That’s it! These topics are the only ones you need to include in your report.

Annoyingly abundant

Don’t add extra information. Basic details about the organization – such as company size, the number of employees, markets where it operates, the location of the headquarters - as well as indicators related to material topics have to be included. Nothing more, nothing less.

Check the list of basic information to be disclosed, find the information required, organize it and present it in the clearest way you can. No tricks, no misleading. And if you can’t report on a required disclosure for some reason, explain why not. It’s really that simple.

Don’t add unnecessary information, even if it makes the organization look good. A report needs to balanced; the challenges and dilemmas should not be buried in strategically irrelevant content. Excess of information – even when presented in a beautiful way – can be quite detrimental to your reputation.

Poorly planned and costly

Gathering high-quality information isn’t cheap. Financial and human resources are needed to determine the units, the boundaries, the process, as well as for the systems for actual collection, aggregation, checks, approvals, and analysis of the data.

Preparing a good roadmap of what exactly has to be reported not only increases the quality of the report but also helps you make the best use of your valuable resources. Define a clear owner for the reporting process, if necessary supported by experienced outside professionals. Such as people with specific expertise on reporting, sustainability communications, etc. Good planning and ‘cutting the crap’ reduces the costs even more in case you’re involving an external service provider to assure the sustainability content of your report.

These tips can help you and your organisation improve reporting - and reduce costs - by progressing from:

  • Charming to clear
  • Random to relevant
  • Abundant to accurate
  • Poorly planned to professional

In times like these, when critical, well-informed decisions are needed, we can’t let useful information go to waste. Don’t bury your company’s impact and performance on key topics in the cacophony of useless information that surrounds us every day.

Join our campaign to cut the crap!

This blog is co-authored by Marjolein Baghuis of The Terrace and Nelmara Arbex of Arbex & Company. It also appeared on www.changeincontext.com and www.arbexandcompany.com


Have a bath before you open your kimono: sustainability reporting

Is your company ready to open its kimono? In 2010, South African corporate governance expert Mervyn King made the audience laugh at the GRI conference. "If you're going to open your kimono, you better have a bath first." It's actually a great analogy for sustainability reporting and performance. And for companies with more than 500 employees in the EU, it's more timely than ever.

EU directive on non-financial reporting

As of 2018, many European companies with over 500 employees will have to open their kimonos. They will have to publish their 2017 performance on select non-financial topics. The European Union adopted the Directive on disclosure of non-financial and diversity information. And the EU member states have transposed the directive into national law. Therefore, many companies will publish their sustainability performance for the first time in 2018, covering 2017. According to KPMG research, 74% of the largest companies in Europe already publish a sustainability report or integrate non-financial performance in their annual reporting cycle. But thousands of additional companies will have to start reporting when this new directive takes force.  

Time to have a bath!

green-bathFor those companies new to reporting on their sustainability performance, this is the perfect time to create - or update - your sustainability strategy. Or better yet, (further) integrate sustainability into your overall strategy. The EU directive requires reporting on "as a minimum, environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters". It all starts with a thorough analysis to focus your strategy for the years ahead and your action plans for 2017. How do these topics relate to your business future? And how do your stakeholders view this? Are there other societal issues that are relevant to include in your strategy and reporting?

For some companies affected by the EU directive, this bath is just a nice-to-have, as they already have a strategy in place, are making progress and "just" need to take the extra step to start reporting. For others, the bath is a need-to-have to get going with sustainability and start the journey in 2017. So there's real progress to share when they have to open their kimonos in 2018.