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Reporting on Community Relations, Investment and Development

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  • 1. Community Development Community EngagementReporting on Community Investment Reana Rossouw Next Generation Consultants
  • 2. Topic• What is sustainability reporting?• Sustainability reporting as a resultant of good performance• Linking CSI and Sustainability reporting• What to report on-how to use it in stakeholder engagement process
  • 3. Reporting on Sustainability 3
  • 4. Sustainability Reporting is ……. The practice of measuring, disclosing and being accountable to internal and external stakeholders for organisational performance against specific environmental, social, economical and governance goals and metrics that support sustainable development, and for how sustainability is incorporated into a company’s strategies, policies and performance 4
  • 5. In essence … • Sustainability reporting describes performance • Sustainability reporting involves measurement • Sustainability reporting is a recurring process • Sustainability reporting requires stakeholder engagement
  • 6. From Annual Report to SustainabilityReport to an Integrated Report……….. 6
  • 7. 7
  • 8. Governance and Compliance• King III – It concerns the manner in which environmental, social and governance (ESG) factors are “integrated” into companies’ annual financial reports• CRISA – To “incorporate sustainability considerations” and demonstrate their “acceptance of ownership responsibilities” in investment arrangements• Regulation 28: – Obliges trustees to “give appropriate consideration to any factor which may materially affect the sustainable long-term performance of a fund’s assets, including factors of an environmental, social and governance nature”• JSE – To comply with King III or explain why not – Integrated Report• Companies Act – Ensures the board reports back to shareholders (at the AGM) on how they have addressed sustainability issues right across the value chain and how they have engaged with stakeholders to minimise risk 8
  • 9. What this means…. • New era of mandatory reporting and associated compliance requires new skills, competencies, capacity, and consideration – a paradigm shift about fundamentally different business models • Reporting will not change corporate behaviour – therefore reporting is the outcome /result of a change management process and the report only communicates the changed paradigm • The new era of corporate accountability and transparency focuses on enabling stakeholders to make informed assessments about the value of an organisation as opposed to companies selling their strategy and telling their story • It requires integrated thinking, implementation and execution that allows and encourages stakeholders to influence business strategy 9
  • 10. In summary:Reporting is not an end in itself. Evengood reporting does not necessarily result in improved sustainability. 10
  • 11. What this means for practitioners• There is no place to hide – You have to measure impact• You cannot just report on quantitative impacts – The numbers, the projects and budgets• You have to be transparent – Include positive and negative impact, intended and unintended impact, across the triple bottom line• The more research and information you have the higher the impact and therefore your ability to report increases• Remember – In future this will be assured – so you cannot wait – learning and testing needs to happen now so that you are ready for the auditors
  • 12. ReportingFrameworks 12
  • 13. The GRI Reporting Framework• The Sustainability Reporting Guidelines are the cornerstone – to organisations for disclosing their sustainability performance.• It is applicable to organisations of any size or type, and from any sector or geographic region, and has been used by thousands of organisations worldwide as the basis for their sustainability and integrated reports.• It facilitates transparency and accountability by organisations and provides stakeholders with a universally-applicable, comparable framework from which to understand disclosed information.• The Guidelines contain principles and guidance as well as standard disclosures – including indicators – to outline a disclosure framework that organisations can voluntarily, flexibly, and incrementally, adopt. 13
  • 14. The GRI Guidelines• Principles and Guidance – Apply the Reporting Principles and guidance to ensure reports is focused and of value for internal and external stakeholders. • Define report content by applying the Principles of materiality, stakeholder inclusiveness, sustainability context, and completeness. • Ensure report quality by applying the Principles of balance, comparability, accurac y, timeliness, reliability, and clarity. • Set report boundary by following the guidance provided to determine the range of entities that should be included in the report. 14
  • 15. GRI Indicators for CSI • EC1 – Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, payments to capital providers and government • EC6 – Policy, practices, and proportion of spending on locally based suppliers at significant locations of operation. – Enterprise development • EC8 – Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind or pro bono engagement • SO1 – Percentage of operations with implemented local community engagement, impact assessments, and development programs • SO9 – Operations with significant potential or actual negative impacts on local communities • SO10 – Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities
  • 16. Disclosure on Management Approach (DMA) (1)• A statement from the most senior executive : – This person will have operational responsibility for Social/Society aspects explaining how operational responsibility is divided at senior management level. – Also explain the division of responsibility for impacts on local communities in the highest governance level. – Inform if and how work councils, occupational health and safety committees and/or other independent employee representation bodies are empowered to deal with and have dealt with impacts on local communities.• Provide a contextual introduction to the social/community section: Inclusive of: – Training and awareness – in relation to community /society aspects – Monitoring and follow up – procedures related to monitoring and corrective and preventative actions, including those related to the supply chain – List of certifications for performance or certification systems or other approaches to auditing/verifying the reporting organisation or its supply chain – Procedures related to assessing the risks and managing impacts on local communities. – This should also include information on how data was collected, and the process for selecting the local community members (individual or group) from whom data was collected• Provide organisational goals pertaining to communities• Use specific organisational indicators as needed in conjunction with GRI indicators to demonstrate the results of performance against goals• Address the extend to which organisational goals contribute to or interfere with the collective rights of communities
  • 17. Disclosure on Management Approach (DMA) (2)• Provide or describe the organisational policy that define the organisation’s commitment related to communities, with specific reference to: – References/statements regarding the collective rights of communities – Risk assessment for impact on local communities, through the whole life cycle – Mitigation of impacts on communities – Engagement with both men and women in local communities – Application of policy within or throughout the organisation• Additional contextual information: – Key successes and shortcomings – Major organisational risks and challenges – Major changes in the reporting period to systems or structures to improve performance – Key strategies and procedures for implementing policies or achieving goals
  • 18. Indicators in Detail (1)EC1 – Voluntary donations and investment of funds in the broader community where theCommunity target beneficiaries are external to the company.Investments These include contributions to charities, NGOs and research institutes (unrelated to company R&D), funds to support community infrastructure and direct costs of social programs. The amount included should account for actual expenditures in the reporting period, not commitments. For infrastructure investments, the calculation of the total investment should include costs of goods and labour in addition to capital costs. For supporting of on-going facilities or programs (e.g. an organisation funds the daily operations of a public facility), the reported investment should include operating costs. This excludes legal and commercial activities or where the purpose of the investment is exclusively commercial. Donations to political parties are included but are also addressed separately in more detail in SO6. Any infrastructure investment that is driven primarily by core business needs (e.g. building a road to a mine or factory) or to facilitate the business operations of the organisation should not be included. The calculation of investment may include infrastructure built outside the main business activities of the reporting organisation, such as a school or hospital for employees and their families.
  • 19. Indicators continue (2)EC6 • Report geographic definition of ‘local’Policy, practices and proportion • Percentages should be based on invoicesof spending on locally based • Report the policy for preferring locally basedsuppliers at significant locations suppliers • State the percentage of the procurement budget used that is spend on suppliers • Indicate the factors that influence supplier selectionEC8 • Explain the extent of development (size, cost,Development and impact of duration) of investment and support and theinfrastructure investments and current or expected impacts (positive orservices provided primarily for negative) on communities and local economies.public benefit through Indicate whether these investments andcommercial, in-kind, or pro bono services are commercial, in-kind or pro bonoengagement • Report whether the organisation conducted a community needs assessment to determine infrastructure and other services needed, if so, explain the results of the assessment
  • 20. Indicators Continue (3)SO1 • Identify the total number of operationsPercentage of operations • Identify organisation wide local community engagement,with implemented local impact assessments and development programs • Report the percentage of operations with implementedcommunity engagement, community engagement, impact assessments and developmentimpact assessments and programs including, but not limited to:development programs • Social impact assessments, including gender impact assessments, based on participatory processesDocument sources may include: • Environmental impact assessments and on-going monitoringBaseline studies - health, • Public disclosure of results of environmental and socialeconomic, environment, impact assessmentscultural, etc. • Local community development programs based on localSocial impact assessments, community needsgender impact assessments, • Stakeholder engagement plans based on stakeholderhuman rights impact mappingassessments, environmental • Broad based local community consultation committeesimpact assessments, social and and processes that include vulnerable groupslabour plans, resettlement • Work councils, occupational health and safetyaction plans, community committees and other employee representation bodies todevelopment plans, grievance deal with impactsand complaints mechanisms, • Formal local community grievance processespublic/ community consultationplans
  • 21. Indicators Continue (5)SO9 All data collected with GRI indicators – eg. EC9, EN1, EN3, EN8, EN12, EN14, LA8, HR6-9,Operations PR1-2 - Actual performance data, internal investment plans and associated riskwith assessments - Including: • Vulnerability and risk to local communities from potential impacts due to:significant • Degree of physical or economic isolationpotential • Level of socio economic development including gender equalityor actual • State of socio economic infrastructure • Proximity to operationsnegative • Level of social organisationsimpacts on • Strength and quality of governance of local and national institutions around locallocal communitiescommuni- • Identify exposure of community to operations due to higher than average useties of/impact on shared resources through: • Use of hazardous substances that impact on the environment and human health in general • Volume and type of pollution released • Status as major employer in local community • Land conversion and resettlement • Natural resources competition • Identify significant potential and actual negative economic, social, cultural and environmental impacts and their rights, considering: • Intensity and severity of impact • Likely duration of impact • Reversibility of impact • Scale of impact
  • 22. Indicators Continue (6)SO10 Use the information on potential andPrevention and mitigation measures actual negative impacts reported in SO9.implemented in operations with Report whether –significant potential or actual negative • Prevention and mitigation measuresimpacts on local communities were implemented • Prevention and mitigation measures were implemented in order to: • Remediate non-compliance with laws or regulations • Maintain compliance with laws or regulations • Achieve a standard beyond legal compliances • Prevention and mitigation objectives were achieved or not
  • 23. Linking Stakeholder Engagement and Reporting• Stakeholder Engagement Standards – Accountability and IFC• You will need – To identify stakeholders – Prioritise stakeholders – Engage with stakeholders – Document engagement and commitments – Report on engagement• In light of Marikana – a lot more emphasis on engagement with communities – Their expectations, their needs – Your CSI plan must reflect the engagement outcome – Your programs are aligned with the expectations raised during engagement – Specifically you must report on impact – linking expectations raised with actual commitments and programs – what was achieved i.e. how you served and recognised needs and expectations
  • 24. Linking CSI – Reporting - Impact• You will need to know – The indicators to report against – You will need data to report against – You will need performance to report – You will need to know your impact in order to report – You will need to engage with stakeholders to ensure the relevance of your report on community development and investment
  • 25. Questions• Reana Rossouw - Next Generation Consultants• Specialists in Sustainability & Integrated Reporting, as well Socio Economic Investment and Development• Tel: (011) 2750315• E-mail: rrossouw@nextgeneration.co.za• Web: www.nextgeneration.co.za• Please note: The information in this presentation is the property of Next Generation Consultants and may not be used or copied or transmitted by any party without the express permission from Next Generation Consultants