connectedthinking Voluntary Reporting of Sustainability-Related Information Samuel Gähwiler June 2005

*connectedthinking

Voluntary Reporting of Sustainability-Related Information*Samuel GähwilerJune 2005

Page 2June 2005PricewaterhouseCoopers

Reporting & Assurance of Sustainability-Related Information

Objectives

• Communicate the current Voluntary Reporting landscape • Experience in the private sector with enterprise reporting and

environmental monitoring activities by public institutions• PwC Reporting & Assurance experiences and service offering• Proposal to encourage Voluntary Reporting in EECCA

*connectedthinking

1. Current landscape

Voluntary Reporting



Evolution of Reporting and Assurance

Overview

OFR

Sarbanes Oxley

Stakeholder Pressure

Low value unspecific, broad assurance

Degree of definition of assurance• scope of assurance (subject matter)• use of reporting standards and criteria • clarity regarding level of assurance and related work effort

High value specific assurance to international standards

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Sector reporting guidelines

Development of reporting standards

AA1000AS

IFAC

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Reporting

Reports

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Reporting

Reports



Global Trends

• Increasing number of reporters of environmental, social and ethical information*– 84 of the FTSE 100 companies produce sustainability-related reports (132 / FTSE 250)– Five years ago the number of FTSE 250 reporters was 30 and ten years ago only 6

• Regional differences in number of reporters*– 22 of the S&P Top 50 produce sustainability-related reports (40 of top 50 European

companies)

• Sectoral differences are also apparent*– The leisure, hotels, software and computer services sector are laggards in sustainability

reporting

• Increased consideration of GRI Guidelines when reporting**– Of the ten leading reporters in the survey, almost three-quarters comment that they have taken

the GRI guidelines into consideration when reporting

Reporting

*/**: Source: www.ft.com 11.09.2003

Survey of sustainability-related reporting trends in the FTSE 100 & 250*, and 100 largest companies in the Fortune 500**



Global Drivers

• Financial Perspective– Growing evidence for link between financial and sustainability performance; more

knowledge on effects of intangible value drivers – Financial Indexes: DJSI, FTSE4Good (Stock Market Indices, Rating Agencies)– Sustainability Investors such as Pension Funds and other Institutional Investors– Shareholder activism – Corporate Governance and stock listing requirements– EU IV Directive on Accounting & Reporting (to be confirmed)

• Stakeholder Perspective– Standards such as GRI Global Reporting Initiative, AA1000, OECD Guidelines for

Multinational Enterprises, United Nations Global Compact Principles– Erosion of public trust due to corporate scandals, need for greater corporate accountability

• Peer Pressure– Within Industry– Within Territory

Reporting



PRESSURES FOR CHANGE

Social and Environmental Reporting Stakes Raised

The Canadian Government has urged all listed companies to start reporting on their social and environmental performance. A letter was issued to the 1341 companies listed on the Toronto Stock Exchange stating that they should begin reporting if they are not amongst the estimated 100 businesses already doing so.

The letter emphasizes that social and environmental reporting is vital in allowing investors, employees, consumers and regulators to make informed decisions about a company.

At present social and environmental reporting is voluntary in Canada. Whilst the letter does not mention any sanctions that will be imposed on companies which fail to comply with the reporting requirements, the letter does suggest that the government may consider enforcing some form of regulation in the future.

Source: http://www.ethicalperformance.com, March 5, 2004

http://www.ethicalperformance.com/

http://www.ethicalperformance.com/



Territory Drivers

• Regulation– Denmark: The Law on Annual Accounts (2001) and the Law on Green Accounts (1996) – France: Law no.2001-420 related to New Economic Regulations (2001), Decree 2002-

221– Norway: The Accounting Act (1999)– Sweden: The Annual Accounts Act (1999)– The Netherlands: The Environmental Protection Act (1997)

• Soft Regulation, Stock Listing Requirements, Standards – Australia: Public Environmental Reporting Framework (2000)– Denmark: Social-ethical Accounts (2001)– EU: Green Paper “Promoting a European Framework for Corporate Social

Responsibility” (2002)– Japan: Environmental Reporting Guidelines / Environmental Performance Indicators

(2001)– South Africa: King II Report on Corporate Governance (2002)– UK: OFR, DTI “Accounting for People” (2003)

Reporting

*connectedthinking

2. Enterprise reporting and environmental monitoring activities by public institutions

Linkage

Experience of the private sector Image from Brandsite



Linkage between the enterprise data collection and reporting, and environmental monitoring activities by public institutions• Site-Level (international companies)

– Generally separate reporting lines and different requirements (parallel reporting). The site has requirements for statistic and compliance reporting from the local and the national administration, reporting requirements from the company, stakeholders and investors– Data source is generally the same, data aggregation is different (e.g. CO2 conversion factor, VOC Mass-balance)Corporate-Level

• The data collected from the sites is used for statistic reporting (e.g. CO2)• The data collected from the sites is used for internal monitoring and support

management decision-making• The consistency check of the different reporting lines are generally part of an

external Assurance



The experience of the private sector in adapting to various data collection and reporting environmental requirements

• Internal Reporting:

– Site-Level: Increasing and different reporting requirements to satisfy the corporate reporting requirements, but with focus on local and regional reporting definitions

– Corporate-Level: The reporting guidelines and reporting standards play an important role in the definition of the reporting parameters (e.g. water consumption according to GRI)

• External Reporting:

– Site-Level: Parameters, conversion factors follows the definition of national regulatory reporting (site-level environmental reports are generally rare)

– Corporate-Level: Parameters, conversion factors follows the company reporting definitions which are often based on reporting guidelines, reporting standards or EU legislation (e.g. GRI, OECD Guidelines, sector specific guidelines)

*connectedthinking

3. PwC’s Expertise

Reporting



PwC International Relationships

• CSR Europe - Board member • ESRA - Management Committee and Jury Member of the European

Sustainability Reporting Award Scheme • FEE - Active members in the Sustainability Working Group of the European

Federation of Accountants • GRI – Charter sponsor of the Global Reporting Initiative and active

involvement in many GRI working groups • ISEA - Council Member of the International Institute for Social and Ethical

Accountability (AccountAbility) - AA1000AS training as well as various other co-operations

• WBCSD - Member of the World Business Council for Sustainable Development where Sam DiPiazza co-chairs a working group on Accountability & Reporting

PwC Services



PwC Service Offering Overview

• Communications Planning and Strategy• Governance, Systems and Processes for Communications • Content Development• Analysis and Feedback• Assurance

* All parts of the service offering may be applied to both internal as well as external reporting and communications

PwC Services



Selection of Reporting Engagements

• USA, Global Food & Beverage Company – GRI assessment

• Switzerland, Pharmaceutical Company– Assurance of Corporate Citizenship reporting

• Denmark, Ministry of Environment – Green accounts reporting

• Russia, Norilsk Nickel – Assurance of social report

Case Studies



Case Studies

Russia, Norilsk NickelClient Issue(s) Unsure what / how to report to a Global audience

Previous reporting had been contained as a section in the Annual Report Assurance that internal controls and systems are functioning as designed, and providing high-quality data

Our Solution • Advisory for developing a reporting framework based on international and industry guidelines and best practice (ILO, UN Global Compact, GRI, ICMM (International Council on Mining & Metals) based on extensive stakeholder engagements at Company Facilities

• Assurance on systems, processes to capture, generate and compile data and information, quality of information, status of implementation of social policies

• Recommendations for improvement• Leverage the Western European assurance experience in Russia

Page 19June 2005

Selected PwC Projects in Russia

Framework for Social Report

Assurance on Social Report

Assurance on Social Report – Sakhalin Island Operations

Environmental Management Systems Audits

Environmental Training



Supply chain audits – Health and Safety, workplace conditions

Audits - Health and Safety, workplace conditions



*connectedthinking

4. Voluntary Reporting in EECCA

Proposals



Encouraging Reporting in EECCA

• Using sustainability related business platforms– Discuss and encourage corporate reporting (e.g. Responsible Business

Forum event in Poland 2003 (PwC presented reporting landscape, business case for reporting…outcome: if the government support it, companies will invest)

• Public sector driven Workshops:– raise awareness of the importance of voluntary reporting– disseminate best practice

• Participation in developing guidance documents• Assessment of voluntary reporting in EECCA:

– assess the current status of voluntary reporting – identify obstacles to voluntary reporting

– recommend initiatives to encourage more voluntary reporting• Existing PwC Environmental reporting services, ISO 14001 / OHSAS 18001 /

AA1000

Proposals



© 2004 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the networkof member firms of PricewaterhouseCoopers International Limited, each of which is a separate andindependent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers.

Thomas ScheiwillerPartnerXLOS Sustainability Leadership Team

Zurich, Switzerland

phone +41 1 630 28 10e-mail [email protected]

Samuel GähwilerSenior ConsultantSustainability Team Switzerland

Zurich, Switzerland

phone +41 1 630 27 93e-mail [email protected]

Documents

*connectedthinking Voluntary Reporting of Sustainability-Related Information* Samuel Gähwiler June 2005

connectedthinking Voluntary Reporting of Sustainability-Related Information Samuel Gähwiler June 2005