CSR REPORTING CSR PERFORMANCE, GLOBAL REPORTING INITIATIVE Ing. Pavel Adámek, Ph.D. CORPORATE SOCIAL RESPONSIBILITY/PEM-NACSR CSR REPORTING OUTLINE OF THE LECTURE 1. Global trends in CSR reporting 2. KPMG 2017 Survey of Corporate Responsibility Reporting 3. The GRI Sustainability Reporting Guidelines CSR REPORTING INTRODUCTION • Sustainability and CSR policies, plans, programs, and projects have been initiated in corporations around the world. Given the broad nature of sustainability, the breadth and depth of these initiatives varies widely. • The internationally recognized system GRI to maintain the unification reports. Although the titles of these reports differ, they typically include words such as “sustainability”, “responsibility”, „accountability” or “citizenship”, and they focus on addressing the economic, environmental, and social dimensions of corporate performance through a review of both qualitative and quantitative information. • CSR reports are typically focused mainly on the environmental and social elements of organizational performance, with the mandatory annual report containing the financial/economic performance. CSR REPORTING INTRODUCTION • „More than three quarters of the world’s largest 250 companies now include at least some “non-financial” information in their annual financial reports. And where the largest firms lead, others inevitably follow. We can also see that some countries appear to be enthusiastically adopting the concept of integrated financial and “non-financial” reporting, in many cases nudged along by regulation or stock exchange guidelines“. (KPMG, 2017) • We operate and use the principles of the major initiatives (principles) or standards which are used by the large companies in the Czech Republic, namely Global Reporting Initiative (GRI) and Top Responsible Company Award organized and awarded by Business for Society. • GRI has pioneered the creation of the world's most widely used concept that provides organizations with guidance on how to generate reports focused on sustainable development, which are publicly published and accessible to all interested parties in order to provide a detailed overview of the activities of the organization. CSR REPORTING INTRODUCTION • For many years companies have been issuing Corporate Responsibility (CR) reports – not that they were called CR reports in the early days, any more than the activities that we now count as CSR we thought of as such. • The first reports data appeared were normally included as a section in the annual report. • Only latterly have companies begun to issue „free-standing“ environmental, sustainability, or other types of report now grouped under the term „corporate responsibility“. CSR REPORTING MAJOR PROVIDERS OF SUSTAINABILITY REPORTING GUIDANCE • Sustainability reports are released by companies and organizations of all types, sizes and sectors, from every corner of the world. • Major providers of sustainability reporting guidance include: – GRI (GRI's Sustainability Reporting Standards) – The Organisation for Economic Co-operation and Development (OECD Guidelines for Multinational Enterprises) – The United Nations Global Compact – The International Organization for Standardization (ISO 26000, International Standard for social responsibility) CSR REPORTING MAJOR PROVIDERS OF SUSTAINABILITY REPORTING GUIDANCE Tim Mohin, Chief Executive of the Global Reporting Index (GRI), explained: • “In the past decade there has been a tremendous upswing in interest coming from the financial sector. With over 90% of the largest companies now filing sustainability reports (85% of the S&P 500), the data is plentiful. But that is not new. What is new is the interest in using the information for investment decisions.“ • A recent study from Oxford University found that more than 80% of mainstream investors now consider ‘ESG’ – environmental, social and governance – information when making investment decisions. And the numbers are compelling - globally, there are now $22.89 trillion of assets being professionally managed under responsible investment strategies, an increase of 25 percent since 2014. This number is so large it needs context – it exceeds the GDP of the entire US economy.” CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING CN100 companies continue to catch up with the G250 • The N100 refers to a worldwide sample of 4,900 companies comprising the top 100 companies by revenue in each of the 49 countries researched in this study. These N100 statistics provide a broadbased snapshot of CR reporting among both large and mid-cap firms around the world. • The G250 refers to the world’s 250 largest companies by revenue based on the Fortune 500 ranking of 2016. Large global companies are typically leaders in CR reporting and their behavior often predicts trends that are subsequently adopted more widely. More details about - The KPMG Survey of Corporate Responsibility Reporting 2017 Video – The KPMG Survey CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING CR reporting in the Americas region has risen by an impressive 6 percentage points in the last two years. CR reporting rates in Asia Pacific have stabilized following a surge of 8 percentage points between 2013 and 2015. Several countries with the highest CR reporting rates in the world, such as Japan, India, Malaysia and Taiwan are in the Asia Pacific region. CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING CR reporting in the Americas region has risen by an impressive 6 percentage points in the last two years. CR reporting rates in Asia Pacific have stabilized following a surge of 8 percentage points between 2013 and 2015. Several countries with the highest CR reporting rates in the world, such as Japan, India, Malaysia and Taiwan are in the Asia Pacific region. CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING Many businesses in Eastern Europe are still focused on the financial bottom line rather than the triple bottom line - it’s fair to say that a culture of sustainability is yet to properly take hold across the region. The EU Directive on Non-Financial Reporting was transposed. Despite this, Eastern Europe are still just beginning to understand the topic and build their capacity to respond. However, It´s expected to see steady growth in CR reporting in Eastern Europe over the next few years and improving quality as regulatory requirements, market pressure and increasing awareness take effect. CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING For the first time in the history of this survey, more than 60 percent of companies across all industry sectors are reporting on CR. As in previous years, sectors with high environmental and social impacts – such as Oil & Gas and Mining – typically have high CR reporting rates. More than two thirds of companies in all sectors except Retail now report on their CR performance CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING CSR REPORTING 1. GLOBAL TRENDS IN CSR REPORTING • This is a clear trend that has emerged in a short space of time and strongly suggests that the SDGs will have a growing profile in CR reporting over the next two to three years. • 40% of companies that connect their CR activities to the SDGs. • Swedish companies are leading the world when it comes to referencing the SDGs in their reporting and there are many reasons behind this including culture and politics. • Nordic companies in general are increasingly interested in demonstrating how they create value in society and the SDGs provide a means for doing so. CSR REPORTING REPORTING AWARDS • Corporate Registr – CRRA CR Reporting Awards 2019 • Organised by CorporateRegister.com, the CR Reporting Awards are the world’s only independent global annual awards for corporate responsibility reporting. • The awards were developed in August 2007 to identify and acknowledge the best in corporate non-financial reporting. • Voting took place online between March 2019 and May 2019. All 60,000 registered users of CorporateRegister.com were entitled to vote. • Founded in 1998, CorporateRegister.com is the global CR resources website and hosts the world’s most comprehensive directory of corporate non-financial reporting, profiling over 102,000 reports from 17,000 organisations across 150 countries. Around 10,500 CR (Corporate Responsibility) reports are published annually and are added to the current 102,000 reports profiled free and online. CSR REPORTING REPORTING AWARDS • Winner - M&S Transformation Underway – Plan a Report 2018 TOP RESPONSIBLE COMPANY IN THE CZECH REPUBLIC – CSR REPORTING 2019 in percentage overall evaluation: CSR REPORTING BENEFITS OF REPORTING • Internal benefits: – Increased understanding of risks and opportunities – Emphasizing the link between financial and non-financial performance – Influencing long term management strategy and policy, and business plans – Streamlining processes, reducing costs and improving efficiency – Benchmarking and assessing sustainability performance with respect to laws, norms, codes, performance standards, and voluntary initiatives – Avoiding being implicated in publicized environmental, social and governance failures – Comparing performance internally, and between organizations and sectors CSR REPORTING BENEFITS OF REPORTING • External benefits: – Mitigating – or reversing – negative environmental, social and governance impacts – Improving reputation and brand loyalty – Enabling external stakeholders to understand the organization’s true value, and tangible and intangible assets – Demonstrating how the organization influences, and is influenced by, expectations about sustainable development CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES • Global Reporting Initiative (GRI) is a large international non-profit organization and a network of thousands of experts from dozens of countries around the world. • GRI was founded in 1997 by the Coalition for Environmentally responsible Economics (CERES), in collaboration with the United Nations Environmental Programme (UNEP) and its headquarters is located in Amsterdam. • Initiative GRI defines CSR report as publicly published a report, which the company makes available to all stakeholders in order to provide a detailed overview of corporate activities in broader economic, environmental and social dimensions. CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES • The first draft Guidelines 2000 was issued in 2000, his second release entitled Sustainable Reporting Guidelines established in 2002. • Four years later, followed by the third edition, called G3 Guidelines, which in 2013 was replaced by the G4 version of the Sustainability Reporting Guidelines. • Directive is freely available on the organization's website. CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES • The GRI Sustainability Reporting Guidelines (the Guidelines) offer Reporting Principles and Standard Disclosures, and an Implementation Manual for the preparation of sustainability reports by organizations, regardless of their size, sector or location. • The Guidelines also offer an international reference for all those interested in the disclosure of governance approach and of the environmental, social and economic performance and impacts of organizations. • The Guidelines are developed through a global multistakeholder process involving representatives from business, labor, civil society, and financial markets, as well as auditors and experts in various fields; and in close dialogue with regulators and governmental agencies in several countries. CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES • GRI’s Standards help businesses, governments and other organizations understand and communicate the impact of business on critical sustainability issues. Some of the distinctive elements of the GRI Standards include: – Multi-stakeholder input: Our approach is based on multi-stakeholder engagement, representing the best combination of technical expertise and diversity of experience to address the needs of all report makers and users. This approach enables us to produce universally-applicable reporting guidance. – A record of use and endorsement: Of the world’s largest 250 corporations, 92% report on their sustainability performance and 74% of these use GRI’s Standards to do so. – Governmental references and activities. CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES An examples of categories and aspets in the guidelines Source: GRI, G4, www.globalreporting.org CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES An examples of categories and aspets in the guidelines Source: GRI, G4, www.globalreporting.org CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES • Economic performance – the economic dimension of sustainability concerns the organization’s impacts on the economic conditions of its stakeholders, and on economic systems at local, national, and global levels. – Direct economic value generated (examples from G4-EC1): Operating costs, Employee wages and benefits, Payments to providers of capital, Payments to government, Community investments. – Indirect economic impacts (examples from G4-EC8): • Changing the productivity of organizations, sectors • Economic development in areas of high poverty • Economic impact of improving or deteriorating social or environmental conditions • Jobs supported in the supply chain or distribution chain • Stimulating, enabling, or limiting foreign direct investment • Economic impact of the use of products and services CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES • Environmental performance – the environmental dimension of sustainability concerns the organization’s impact on living and non-living natural systems, including land, air, water and ecosystems. • The environmental category covers impacts related to inputs (such as energy and water) and outputs (such as emissions, effluents and waste). In addition, it covers biodiversity, transport, and product and service-related impacts, as well as environmental compliance and expenditures (more study in G4- EN part of GRI). – Materials (examples G4-EN1): • Report the total weight or volume of materials that are used to produce and package the organization’s primary products and services during the reporting period, by: • Non-renewable materials used • Renewable materials used – Percentage of materials used that are recycled input materials – Energy consuption within the organization (elektricity, heating, cooling, steam consuption CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES • Environmental performance – Total weight of waste by type and disposal method (examples G4-EN23): • Reuse • Recycling • Composting • Recovery, including energy recovery • Incineration (mass burn) • Dep well injection • Landfill • On-site storage CSR REPORTING 2. THE GRI SUSTAINABILITY REPORTING GUIDELINES • Social performance – the social dimension of sustainability concerns the impacts the organization has on the social systems within which it operates. The social category includes the sub-categories: • Labor Practices and Decent Work • Human Rights • Society (local communities, anti-corruption, • Product Responsibility (customer health and safety, labeling, marketing communications, • More study in G4-LA part of GRI). Examples (G4-LA2): – Employment • Benefits provided to full-time employees (life insurence, health care, disability and invalidity coverage, parental leave, retirement provision, stock ownership). – Training and education – Diversity and equal opprortunity – Equal remuneration for women and men CSR REPORTING PROCESS FOR DEFINING REPORTING CONTENT - SUMMARY 1. Step – Identification – consider the GRI Aspects list and other topics of interestpply the Principles of Sustainability Context and Stakeholder Inclusiveness: Identify the Aspects – and other relevant topics – based on the relevant economic, environmental and social impacts related to all of the organization’s activities, products, services, and relationships. – Identify where the impacts occur. – Make a list of the aspects and other topics considered relevant. 2. Step – Prioritization – Apply the principles of materality and stakeholder inclusiveness (signifikance fo the economic, environmental and social impacts) – Define and document thresholds (criteria) – For each materiál aspect identified, decide the level of coverage – Lis the materiál spects to be included in the report CSR REPORTING PROCESS FOR DEFINING REPORTING CONTENT - SUMMARY 3. Step – Validation – Apply the Principles of Completeness and Stakeholder Inclusiveness – Approve the list of identified material Aspects with the relevant internal senior decision-maker – Determine which information is available and explain those for which it still needs to establish management approaches and measurements systems 4. Step – Review – Apply the Principles of Sustainability Context and Stakeholder Engagement: Review the Aspects that were material in the previous reporting period – Use the result of the review to inform Step 1 Identification for the next reporting cycle For the description and detailed guidance of the steps summarized here, see Guidance for G4-18, Implementation Manual pp. 31-40. CSR REPORTING PROCESS FOR DEFINING REPORTING CONTENT - SUMMARY Defining material aspects and boundaries – process overview Source: GRI, G4, www.globalreporting.org CSR REPORTING SUMMARY OF THE LECTURE • Sustainability reporting is a process that assists organizations in setting goals, measuring performance and managing change towards a sustainable global economy – one that combines long term profitability with social responsibility and environmental care. • Sustainability reporting – mainly through but not limited to a sustainability report – is the key platform for communicating the organization’s economic, environmental, social and governance performance, reflecting positive and negative impacts. • The aspects that the organization deems to be material, in response to its stakeholders’ expectations and interests, drive sustainability reporting. CSR REPORTING SUMMARY OF THE LECTURE • Integrated reporting is an emerging and evolving trend in corporate reporting, which in general aims primarily to offer an organization’s providers of financial capital with an integrated representation of the key factors that are material to its present and future value creation. • The accounting plays an important part in this proces of improving the credibility of CR performance. Recomended study: – The KPMG Survey of Corporate responsibility reporting 2017 – GRI Sustainability Reporting Standards (G4) – Blowfield and Murray, Corporate Responsibility, 2014 (chapter 8)