What is

sustainability
reporting?

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Origins of Sustainability Reporting

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 Origins…. 1989
1977 Valdez principles established by
Sullivan principles created to apply coalition of environmental NGOs
economic pressure on South Africa. and investors.
Launched as “Global Sullivan
Principles” in 1999 to cover social
justice and human rights

Valdez principles become CERES

principles after the founding
coalition (Coalition for
Environmentally Responsible
Economies)

1976
OECD issues Guidelines for 1997
Multinational Enterprises. 5th edition
Ceres establishes GRI
published in March 2011
as independent
entity in 1997 with
support of UNEP FI
and World Bank
Group

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GRI in relation to other standards
National, sector and issue
focused guidelines

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 Global sustainability reporting trends
• 48% of S&P 500
companies now
publish reports (Greenbiz,
2012 State of Green Business report)

• More than 5,500 such

reports are published
worldwide. (According to
CorporateRegister.com)

• As of 2010, 1866 from

60 countries use the
GRI framework to
publish reports (29%
increase in reporters from developing
countries compared with 2009)

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 Reporting trends in emerging markets

CHINA – 2006 regulations for

state-owned enterprises and
2008 stock exchange
requirements = 703 reports in
2011.

SOUTH AFRICA – Over 450 JSE

listed companies must produce
integrated reports (F+ESG)

INDIA – 2011 requirement that

top 100 companies must publish
Business Responsibility Reports.

BRAZIL –2012 BM&FBOVESPA

stock exchange recommends
sustainability reporting
 Why report?

• Stakeholder relationships (license to operate)

• Risk reduction (reputational and operational)
• Investor relationships
• Identification of new markets and business opportunities
• Future resilience
• Employee morale
• Improved strategy and management systems

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ACCOUNTABILITY
VULNERABILITY
& DEPENDENCY

OPPORTUNITY
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 The CFO’s role is on the rise

Growing awareness of
scarcity of business
resources

CFOs interested in
potential cost savings

Rankings and ratings

matter to company
executives
Six growing trends in corporate sustainability, Ernst&Young, March 2012

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 The GRI Framework (G3.1)

• Principles, process and

performance

• Different levels of reporting

(A,B,C, +)

• Multi-stakeholder consensus
Reporting

a
Framework
• Sector supplements

• National guidelines (Brazil

pilot)

Figure 1:The GRI Reporting Framework

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 IFC Performance Standards Objectives
and GRI

Objectives Requirements

IFC
IFC

GRI
GRI
 Reporting principles

Content
• Materiality
• Stakeholder inclusiveness
• Sustainability Context
• Completeness

Quality
• Balance
• Comparability
• Accuracy
• Timeliness
• Reliability
• Clarity

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Stakeholders
 Materiality

“The information in a report should cover topics and Indicators

that:

reflect the organization’s significant economic, environmental,

and social impacts

would substantively influence the assessments and decisions of

stakeholders.”

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 A Paradigm shift

Holistic
Environmental, social, representation
economic and of value
governance performance creation in
corporate
annual report

Sustainability Integrated
reporting reporting

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 Managing different forms of capital

“The process of integrated reporting …

challenges organizations to demonstrate their
stewardship of multiple forms of capital—
financial, manufactured, human, intellectual,
natural, and social—and encourages
collaboration and communication within the
company.”

Hanks, J. and Gardiner, L. (2012) Integrated Reporting – Lessons from the South African
Experience, Private Sector Opinion 25, Global Corporate Governance Forum

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 Group discussion

What is “good” sustainability reporting?

(Discuss in groups for 10 mins and report back)

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DESIGNING THE
PROCESS

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 What IFC has learned

• Build a cross-cutting team

• Identify stakeholders
• Determine goals of reporting
• Identify material issues to report on
• Build an appropriate reporting system (consider scale and scope)
• Link reporting to an integrated corporate strategy

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 Challenge/ opportunity Response Outcome
Privatization of major water •IFC staff and company worked Significant reputation
Manila
supplier. Member of largest together to undertake extensive benefits and numerous
Water family-led group in the stakeholder engagement, establish business awards contributed
Philippines (Ayala Group) with an environmental and social to very successful IPO,
(Philippines) strong social commitment. management system with KPIs, subsequent annual
Needed to reach out to and then publish first sustainability reports and a
underserved communities. sustainability report. coordinated sustainability
effort at Group level.

Petrotesting Diverse community and •IFC provided support to CSR First report published shortly
environmental initiatives which team to develop first before the company was sold
(Colombia) demonstrated commitment to sustainability report, building to new owners. New
best practice. But lack of their capacity and helping to management view CSR efforts
focused strategy at corporate promote awareness at corporate as adding value and are
level and ad hoc public level. exploring options to move
reporting. forward with a more focused
sustainability strategy.

The company sought IFC’s •IFC global and local IS/AS team First report published in May
GDIH assistance to publish a best worked with company to select 2010, and second in 2011.
(China) practice sustainability report in local trainer and consulting firm Each time company has been
response to guidelines/ to assist in mapping IFC/GRI/SSE ranked top in the energy
requirements issued by the requirements and designing best sector in China for its SR
Shanghai Stock Exchange. IFC practice report report. Reports ties
and client saw opportunity to sustainability to core business
leverage the ESMS approach strategy and discusses
under PSs. stakeholder views.

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 4 Common pitfalls

• Outsourcing: Selecting the right local consultant to provide

coaching and support throughout the process

• Leadership: Effectively introducing senior staff to the concept of

reporting and getting their buy-in

• Organizational ownership: Identifying a cross-departmental task

force within the company to be responsible for the reporting
process, thereby bringing different perspectives, speeding up data
collection, and ensuring internal learning

• Internal capacity: Proper training of the task force and operational

staff at the outset on GRI reporting by certified trainers

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Reporting as part of the strategy cycle

Reporting Strategy

Monitoring & Planning

Engagement

Implementation

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 Board of directors, Chairman and CEO

Senior Executive responsible for

Sustainability Reporting

Example of a
reporting Cross-departmental
Task Force to plan
Operational departments
Human Resources

structure
Investor Relations
and compile annual
Health & Safety
sustainability report
Environmental management
Community program

Deploy sustainability report content

in different forms and channels
through an integrated
communications strategy

Contact point for

questions from
Source: IFC and GRI (2010), “Getting
investors and
More Value from Sustainability
the public
Reporting”

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 Group exercise

Design a reporting process for BRAC. Consider:

 How long will the reporting process take?
 When will it start? When will it finish?
 What are the different steps you will include in the process?
 Who will make up the reporting team?
 Who will need to review and sign off?

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LINKING M&E AND
REPORTING

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 Creating continuous improvement

• M&E should reflect corporate strategy and commitment to goals

and targets
• Provides regular feedback on progress
• Choosing indicators that encourage innovation and
competitiveness
• Integrate stakeholder views and feedback
• Learning from innovative approaches

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0
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http://www.bamnuttall.co.uk/, civil engineering company
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3
 Looking forward

• Growing investor interest in value

drivers of sustainability

• Integration of financial and

sustainability reports

• Balanced reporting – “telling the

good and the bad”

• Real-time information online

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 Group exercise
Design your company commitment to sustainability reporting:

1. Choose 3 sustainability issues that you believe should underpin

your corporate strategy

2. Make a commitment on what your company will achieve in 5

years in relation to these topics

3. Set a target for annual performance improvement

4. Choose 1 GRI indicator per issue to measure performance

5. Explain how you will tell stakeholders about poor performance

if you don’t manage to meet your targets

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