Yara: Expressing a holistic approach to sustainability

• Winner: Communicating Integrated Thinking

What 

Yara is a global crop nutrition company headquartered in Norway. The company has chosen not to have a standalone sustainability strategy but to have a core business strategy that prioritises sustainable food production and enabling the hydrogen economy, underpinned by innovative digital solutions. The strategy is supported by a people, planet and prosperity scorecard, which links to performance management and directors’ remuneration.

As an integral element of Yara’s business and strategy, sustainability is central to Yara’s communications with investors and other stakeholders. The integrated strategy and scorecard has been clearly communicated in the company’s 2020 integrated annual report, sustainability report, an ESG investor seminar in December 2020 and quarterly results presentations. Yara has robust procedures to ensure that it reports high-quality sustainability data, and its integrated report is based on the International <IR> Framework from the International Integrated Reporting Council.

Responsibility for financial and non-financial performance lies with the CFO, with the sustainability governance team now part of the finance function. The CFO presents sustainability risk, performance and governance responses to the board audit and sustainability committee, which in turn prepares sustainability-related topics for board discussions. Yara’s strategy and communications form a holistic narrative that also inspires the company to continually elevate its work on sustainability, identifying gaps and improving processes throughout the business.

Why 

Yara has embraced an integrated way of thinking for a number of years, driven by its emphasis on creating value for farmers – because farmers need healthy, nutrient-rich soil. The current strategy represents a sharpening of Yara’s corporate identity, sparked by a growing global awareness of climate change and the need to decarbonise the food chain. This is reflected in Yara’s mission, to ‘responsibly feed the world and protect the planet’. 

Operating sustainably and embracing digital solutions is how the company believes it can best drive long-term shareholder value. Investors have been keen to engage with Yara on the company’s sustainability performance and integrated thinking. And by communicating its integrated thinking and how its strategy has evolved, Yara helps investors to understand the company’s long-term value drivers. The company’s transparency and use of widely-used standards and frameworks has received positive feedback too. As well as investors, Yara expects that sustainability will also become increasingly important to banks and insurers.

Talking openly about its approach to sustainability with these groups helps Yara to build better relationships and improve trust.

How

Yara’s strategy clarifies its integrated thinking and gives structure to its communications, which in turn have driven changes to business processes:

• When the strategy was updated, the board’s mandate was formally updated to include responsibility for sustainability. The CFO reports to the board audit and sustainability committee on people, planet and prosperity performance.
• The finance function worked to actively embed the strategy into its work. This started with defining a new finance aspiration, ‘Shaping sustainable performance’. Within finance, the sustainability governance team owns integrated reporting processes and the CFO team has oversight over the people, planet and prosperity KPIs.
• A sustainability network makes sure that the right systems and processes are used in the business. The network maps sustainability topics across the organisation, identifying and addressing any gaps discovered. Finance functions such as sustainability governance and risk management are well represented in the network.
• Yara has a stakeholder procedure that structures how it organises, monitors and improves stakeholder relationships on key topics such as sustainability. The company’s approach to engaging with stakeholders is included in its integrated report.
• To support strong performance management and reporting disclosures, the finance function has oversight over financial and non-financial reporting and works to apply the same level of rigour to both.
• Sustainability data is gathered using an online data aggregation tool. Data sources, risks and calculations are all documented. External assurers provide assurance over all reported non-financial data, including reasonable assurance on greenhouse gas emissions.
• Each year, Yara evaluates its annual reporting to identify points for improvement. The aim is not only to enhance disclosures but to invest in improved performance. This work has prompted changes to the capital value process, including embedding an internal carbon price.
• Yara’s integrated annual report includes its people, planet and prosperity KPIs and provides a clear and succinct summary of its strategy. A materiality chart shows the short- and long-term impacts that various dimensions, including sustainability megatrends, have on Yara’s value creation and performance.
• Throughout its communications, Yara makes clear that sustainability is not separate from its strategy but it is at the core of the company strategy.

About Yara

Yara is a global crop nutrition company. At the core of the company’s new integrated strategy is the knowledge that we need to produce more food to meet the needs of a growing global population – but not more carbon emissions. A wide range of investors attended Yara’s ESG-focused investor seminar where the company presented this new strategy. An integrated annual report shows how Yara creates value and how it is performing against people, planet and prosperity targets. Yara’s approach to communicating how and why it has embedded sustainability into its corporate strategy has helped it to cultivate informed, engaged providers of financial capital.