This is New Zealand Post’s fourth integrated report using the International Integrated Reporting Council (IIRC) Integrated Reporting (IR) Framework. We were a participant in the IIRC pilot programme, producing New Zealand’s first integrated report in 2013. Our adoption of integrated reporting has been a work in progress; each year we have aimed to advance our understanding and application of the framework. Our integrated report is intended to be a succinct communication of the value created for stakeholders in the short, medium and long term.
This year we have made a significant change in focusing our integrated report on the Post part of the business. By not including Kiwibank and related financial services in this report, we aim to remove some of the complexity and provide greater clarity regarding the Post business model. To meet our statutory obligations as a Group, we have produced a separate annual report covering all parts of the New Zealand Post Group.
In response to feedback, we have also provided more detail on the process used to determine the matters of most importance to our business and our stakeholders. We call these our material matters and have based the structure and content of this report on these priorities. In summary, we are here to create value for our stakeholders, across the six capitals, via our strategy to address the material matters.
In an effort to improve the connectivity of information contained in the report, we have increased the use of icons and colour-coding (see the glossary on the back cover flap for details), to show how everything is interlinked. At the start of each of the three performance chapters, namely Grow, Innovate and Serve, and Lower Cost, the capitals and relevant material matters are identified as well as quotes that represent some stakeholder views.
The six capitals provide a holistic view of the range of resources we rely on to run our business and deliver value. Similarly, we create a range of different types of value for our stakeholders such as customer and employee satisfaction. Here is a summary of what each of the six capitals means for NZ Post:
This capital relates to how our relationships and investment in others, such as customers, partners and community, help us to achieve our strategic goals and create value.
This is the unique blend of knowledge, skills and experience that our people have and how they use it to deliver existing, and develop new, products and services.
This is our physical nationwide network of delivery and distribution facilities, allowing us to do what we do increasingly effectively.
These are our people – how we recruit and invest in our people, developing the right culture to succeed.
This relates to our financial performance, such as profitability, and how this allows us to invest in those things that create value.
These are the environmental resources we use every day, such as fuel for our vehicle fleet and electricity for our buildings, that in turn create carbon emissions which we strive to minimise.
Our material matters are those risks and opportunities that matter most to our stakeholders and to our business.
This is the second year that we have engaged an external expert to undertake an independent materiality process. The approach drew on best practice guidance from the International Integrated Reporting Council (IIRC), the Global Reporting Initiative (GRI), the International Organization for Standardization (ISO) and others. It involved a survey, one-on-one interviews and a workshop with our stakeholders.
To ensure that NZ Post understands what is most important across our business and to our stakeholders, a survey was completed by a balanced and representative sample of 12 internal and 11 external stakeholders. Internally, we involved leaders from across NZ Post responsible for the six capitals, namely our finances, our people, our relationships (customers, community), our network, our environment and our expertise. Externally, we involved those stakeholder groups with which we regularly engage, including the Red Cross, the New Zealand Sustainable Business Council, the Ākina Foundation, a small business owner, the Treasury, BNZ and Z Energy.
Stakeholders were asked to rank 15 material matters from 1 to 5, where 1 is not important to them and 5 is extremely important to them. A spread of rankings was encouraged, to provide a clear picture of the relative importance of the matters. The data from this survey resulted in the materiality matrix shown, where stakeholder concern appears on the horizontal axis and business impact on the vertical.
Six of the 15 material matters emerged as the most pressing priorities for our business in 2016. They sit in the top right hand corner of the matrix showing that both our internal and external stakeholders feel these matters both were important and have a high impact on our business. These six matters are the things that shape our current business strategy the most; however, we will continue to work with all 15 material matters according to their importance.
The top six matters identified are:
Some stakeholders also highlighted the importance of the health, safety and wellbeing of our people as a potential material matter. This is already an important area of focus and activity for NZ Post, with clear targets to improve our performance. However, in response to stakeholder feedback, we will include this in our list of material matters next year.
The remaining issues (economic well-being, demographic change and regulation) didn’t feature in the stakeholders’ top three; however, we will of course keep a watching brief on them.
The results of the survey are represented on our ‘materiality matrix’, which ranks the 15 issues according to stakeholder concern and business impact:
Individual interviews with nine of the internal and five of the external stakeholders helped us to understand what the material matters mean to them. Rather than assuming that we understand why different stakeholders prioritise particular matters, we explored this with them one-on-one. This resulted in valuable context, which fed into the content for this integrated report, as well as into our strategy and initiatives.
With such a long history and far reach into the New Zealand community, we touch a wide range of external stakeholders. We were interested to hear their views, and in particular generate dynamic discussion and debate on how NZ Post is performing on our material matters. With this in mind, we held a workshop with five external stakeholders, including the Red Cross, the New Zealand Sustainable Business Council, Ākina, a small business owner and Z Energy.