Case | HBS Case Collection | 2011 (Revised from original 2010 version)

Southwest Airlines One ReportTM

by Robert G. Eccles, Beiting Cheng and Susan Thyne

Abstract

In 2009, Southwest Airlines produced its first integrated annual report, the Southwest Airlines One Report, combing financial and nonfinancial performance information. This case examines Southwest's environmental and corporate social responsibility (CSR) reports produced in the two years preceding 2009 and follows the company's decision to transition to a new reporting format. Preparing for the 2010 report, the Southwest reporting team contemplates how to improve the One Report. The case also allows for debate on the future of integrated reporting, including its impact on internal management processes, integrated audits, and mandated nonfinancial reporting.

Keywords: Environmental Accounting; Financial Reporting; Integrated Corporate Reporting; Innovation and Invention; Corporate Social Responsibility and Impact; Environmental Sustainability; Air Transportation Industry; United States;

Format: Print

22 pages

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Citation:

Eccles, Robert G., Beiting Cheng, and Susan Thyne. "Southwest Airlines One ReportTM." Harvard Business School Case 411-042, December 2011. (Revised from original September 2010 version.)

This case is about how the Boston Consulting Group has approached innovation from its founding to the present day. It discusses the role of the firm's talent market and client market in developing these innovations.

Philips Electronics is a leader in integrated reporting. In 2010 it produced its third generation report. Since its first report in 2008, Philips' integrated reports and its integrated reporting website had grown in sophistication. In planning for its integrated report for 2011, the company is exploring the issues that will need to be addressed in order to produce an integrated report. KPMG is the company's auditor for both the financial and nonfinancial information contained in the integrated report, but these are covered by separate assurance opinions. Among the challenges of providing an integrated audit is getting the internal measurement and control systems for nonfinancial information to be of the same quality as for financial information. A further challenge is that the cultures of the finance function and those who work in sustainability are very different.

Dow Chemical is one of the few major American industrial corporations that was founded in the late 19th century that is still in existence. From its origins producing bromine out of the brine underneath Midland, Michigan, the company has evolved from a diversified commodity chemical company to an advanced materials company whose products and services can make its clients more sustainable. During the 1960s and 1970s the company received a series of external shocks in the form of negative public opinion for some of its activities. These challenged the company's perception as being a "good company" and made it realize it needed to more proactively seek outside perspectives on how the company was viewed and what it should do. This led to the formation of the Corporate Environmental Advisory Council in 1992 which was renamed the Sustainability External Advisory Council (SEAC) in 2008. With substantial input from the SEAC, the company set two ambitious sets of ten-year goals: 1996-2005 and 2006-2015 and was largely successful in meeting them or on the way to doing so. In 2011, Neil Hawkins, Vice President of Sustainability and EH&S (Environmental, Health and Safety) is trying to decide what the content and format of the next ten-year goals should be to ensure the company's viability on its 200th birthday. Should they be incremental goals like the ones for 2005 or ambitious stretch targets like the ones for 2015? Or should they be broad statements of principles that encourage innovating for sustainability throughout the company? A further challenge facing the company is that it was rapidly globalizing with a large portion of its workforce outside its Midland, Michigan headquarters, making it even more difficult to preserve a common culture and commitment to sustainability.

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