Business in the Community: external comment

Business in the Community provided feedback on our printed report, Sharing our sustainable future.

Business in the Community (BITC) provided feedback on Mondi’s ‘Shaping our sustainable future’ 2012 report. Over the last year the company has made significant changes to its report and invited us to provide feedback to the 2013 version in order to evaluate the progress made and identify further steps for improvement. It is encouraging to see some of our recommendations being implemented, and we are looking forward to the opportunity to help shape Mondi’s reporting practices even further.

The report is aimed at a wide range of stakeholders and serves as Mondi’s platform for highlighting its priorities within a broader global context. It is accompanied by Mondi’s integrated report and financial statements for 2013 and an online sustainable development report, which together contain detailed information on the company’s performance with regards to environmental, social and governance issues.

This statement provides our assessment of Mondi’s report; it expresses our views on whether the company adequately identified its material issues and how these are being addressed, as well as the structure and fairness of the report. BITC did not engage in formal verification or assurance of the accuracy or completeness of the information or data presented in the report. Views expressed in this statement are based on the review of the ‘Sharing our Sustainable Future 2013’ report only.

Mondi’s approach to sustainable development

Mondi’s strategy and business

The report provides a comprehensive overview of The Mondi Way and how its operational framework supports the business in achieving its objectives ‘in a sustainable way’. The company outlines its risk and opportunity management processes and describes how sustainability is integrated into strategic decision making;, in particular prior to introduction of new operations, practices, processes and products.

Mondi’s ambition

Mondi works with the World Business Council for Sustainable Development’s focus areas and sector teams around the Action2020 initiative. It is a positive step and we look forward to seeing how their commitments will be developed for the 2016 to 2020 period.

All of this demonstrates that sustainability is not a separate part of the business but that it is, indeed, integrated into the way Mondi does business.

Governance

The Group’s Board has the ultimate responsibility in upholding ethical standards across all operations. Commitment to sustainable development is reinforced in a letter from the chairman of the DLC sustainable development committee and Chief Executive Officer. The letter refers to some of the Group’s focus areas including safety, carbon footprint, integration of new acquisitions and supply chain, and discloses some of Mondi’s key challenges, including four fatalities experienced in the Group during the year. We commend the company’s efforts and transparency in reporting on this issue.

Stakeholders

The report provides a list of eleven key stakeholders that Mondi engages with on an ongoing basis. This overview provides much more detail compared to the 2012 report. It showcases the importance the company places on stakeholder engagement and reflects the global context within which they operate. Examples of engagements provided throughout the report demonstrate the commitment given to ongoing dialogue. The report also includes the list of organisations of which Mondi is an active supporter, member and/or participant. Mondi takes the disclosure one step further by directing the reader to the online sustainable development report, which contains information on the type and level of engagement with each stakeholder group.

Mondi’s response to global sustainability issues

Mondi identified the most material sustainability challenges the company and its stakeholders are facing and provides many examples of how it addresses these challenges at the local level. The identification of material issues involved a dialogue with the company’s stakeholders at multiple levels, which we consider to be good practice. See Our material issues within a global context of the report for the comprehensive list of issues.

The company clearly explains why it focuses on these issues and outlines its business case for each of them. The report also identifies what could be considered Mondi’s ‘unique contribution’ to the ‘9 billion challenge’1 : promotion of responsible management of forests as one of the key ecosystems in protecting the planet.

In addition to this, we would encourage Mondi to create a better link between its business case for ‘People, societies and development’ and the data provided in the ‘Actions’ section (see recommendations in ‘Our manufacturing operations: a focus on our people’ section).

In 2013, Mondi restructured the report in order to make it easier for the stakeholders interested in specific operations to understand the scope of respective activities. The new structure of the report better reflects Mondi’s operational framework (i.e. operational excellence, people development, sustainable development, cutting edge products and customer focus), and outlines how the two main lines of business, forestry and manufacturing operations, support this framework.

Our forests: operational excellence

This section outlines how Mondi’s modernisation programme enables the company to address key challenges affecting the forest sector. In 2013, the Group’s focus shifted from harvesting to roads, planning and silviculture. The examples of modernisation programmes in South Africa and Russia demonstrate the positive impact of these initiatives, such as increased forest yields and improved safety of the workforce. We encourage Mondi to also clarify the impact of these initiatives on some of the issues identified at the beginning of that section (Operational excellence), including an ageing rural workforce and, in South Africa, high labour turnover and the impact of HIV/AIDS.

Our forests: a focus on people

This section focuses on how Mondi’s forest operations contribute to the wellbeing of its workforce and local communities and the development of the forest industry.

The company goes beyond health and safety standards and supports the wellbeing of its workforce, which was effectively demonstrated by the example of the logging camps in Komi, Russia.

In order to make sure that its community investment activities are focused on the needs of local communities, Mondi conducts socio-economic assessments of the areas where the business operates. These plans are covered in more detail in another section of the report (‘Our manufacturing operations: a focus on our people’) and the reference to this section is provided.

We commend Mondi’s commitment to building up the capacity of the forest industry by developing a pipeline of talent and supporting its small-sized suppliers. Mondi Zimele, small supplier development programme, is a great initiative focused on building the capacity of Mondi’s current and future small-sized suppliers. It promotes responsible business practices and ensures Mondi’s access to sustainable fibre. The report would benefit from providing more detail of the outcomes of this support from the suppliers’ and communities’ perspective. Some of this information, e.g. jobs created, was included in the 2012 report.

Our forests: ecosystem stewardship

Mondi proactively collaborates with NGOs, governments and other organisations around the protection of ecosystems and biodiversity. The company goes beyond complying with legislation, and its activities are often mentioned as good practice examples at relevant industry events. In 2013 the company has started to use its Integrated Biodiversity Assessment Tool on Group level, which is expected to increase the understanding of potential biodiversity risks further.

As part of its commitment to biodiversity, the Group has set aside 26% of its forestry landholding for conservation and maintains 100% FSC certification of all owned, leased and managed forests in Russia and South Africa, which is a significant achievement.

Our manufacturing operations: operational excellence

This section provides an overview of how Mondi addresses its key environmental impacts, including carbon emissions, water use, emissions to water and air, and solid waste. We commend Mondi’s work on driving performance improvement, which was demonstrated in all areas except for solid waste and water use.

In 2013 Mondi successfully completed water impact assessments at all its paper and pulp mills. This exercise has increased the company’s understanding of water issues and its management. Responding to Business in the Community’s recommendations to the 2012 report, Mondi provided a visual breakdown on the type of water used during the production process and examples of its responsible management practices.

We encourage Mondi to present the data in this chapter in a more accessible way by introducing infographics explaining the company’s manufacturing operations and showcasing at which stages the impacts are taking place and in which quantities. We would also suggest providing a comparison of performance between Mondi’s manufacturing operations and other parts of the business. This could also be done by signposting the reader to where more detailed information is available.

Our manufacturing operations: a focus on our people

In this section Mondi focuses on its key employee issues, including diversity, safety, and learning and development. Health and safety is probably the most crucial aspect for Mondi when it comes to its workforce, and we commend the Group’s efforts and transparency in reporting on this issue. As mentioned in our previous feedback, we suggest the company builds on these efforts and includes a wider range of indicators around wellbeing and diversity. We also recommend making it clearer whether the data in the “Employment” section covers the company’s forestry operations.

In addition to the above, the Group outlines its commitment to local communities and describes its socio-economic assessment process as a framework to evaluate the effectiveness of its community investment projects. Building on our 2012 feedback, Mondi provided a detailed example of its employees’ role in community investment. To take this one step further, we recommend mentioning the criteria used to prioritise Mondi’s community investment. The criteria, which were included in the 2012 report, will enable the reader to gain a better understanding of the overarching approach.

Our supply chain

In the 2013 report, Mondi outlined its approach to developing a transparent and responsible supply chain, which includes gaining a better understanding of the impacts across the whole supply chain and working together with key suppliers and customers around its sustainability challenges. The Group provides clear examples of how it reduces its Scope 3 carbon emissions through optimised logistics and secures sustainable fibre via promotion of sustainable forestry. We recommend referring to the subsection “Securing a sustainable wood supply” in the “Our forests operations” section in order to better facilitate the navigation of forestry stakeholders throughout the report. Adopting a collaborative approach is best practice in responsible supply chain management and we look forward to seeing how Mondi progresses this area in coming years.

Our products

Mondi uses a life-cycle approach when managing the impact of its products and demonstrates great effort in product design to reduce material use and waste. Following our previous recommendations, the company provides several examples of how it engages with its customers and how their feedback is used in developing greener products. Mondi also mentions that it integrates recycling into its business model. We encourage the Group to include more information about this in its report. Finally, as mentioned last year, we also recommend outlining the Group’s approach to influencing end user behaviour. It is important to consider this aspect to accurately design close-loop recycling of all products.

Overall report and quality format

The report is comprehensive and presented in a reader friendly format. The report structure enables Mondi’s stakeholders to understand its business model and strategy, as well as how these are being supported by the company’s operations: forestry and manufacturing.

The report gives numerous links to the other two reports (Integrated report and sustainable development report), giving stakeholders access to more detailed information on the Group’s activities and performance.

There is a clear link between the Group’s 2015 sustainable development commitments and its material issues, as shown under Our material issues within a global context. There is an opportunity for Mondi to give more information on how the Group sees the new 2016-2020 commitments contribute to each of the four pillars of its business strategy.

Conclusions

In our opinion Mondi’s ‘Sharing our sustainable future 2013’ report allows the company’s stakeholders to easily grasp the scope of its material issues and why these are relevant to the business. The report offers detailed and easy-to-read information and provides examples of how Mondi’s operations contribute to finding and implementing solutions to different challenges. The Group has made great progress in addressing these and included an impressive list of initiatives for the next two years. We are looking forward to seeing the company’s 2016-2020 commitments and encourage Mondi to develop longer-term commitments.