Overview on SustainabilityReportingSonal KaushikEnvironmental Management Centre LLP
What is Sustainability Reporting?2Disclosure in public domain about non-financialperformancehere, Non-financial means = Governance, Environment, Social, Health &SafetyIn simple words…..It is an organizational report that talks about theperformance of four key areas namely economic,environmental, social and governance.
Sustainability Reporting3Sustainability reporting is the practice of measuring,disclosing, and being accountable to internal and externalstakeholders for organizational performance towards thegoal of sustainable development.– Global Reporting Initiative (GRI)The founding motto of the GRI,“What you cannot measure, you cannot manage,” Adding to it….If you cannot manage, you cannot perform.”
What is the Purpose?4Benchmarking and assessing sustainability performancewith respect to laws, norms, codes, performancestandards, and voluntary initiatives;Demonstrating how the organization influences and isinfluenced by expectations about sustainabledevelopment; andComparing performance within an organization andbetween different organizations over time.Intended to improve internal processes, engagestakeholders and attract investors !
Who offers guidance on SustainabilityReporting?5The following organizations offer sustainability reportingguidance (globally)The Global Reporting InitiativeOrganization for Economic Cooperation and development(OECD Guidelines for Multinational Enterprises)The United Nations Global Compact (the Communication onProgress)International Organization for Standardization (ISO 26000,International Standard for social responsibility)Now in India..Ministry of Corporate Affairs with GIZ – has came up withNationalVoluntary Guidelines (NVGs)SEBI has come with ‘Business Responsibility Reporting (BRR)’
What is GRI ?6GRI – a non-profit organisation and a multi-stakeholdernetwork in 30 countriesGRI is a global initiative to standardise NFR which theorganisations adopt and has become the de-factostandard globally. GRI is a long term, multi-stakeholder, international process whose mission is todevelop and disseminate globally applicable SRguidelines.
Evolution of GRI71997• CERES,Tellus Institute & UNEP initiated GRI2000• Version 1 of SR guidelines released2002• Version 2 of SR guidelines released during WSSD at Johannesburg• It became a separate permanent Institution, headquartered in NL2008 • Version 3 called as GRI G3 guidelines on SR released2010 • GRI Focal point opened in New Delhi, India2011• Organisations from 60 countries report based on GRI;• Almost 7500 GRI based Reports registered on GRIAlthough the GRI is independent, it remains a collaborating centre of UNEPand works in cooperation with the United Nations Global Compact
Example : Human Rights IndicatorASPECTS• Investment and ProcurementPractices• Non-Discrimination• Freedom of Association &Collective bargaining• Child Labour• Forced & Compulsory Labour• Security practices• Indigenous rightsTotal number of incidents of discriminationand actions takenTotal no. of incidents of discriminationStatus of incidents –• Reviewed• Actions taken• Implemented• Resolved/ completedINDICATORDATA REQD.9
What are NVGs?Issued by MoCA (prepared by IICA)NVGs are NOT reporting guidelines but lays down thebasic requirements for businesses to function responsiblyPrinciple based approachThere are 9 Principles supported by core elements10
9 Principles of NVGsBusinesses should -P1: Conduct and govern themselves with Ethics,Transparency andAccountabilityP2: Provide goods and services that are safe and contribute to sustainabilitythroughout their life cycleP3: Promote the wellbeing of all employeesP4: Respect the interests of, and be responsive towards all stakeholders,especially those who are disadvantages, vulnerable and marginalisedP5: Respect and promote human rightsP6: Respect, protect, and make efforts to restore the environmentP7: When engaged in influencing public and regulatory policy, should do soin a responsible mannerP8: Support inclusive growth and equitable developmentP9: Engage with and provide value to their customers and consumers in aresponsible manner11
Example: P3: Wellbeing of Employeesfreedom of association, collectivebargaining and grievance redressalmechanismsequal opportunities irrespective of caste,creed, gender, race, religion or sexnot use child labour, forced labourwork-life balance of employeestimely payment of fairliving wages to meet basic needsSafe, hygienic and humane workplaceenvironmentcontinuous skill enhancementharassment free workplace• Total number of employees with percentage ofemployees that are engaged through contractors• Statement on non-discriminatory employmentpolicy of the business entity• Percentage of employees who are women• Number of persons with disabilities hired• Amount of the least monthly wage paid to anyskilled and unskilled employee• Number of training and skill up-gradationprogrammes organized during the reporting periodfor skilled and unskilled employees• Number of incidents of delay in payment of wagesduring the reporting period• Number of grievances submitted by the employeesCORE ELEMENTS INDICATORS12
What is BRR?SEBI issued a Circular dated 13th August 2012, where itsays that listed companies should include BRR as part ofthe Annual Reports.Mandatory for 100 listed companies for both NSE & BSEOthers, should voluntarily discloseThe provisions of the Circular is applicable for FY endingon or after Dec 31, 2012BRR is based on NVG principles and a simplified formatgiven as Annexure 1 of the Circular.13
BRR FrameworkSec A: General Information about the CompanySec B: Financial DetailsSec C: About the Subsidiaries/ JVsSec D: BR Information (based on principle-wise policy)Sec E: Principle-wise Performance14
CompanyCreatebaselinethroughIndicators• GRI• NVGs• IntegratedReportingSustainabilityIndicators?Set Goals & Targets as per the baselineprepared to move towards Sus. Dev.Commitment required,henceVision and Policy to beformulated & approved byBODDISCLOSURE of :• approach/ process• governance• targets• performance= SustainabilityReportTo achieve the targetsAction Planning &Implementationof ActionsMeasure theIndicatorsagainPerformance!!Input fromStakeholders19
Reporting phases20PrepareConnectDefineMonitorReport1- 1.5 months1- 1.5 months1- 1.5 months6 months1- 1.5 monthsYear 1Plan for reportingprocessEngage withStakeholdersFinalise the Indicators,Actions & ReportContentMeasure the dataMonitor the actionsWrite the Report,Communicate andcollect feedback
Benefits of SR21Internal benefits for companies includes :Increased understanding of risks and opportunitiesEmphasizing the link between financial and non-financial performanceInfluencing long term management strategy and policy, and businessplansStreamlining processes, reducing costs and improving efficiencyBenchmarking and assessing sustainability performance with respectto laws, norms, codes, performance standards, and voluntaryinitiativesAvoid being implicated in publicized environmental, social andgovernance failuresComparing performance internally, and between organizations andsectors
Benefits of SR22External benefits of sustainability reporting can include:Mitigating - or reversing - negative environmental, social andgovernance impactsImproving reputation and brand loyaltyEnabling external stakeholders to understand company’s truevalue, and tangible and intangible assetsDemonstrating how the organization influences, and isinfluenced by, expectations about sustainable developmentAttract investors
Case Study : VeriformVeriForm, an energy-intensive steel fabricatingcompany located in Cambridge, Ontario.The company invested $46,186 between 2006and 2008 to cut its energy costs.VeriForm reduced its natural gas consumption by90%.It’s electricity bill dropped by more than 58%, andits profit increased by 76%.Equally impressive, the average payback periodfor its 42 energy saving projects was 6.3 months,which equates to an annual ROI of 190 %.23
Case Study : VeriformVeriForm has implemented over 42 energy conservationand waste reduction projects since 2006.Their achievementhighlights:58% reduction in electricity usage90.5% reduction in natural gas usage100% elimination of paper product wasteOverall reduction of annual CO2 emissions by 115 tonnesSource: http://www.veriform.ca/energy.html25