French listed companies have been reporting on their environmental and social impacts since 2001. Recent legislation (known as Grenelle II) broadened the scope to private and public companies of more than 500 employees and enforced extra-financial disclosures in the annual management report that must be approved by the Board of Directors and independently verified. This ought to make integrated reporting a very logical next step for French reporters but very few have grasped this opportunity so far.
The first mover advantage was claimed by GDF Suez in a confident tone – having set out the significant challenges posed by global warming, changing energy markets and unstable socio and political environments, the chairman confidently asserts that GDF Suez has “answers to these global challenges”. So does the report provide these?
I would expect to see the philosophy of the business articulated in the first 20 pages and I was not disappointed. There is a good market context that sets out the changing energy landscape and paints the backdrop to the two strategic priorities:
- being the leading energy supplier in high growth countries
- leading the energy transition in Europe.
The report provides good evidence of strategy in action, making a clear case for capital allocation. This includes an explanation of the acquisition of Balfour Beatty Workplace and how this links to their strategic priorities.
GDF Suez explains that its transformation will be guided by listening to customers and civil society. There are several references to engagement with stakeholders including a dedicated project for customers. Despite this, the report stops short of including the ‘customer voice’.
There is a good description of the Group’s business model, backed up with evidence to show differentiation e.g. its claim to be a ‘sought-after industrial and financial partner’. This section could be enhanced by a more informative diagram.
A key strength of the report, and one which investors will be interested to note, is its future focus. This is evidenced by the launch of GDF Suez New Ventures, a €100 million fund for start-ups in the field of energy transition, and the fact that there are 800 researchers in their R&D centres.
The risk section also includes ESG risks. There is another confusing illustration that attempts to show the relationship between the risks and GDF Suez’s reputation, values and commitments but fails to do so effectively. This is not aided by the fact that the company values – Drive | Commitment | Daring | Cohesion – do not embody any ethical or morale aspect such as responsibility, fairness or integrity.
The governance section is very good and explains the integration of ESG issues into board deliberations and a comprehensive remuneration policy overview.
It provides a good description of the activities of the board and its committees. However, with the exception of setting the goal to reduce carbon emissions, there is little insight into board decisions or actions taken as a result of their deliberations.
This is clearly a business under transformation and the excellent people section outlines the support available to staff during this period. This is a good example of the stewardship of human capital with quantifiable evidence in terms of preservation and enhancement of value, e.g. accident rates and employee commitment levels.
So in total, it is a very good first integrated report, presented as a provisional version for consultation by stakeholders. I sincerely hope the next version includes some of these stakeholder comments. Because, as well as having answers to global questions, it must also have answers to local questions raised by customers and other stakeholders.