Primer on
Sustainability Reporting
International CEO Forum VIII
December 5-7, 2011
Thimpu:Bhutan
Enrique I. Florencio
Knowledge Management Head/Sustainability Officer
What’s
next?
FAQs
What?
Why?
How?
Who?
What?
What is Sustainable Development?
• “Sustainable Development is a development
that meets the needs of the present without
compromising the ability of the future
generation to meet their own needs”.
(Brundtland Commission)
• Also defined as an acceptable balance on
economic development, social progress and
environmental protection
What is Sustainability Reporting?
• The practice of measuring, disclosing and being
accountable to internal and external stakeholders for
organizational performance towards the goal of
sustainable development.
• Reports on economics, environmental and social
impacts.
• Sustainability reports must report on a company’s
sustainability performance, not just its sustainability
targets or objectives
GRI Definition
• Measuring, disclosing and being accountable to internal and
external stakeholders for your organization’s environmental,
social and economic impacts and performance towards the
goals of sustainable development.
• Sustainability Report should:
– Provide balanced (positive and negative) information
– Serve various information needs of reporter and its stakeholders such
as: benchmarking, comparison with other organizations, investment
and purchase decisions, management and strategic development
within the reporting organization, etc.
– Disclose the outcomes and results that occured within the reporting
period in the context of organization’s commitment, strategy and
management approach.
Global Reporting Initiative
www.globalreporting.org
• The Global Reporting Initiative (GRI) is a network-based
organization that has pioneered the development of the
world’s most widely used sustainability reporting
framework and is committed to its
continuous improvement and application worldwide.
• In order to ensure the highest degree of technical
quality, credibility, and relevance, the reporting
framework is developed through a consensus-seeking
process with participants drawn globally from business,
civil society, labor, and professional institutions.
What is GRI Reporting Framework
• Intended to serve as a generally accepted framework
for reporting on an organization’s economic,
environmental, and social performance
• Designed for use by organizations of any size, sector,
or location
• Takes into account the practical considerations faced
by a diverse range of organizations-from small
enterprises to those with extensive and
geographically dispersed operations
Issues on Sustainability Reporting
• It is determined by stakeholder’s confidence in;
– Brand and goodwill
– Reputation of management and board
– Quality of governance
– Strategic direction
– Sustainability (TBL/ESG) in the form of sustainability
strategy, with sustainability reporting and
management integrated into the core business
operations/ development mission
Issues on Sustainability Reporting
• Stakeholders Communication
• Companies expected to move beyond just
philantropy to sustainability strategy and manage
their overall sustainability impacts and performance
• Financial report / balance sheet doesn’t provide
answers on governance, strategy and sustainability –
sustainability reporting emerges as complimentary to
financial reporting
Corporate Citizenship
Program Framework
Social
Equal opportunity & access
Occupational health & safety
Social
Governance
Fairness, accountability and
transparency
Corporate culture &
values
Environment
Economics
Global Reporting Initiative
• A multi-stakeholder process and independent
institution
• Sustainability Reporting Guidelines for voluntary
reporting on the economic, environmental, and
social dimensions of activities/products
• GRI “G3” guidelines just released-refined
• Indicators, reporting process and more tools,
electronic report format
Global Reporting Initiative
GRI’s Mission
A generally accepted Global Framework
for Sustainability Reporting
Global Reporting Initiative
GRI’s Vision
Reporting on Sustainability Performance
becomes as mainstream and as
transparent as reporting on financial
performance
Purposes of Sustainability Reporting
• Sustainability Reports can be used for the following
purposes, among others:
– Benchmarking and assessing sustainability
performance with respect to laws, norms, codes,
performance standards;
– Demonstrating how the organization influences and is
influenced by expectations about sustainable
development;
– Comparing performance within an organization and
between different organizations overtime
Benefits of Sustainability Reporting
• Improving business performance, operational
efficiency and cost savings
• Improving reputation with stakeholders including
investors, credit agencies, customers, employees
and business partners
• Increasing brand value and recognition
• Enhancing risk assessment and management
capabilities
Why?
Reporting
• Why Report?
– Accountability to shareholders and
stakeholders
– Opportunities in all relevant dimensions;
economic, social, environmental, and
stakeholders engagements
– Relying on the transparency of the process
Approaches to Sustainability Reporting
• Globalization challenges and opportunities are
changing the role of business and its relationship
with the society
– Growth, profitability, impacts & risks- business seen as a
problem source and solution
– Internal and external communication – to see what
actually has been done in the organization
– Growing pressure for greater disclosure and transparency
on both financial and non-financial aspects of business
performance
Approaches to Sustainability Reporting
• Trust and confidence in the company by the
stakeholders drives the company value: Your
company’s performance and impacts are now
everyone’s business
• Sustainability- a Corporate Governance
priority
Reporting to build a better future?
Show what you are doing or would like to do
Basic sustainability disclosure
requirements
brings clear benefits
“We cannot manage what we cannot measure”
“We cannot measure something
what we cannot define”
“What gets communicated, gets understood”
Why Standardize Reporting?
Companies
receive diverse
information
requests
Stakeholders
receive
incomplete
information
A generallyaccepted reporting
framework
developed through
a multi-stakeholder
process
Why Standardize Reporting?
• Lack of credibility on Reports
Stakeholders are watching you
whatever you do, and they are now
demanding information.....
Absence of Standards
Means Inconsistency
A recent McKinsey & Co. global survey found that 20% of
executives don’t have a clear definition of sustainability
Absence of Standards....
• Sustainability reports are now more detailed and reflect the
priority companies have given to measuring and managing the
impact of their operations.
• Chief operating officers and other board members now join
CEOs in devising a core sustainability strategy.
• Companies themselves understand the need to move
sustainability reporting beyond a simple statement in their
annual reports to a more detailed assessment of their
operations, management practices, workforce issues and
development strategies. A fully integrated, company-wide
approach will be needed to realise the benefits.
The Rise of Non-Financial Information
Issues in Business Reporting
 Growing Requirements for Environmental and Social
Disclosures in Business
 Leadership, Brand, and Reputation
 Stakeholders Communication
 Informed and Empowered Sustainability
Management
 Organizational Competency on Sustainability
 Alignment with Core Corporate Strategy
Trends in Sustainability Reporting
 Sustainability reporting is largely voluntary, rather than by
compliance.
 Sustainability reporting is now the norm among large companies
globally.
 Sustainability reporting in the U.S. is not as commonplace as it is
in Europe.
 Most industrialized countries restrict environmental-impact
activities and require some form of environmental regulatory
reporting already.
Source: World Business Council for Sustainable Development, “How to Report”, Guide 2010
Trends in Sustainability Reporting
 The evolution of metric frameworks for sustainability reporting is a
major challenge for suppliers and users. (eg; green events checklist)
 There are variable and unreliable measurement and disclosure results
in today’s sustainability reports due to multiple metric frameworks and
a lack of uniform definitions.
 The emergence of overlapping national and regional legislation and
regulation is a major challenge for companies.
 Prediction: Governmental, regulatory, and audit oversight of
sustainability issues will become the norm within five years, in both
the developed and developing world, across all industries.
Source: World Business Council for Sustainable Development
How?
Sustainability Reporting
What is the organization doing
to progress towards
sustainable development?
ADFIAP is the focal point of
all development banks and
other financial institutions
engaged in the financing of
sustainable development in
the Asia-Pacific region.
Founded in 1976, ADFIAP
has presently 131 memberinstitutions in 45 countries
Published SR / CSR Report –
8% (10)
•Best Annual Report
•Best Sustainability Report (2009)
Application of GRI Reporting Framework
• Identify the topics and related indicators that are relevant,
and therefore might be appropriate to report, by undergoing
an interactive process using the Principles of materiality and
stakeholder inclusiveness
• When identifying the topics, consider the relevance of all
Indicator Aspects identified in the GRI Guidelines and
applicable Sector Supplements. Also consider other topics, if
any, that are relevant to report
• From the set of relevant topics and indicators identified, use
the tests listed for each Principle to assess which topics and
indicators are material and therefore should be reported
Application of GRI Reporting Framework
• Use the Principles to prioritize selected topics
and decide which will be emphasized
• The specific methods or processes used for
assessing materiality should;
– Differ for, and can be defined by, each
organization;
– Always take into account the guidance and tests
found in the GRI Reporting Principles; and
– Be disclosed
Measurement and Reporting Strategy
• Measuring sustainability performance enables
organizations to identify opportunities to improve
operations, and avoid risks to the long-term value of your
organization
• The ability to manage sustainability impacts helps
organizations preserve and increase their value
• Investors and analysts gain vital insight into organizational
performance, and optimal investment potential
• Transparency increases trust - stakeholders and civil society
can respond to comparable and standardized information
• Organizations can mitigate negative impacts
Frameworks and
Standards in
Financial Reporting
Frameworks and Standards in
Financial Reporting
• Financial Reporting
– Generally Accepted Accounting Principles
(GAAP)
– International Financial Reporting Standards
(IFRS)
• Financial Auditing
– IAASB International Audit Standards
Frameworks and
Standards in
Sustainability, CSR
Reporting
FRAMEWORKS and STANDARDS
Sustainability, CSR Reporting
• Management and Reporting
– ISO14001 (design, implement EEMS) (ISO 14004)
– UN Global Compact (strategic policy initiative-10 univ. accep. prin- human rights,
labour, environment,anti-corruption)
– Dow Jones Sustainability Index (establish to track performance of companies
that lead the field in terms of corp sustainability)
– Global Reporting Initiative (GRI)
– ISO 26000 (Social Responsibility ) –implementing as a way to achieve the benefits of
operating in a socially responsible manner)
• Assurance
– Accountability 1000
(assurance standard focus on the accuracy of quantitative
data)
– ISAE 3000 (designed to provide a basic framework for large scale audits)
– Nivra 34109 –(review of historical financial information)
Global Reporting Initiative
Standard and Brand
•
•
•
•
•
•
Consensus and Legitimacy
Significant Adoption
Normative Clarity
Functionality
Soundness and Flexibility
Triple Bottom Line Format
GRI Reporting Framework
• This framework sets out the principles and
indicators that organizations can use to measure
and report their economic, environmental, and
social performance.
• The cornerstone of the framework is the
Sustainability Reporting Guidelines. The third
version of the Guidelines – known as the G3
Guidelines - was published in 2006, G3.1 in 2011.
GRI Sustainability
Indicators Set
• 79 Indicators of Sustainability Performance
– 9 Economic Value Generated and Dist
– 30 Environment
– 14 Labor Practices
– 9 Human Rights
– 8 Society
– 9 Product Responsibility
• FI Sector Guidelines
• Sector Supplements (G3) (G3.1)
• Level of Application: C, B, and A
Performance Indicators
•
•
•
Communicates performance and results
Performance is considered here to be the
ability to track changes over time, and
outcomes achieved as a result of an
organizations actions
These results can then be placed in the
context of stated policies, goals, and
commitments as set out in the DMA
Environment Performance Indicators
• Materials, Energy and Water
• Biodiversity
• Emissions, Effluents and
• Products and Services
• Compliance
• Transport
(30)
Wastes
Economic Performance Indicators
• Economic performance – this category of indicators
addresses the direct economic impacts of the organization’s activities and
the economic value added by these activities.
• Market presence-
these indicators provide information about
interactions in specific markets.
• Indirect economic impacts- these indicators measure the
economic impacts created as a result of the organization’s economic
activities and transactions.
Social Performance Indicators
Labour Practices
Product
Responsibility
Society
Human Rights
•Employment
•Labour Relations
•Occupational Health
& Safety
•Training & Education
•Diversity
•Customer Health &
Safety
•Product and Service
Labeling
•Marketing
Communications
•Customer Privacy
•Compliance
•Community
•Corruption
•Public Policy
•Anti-Competitive
Behaviour
•Compliance
•Investment &
Procurement
Practices
•Freedom of Assoc &
Collective Bargaining
•Non-Descrimination
•Child Labour
•Forced &
Compulsory Labour
•Security Practices
•Indigenous Rights
Report Application
Level
Source: www.globalreporting.org
Four Pillars of GNH
• Sustainable and Equitable Economic
Development
• Conservation of the Environment
• Preservation and Promotion of Culture
• Good Governance
GRI's 2015 Goal
• By 2015 all large and medium sized companies in
OECD countries and large emerging economies
should report publicly on their economic and
environmental, social and governance performance,
or explain why if they do not.
• GRI is committed to mainstreaming sustainability
reporting. One way to achieve this goal is to drive a
report or explain approach to reporting. GRI works in
a number of ways to support organizations that want
to report.
GRI's 2015 Goal
• Encourages organizations of all sizes, from all sectors and all
regions to produce sustainability reports by engaging with
them directly
• Ensures every company in the world has access to GRI’s
Sustainability Reporting Framework, by making it available
as a free public good in multiple languages
• Offers support to reporters by producing publications and
providing training
• Continually improves the Sustainability Reporting
Framework, by creating a more robust version of the GRI
Reporting Guidelines – G4 – and by developing Sector
Supplements, using a collaborative, multi-stakeholder
working process
• Harmonizes reporting guidance with other existing
frameworks and initiatives
Who?
Stakeholders of Sustainability Reports
• Information seekers
– Conventional stakeholders, shareholders, investors,
labor, business, partners, regulators, etc.
• Global Players
– UNEP and GRI, ISO, IASB (International Accounting
Standard Board), accounting firms and consultancies
– Press, national regulators and standards organizations
• Reporting Organizations
– Executive Practitioners
• International Funders- IFC, World Bank
Sustainability: Who is involved?
•
•
•
•
Not only for the key NGOs
Not only for the Leading Corporate Supporters
Not only for the Government
But all organizations (private, public, or nonprofit)
– All Organizations are encouraged to report against
the guidelines whether beginners or experienced
reporters, and regardless of their size, sector or
location.
Corporate Structure for
Sustainability, CSR Reporting
•
•
•
•
•
Board Level
Executive Management Team
Corporate Social Responsibility (CSR)
Investor Relations Unit (IRU)
Corporate Communications/Public
Relations (PR)
• Mixed Group with CSR as lead
Evolution of
Corporate Social
Responsibility and
Sustainability
Initiatives
Source: www.globalreporting.org
Source: www.globalreporting.org
Source: www.globalreporting.org
GRI
List(Aug
(Aug2011)
2011)
GRI
List
Source: www.globalreporting.org
Looking into the Future
• Reports are more:
–
–
–
–
Relevant
Comparable
Auditable
Performance Focused
• G3 Guidelines
– More User friendly
– The common reporting
framework
– Universally applicable
Challenges in CSR, Sustainability
Measurement and Reporting
• Leadership and Commitment
• The Business Case for Transparency
– Why do we have to disclose?
• Organizational Competence and Capacity
• Data Collection and Repository
– Information availability, cost of measurement, lack of criteria
• Measurement and Reporting Strategy
Decisions to Be Made...
• What to measure, and How?
– Internal problem
– Guidelines to follow
• What to Disclose, and How?
– Complex communication problems
– Stakeholder Management
Sustainability Reports from Banks
2010
DBP’s 2009 Sustainability Report
GRI Compliance
sustainable
development
Association of Development Financing Institutions in Asia and the Pacific
Global Reporting Initiative (GRI) G3
Sustainability Reporting
Land Bank of the Philippines
April 2011
Assuring Sustainability Reports
• Quality Assurance
• Third Party Assurance
• Assurance on Certain Disclosures
(e.g., Climate Change)
Publishing Sustainability Reports
• Printed
• Printed and Online
• Purely Online
Green Initiatives
• Emergence of green economies-shifting from high to low
carbon
• Greening the DFIs (Corporate Governance)
• Green Technologies (clean energy)
• Reducing environmental footprints in operations and
cutting costs
• Alternative source of energy / Renewable Energy
• Sustainable Consumption and Production
• Sustainable Waste Management System
Beyond the Bottomline
Greening the
DFIs
Energy
Efficient
Technology
Sustainable
Waste Mgmt
System
Sustainability
Reporting
Framework
Reducing
environmental
footprints in
all aspect of
operations
Sustainable
Consumption
and
Production
Alternative
source of
energy
“Whatever you call it —
green business, sustainable business,
eco-capitalism or anything else —
the signs are all around us that green
businesses are a growing business
trend”
Four Basic Steps to achieve GNH
Live Green…
Offer Green…
Buy Green…
Invest in Green…
It is okay to
leave footprints
only when it is
green…
Thank You!