Sustainability Reporting

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Sustainability Reporting Sd3 Ltd
Sustainability advisors Dan Holmes dan.holmes_at_sd3
.co.uk www.sd3.co.uk
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What we do

• We help organisations improve their performance
  and create value by adopting business
  sustainability practices and through integrating
  economic, environmental and social management

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Our clients

• Vauxhall Motors
• General Motors
• Nationwide Building Society
• Shell International
• Intel
• DTI
• London Borough of Ealing

• Society of Motor Manufacturers and Traders (SMMT)
• Royal Mail
• Royal Sun Alliance
• Motorola
• Project SIGMA
• Welsh National Assembly

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Vauxhall and Sd3

• 6 year relationship covering the evolution of
  Vauxhalls reporting
• 1997 - Annual Review Annual Report First
  Environmental Report (won ACCA UK first time
  environmental reporting award)
• 1999 - First Sustainability Report combined
  Environment Report with Annual Review. First
  combined report for car company in world first
  sustainability report by European car company
• 2000 - Printed report reduced from 80 to 32 pages
  plus new website with full info. Placed in top
  10 by DT global auto reports survey
• 2001 2002 - same format as 2000. 2001 report
  shortlisted for ACCA sustainability reporting
  awards

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But

• Vauxhall was not starting from scratch
• 1995 BS7750 /ISO14001 world first
• 1997 Dualfuel gas-powered vehicle range launched
• 1999 Founding patrons of ACORN which helps our
  suppliers meet environmental standards
• 2000 Backing the responsible use of cars by
  providing cars for car club operations in many UK
  cities
• 2000 First solar powered dealership in the UK
• 2001 First volume manufacturer to certify all
  activities and sites to ISO14001
• Product Stewardship - LCA, DfE, alt. fuels,
  responsible use, Motability
• 2001 More than 80 of all car sales, including
  all LPG vehicles meet EURO4 emissions 4 years
  ahead of deadline
• 2002 Vauxhall LPG OEM market share 47 -
  continuing 4 years of industry leadership

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Session outline

• Engaging Stakeholders
• Who are they?
• What do they want?
• Why bother?
• Communication and engagement
• Sustainability Reporting
• History
• Where we are now
• Why report? Drivers
• Guidelines and standards
• Assurance and verification
• What is the future?

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Context
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Engaging Stakeholders
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Who are they?

• Definition (Business in the Community, 2002)
• 'Stakeholders' are those who either affect, or
  are affected by, the activities of a company.
  They include customers and consumers, employees,
  trade unions, business partners, lenders and
  insurers, investors and analysts, sector/industry
  experts government, regulators, host communities,
  local and international NGOs, the media, and
  suppliers etc.

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What do they want?

• Information
• Want to know whats going on
• Reassurance
• Want to know that things are OK
• Influence
• Want to be involved in decisions that affect them
  or those they represent

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Why bother?

• CNN World
• Nowhere to hide - instant global communications
  e.g. StopEsso, McLibel
• Globalisation
• Reduced control of nations increased
  expectation of corporate responsibility
• Managing Risk
• Many high-profile examples (Shell, Monsanto,
  Nike)
• Identifying Opportunities
• Harder to identify reputation, innovation, new
  product development etc. (e.g. Co-op bank,
  Interface, Fairtrade)

Independent analysis for the Co-op Bank plc puts
the commercial value of the bank's sustainability
positioning at around 18 of pre-tax profit.
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Monsanto We forgot to listen

• A high value agricultural products business
  expanding into biotechnology GM crops
• Seen as key new growth sector - rolled out new
  technology crops at rapid rate
• Misjudged public opinion - tried to storm the
  market
• Reaction took business by surprise
• EU corn imports from US down 96
• Deutsche Bank advised markets to sell GM-related
  stocks
• Monsanto share price fell by 35 over a year
• Agricultural products division eventually sold
  for nominal value

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Monsanto
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Stakeholder communication

• Little or no communication
• One-way communication (Incl. Reporting)
• Two-way communication (Tailored)
• Two-way communication (Dialogue)

Business in the Community corporate
responsibility survey, 2002
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Stakeholder engagement pays-off
Stakeholder Superstars
43 Growth
SP 500
19 Growth
1984 1999
Source Towers Perrin, Compustat
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Communication ? engagement
The Shell perspective
High
Trust me
Involve me
Tell me
Trust
Show me
Low
Low
High
Transparency
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Sustainability Reporting
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History
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Where we are now
Social, 3
Type of reports Global Fortune 250, 2002
Environmental Social, 10
Sustainability, 14
E(HS), 73
Source KPMG
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Why report? drivers

• Regulation
• Threat of regulation (Meacher, EU CSR white
  paper)
• Bandwagon
• Stakeholder pressure (esp. finance industry more
  recently)
• Differentiator/Reputation
• One-stop shop (e.g. questionnaire fatigue)

More info wbcsd striking a balance
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Mandatory Reporting

• Netherlands, Denmark, Australia, New Zealand,
  Sweden, France, US (TRI), Canada, Also Belgium,
  Norway. EU IPPC rules coming into force.
• Increase in past 3 years
• Potential for far more

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Reporting process (Vauxhall)
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Money - what does it take?

• Costs
• DEFRA Survey November 2001 (47 companies)
• 6,500 535,000 average 92,716
• Without strategy formulation and establishing
  info systems 4500 - 259,500 average 66,903
• Web only (4 companies) 11,215 average
• Resources
• Time 3-6 months

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Guidelines, standards, awards and surveys

• Wide range, including
• Guidelines GRI, DEFRA UK env. reporting
  guidelines, ABI, Forge, CIRIA, SIGMA
  (incorporates GRI)
• Standards EMAS, AA1000, SIGMA?
• Awards ACCA (UK, Ireland, USA, Australia, Hong
  Kong, Malaysia, Pakistan, Singapore)
• Surveys Unep/SustainAbility Global Reporters
  Survey, BiE index (BiTC corporate responsibility
  index also)

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Pros and cons of guidelines standards

• Pros
• Reduced learning curve for organisations
• Allows comparison
• Bad practices reduced
• Good practice promoted and shared
• Recognition for organisations that follow them
• Keeps focus on key elements of performance
• Help develop professional skills
• Can reduce costs

• Cons
• Promote accepted practice rather than best
  practice
• Reduce innovation
• Incorrectly or selectively applied
• Lowest common denominator
• Too rigid or too flexible

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Global Reporting Initiative (GRI) Report Content

• 1. Vision and Strategy
• 2. Profile
• 3. Governance Structure and Management Systems
• 4. GRI Content Index
• 5. Performance Indicators
• Economic Performance Indicators
• Environmental Performance Indicators
• Social Performance Indicators

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GRI Performance Indicators
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Why GRI?

• Based on stakeholder consultation
• Saves time and resources
• Adds credibility (internally and externally)
• Helps continual improvement - identifies areas to
  focus on
• Provides clear template - roadmap towards
  complete sustainability reporting

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Vauxhall and GRI the benefits

• Reporting process is a sustainability management
  tool
• raises awareness, understanding and buy-in,
  public reporting of commitments and progress
  focus for improvements
• Corporate recognition
• leadership, raising the standard
• Encourages cross-functional working
• One-stop-shop
• communication tool providing info on what
  Vauxhall is and does (useful internally and
  externally)
• Used detailed GRI format as a template
• GRI structure is flexible
• enabled use of other standards (e.g. UK GHG,
  WBCSD Eco-Efficiency)

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Reporting as part of sustainability management

• Key management tool
• Vision and strategy
• Goals and targets
• Performance data reviewed and explained
• Additional commitments made public
• Internal communication
• Often an initiator of improved management
  (baseline review)
• Reporting is central to emerging standards
  (AA1000, Sigma)

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SIGMA Framework
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AA1000
Reporting is an integral part of management
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Assurance and verification

• KPMG survey
• Global Fortune 250 companies 64 major
  accounting firms, 9 certification bodies, 21
  technical firms, 6 other
• Trend towards increased verification 1999-2002
  Global Fortune 250 19-29, Top 100 18-25
• SustainAbility - Trust Us verdict
• 68 in 2002, up from 50 in 2000
• Traditional Accountants lowest quality 2.0/4
• Specialist consultancies better 2.6/4
• NGOs by far the best 3.5/4
• ISEA AA1000s assurance standard

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AA1000s

• Covers the qualitative and quantitative data
  relating to sustainability performance
• Complements the GRI Reporting Guidelines
• The first assurance standard that covers the full
  range of an organisation's disclosure and
  performance
• AA1000s is based on assessment of reports
  against three Assurance Principles
• Materiality does a report give information on
  all areas of performance that stakeholders need
  to judge an organisation's sustainability
  performance?
• Completeness is the information complete and
  accurate?
• Responsiveness has the organisation responded to
  stakeholders' concerns and interests?
• The standard is designed primarily for assurance
  providers in guiding the manner in which they
  provide assurance.

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Assurance - what is the purpose?

• ERM survey (what companies seek)
• Confirmation Seekers
• Focused on shareholders and analysts as main
  audience
• Want reported information validated
• Use the big accountants
• Active Learners
• Want to improve processes and gain credibility
  with experts
• Use specialist environmental and social
  consultancies
• Crowd Pleasers
• Consider main audience is general public and
  retail customers
• Use NGOs or celebrities

Source SustainAbility/Unep Trust Us 2002
Survey of Corporate Sustainability Reporting
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State of the Art

• Co-Op Bank
• Novo Nordisk
• BAA
• BT (Management quality)
• Rio Tinto
• Shell (context and commitments)
• BP

• Bristol-Myers Squibb
• South African Breweries
• BASF
• VW
• WMC
• CIS Co-operative insurance
• Baxter International

Source SustainAbility/Unep Trust Us 2002
Survey of Corporate Sustainability Reporting
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What is the future?

• More sustainability greater linkage to ARA
• SustainAbility/Unep Trust Us
• Materiality the bits that matter
• Integration Balance Sheets blended value,
  Boards - governance, Brands that build true
  value, Business models that are more sustainable
• More web, less paper
• Real-time?
• NIKE vs Kasky
• http//www.corporatewatch.org.uk/news/nike_update

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More information

• ACCA - www.accaglobal.com/sustainability
• DEFRA - www.defra.gov.uk/environment/envrp
• GRI - www.globalreporting .org
• WBCSD Sustainable Development Reporting Portal
  - www.sdportal.org
• Corporate Register - www.corporateregister.com
• Tomorrow Magazine - www.tomorrow-web.com
• KPMG International Survey of Corporate
  Sustainability Reporting 2002 -
  www.kpmg.com/services/content.asp?l1id10l2id450
  cid678
• Unep/Sustainability Trust Us Global Reporters,
  2002 Survey of Corporate Sustainability Reporting
  - www.sustainability.com
• Deloitte Touche Tohmatsu sustainability reporting
  scorecard - www.deloitte.com/vs/0,1616,sid253D108
  4,00
• Institute of Social and Ethical Accountability
  (ISEA) - www.accountability.org.uk
• European Federation of Accountants (FEE) -
  www.fee.be/publications/LatestPubs.htm
• CIRIA Sustainable Construction Targets and
  Indicators - www.ciria.org.uk/
• FORGE - Guidelines on Environmental Management
  and Reporting for the Financial Services Sector -
  www.bba.org.uk/public/corporate/35475/1712?version
  1

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Sustainability Reporting Sd3 Ltd
Sustainability advisors Dan Holmes dan.holmes_at_sd3
.co.uk www.sd3.co.uk
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(No Transcript)
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ACCA UK Awards for Sustainability Reporting 2002

• Environmental Category
• Best environmental report Unilever
• Joint runners-up, best environmental report CIS
  ScottishPower plc
• Best first-timer report Canary Wharf Group plc
• Best SME report Best Foot Forward Ltd
• Social Category
• Best social report FRC Group
• Joint runners-up, best social report CIS
  Traidcraft
• Best First Timer report British American Tobacco
  p.l.c.
• Sustainability Category
• Best sustainability report The Co-operative Bank
• Runner-up, best sustainability report Shell
  International
• Commendation for sustainability reporting BT
  Group plc
• Commendation for SME sustainability reporting
  Risk and Policy Analysts Ltd
• Electronic media commendation BT Group plc

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ACCA Criteria

• Completeness to enable the reader to form a
  complete picture of the reporting company and to
  define the boundaries of what the report covers.
• Credibility an honest and objective view of good
  and poor aspects of a company's performance.
• Communication written with the audience in mind,
  and recognising the needs of different
  stakeholders.
• Comparability readers may wish to compare
  reported material against other organisations in
  your sector, or against previous reports.
• Timeliness many organisations report on an
  annual cycle, but website based reporting allows
  reports to be updated more frequently.

www.accaglobal.com/sustainability