2011 MACPA MIBS Show Newman   Reporting For Sustainability V Fx
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2011 MACPA MIBS Show Newman Reporting For Sustainability V Fx

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Presentation to the 2011 Management Information and Business Shows sponsored by the Michigan Association of Certified Public Accountants

Presentation to the 2011 Management Information and Business Shows sponsored by the Michigan Association of Certified Public Accountants

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2011 MACPA MIBS Show Newman   Reporting For Sustainability V Fx 2011 MACPA MIBS Show Newman Reporting For Sustainability V Fx Presentation Transcript

  • Reporting for Sustainability Presentation to the Michigan Association of CPAs Management Information and Business Show June 9, Grand Rapids June 29, NoviNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 0
  • Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and QuestionsNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 1
  • A Model for Sustainable Business Economic Environmental Social Triple Bottom-line ScorecardNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 2
  • Corporate Drivers of SustainabilityThe Dow Jones Sustainability Index (DJSI) created in 1999 represents over $US 9 billion in totalmarket capitalization. The DJSI STOXX40 has outperformed the nominal DJ STOXX50 by 7.5% todate (and up to 15-20% during the period preceding the financial crisis). The DJSI comprises publicly traded organizations that follow the Global Reporting Initiative (GRI) for Sustainability reporting The investment community is giving increased weight to Corporate Sustainability to guide rating and investment decisions.Source: SAM Sustainability Annual Review, September 3, 2009Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 3
  • Benefits of Corporate Responsibility / Sustainability Consumers Behave To create Ethically value for Shareholders Host GovernmentsNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 4
  • Sustainability in the Boardroom According to a survey of global CEOs conducted by the UN Global compact over 90% of those surveyed considered sustainability issues either important or very important to the future success of their business. But what does sustainability really mean? It depends on your framework.Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 5
  • Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and QuestionsNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 6
  • Emerging Sustainable Frameworks The University of Oregon Sustainability Leadership Program is tracking over 50 emerging standards, guidelines andframeworks in the area of sustainability.Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 7
  • One Framework – The UN Global Compact 1. Businesses should support and respect the protection of internationally proclaimed human rights. 2. Make sure that they are not complicit in human rights abuses. 3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. 4. The elimination of all forms of forced and compulsory labour. 5. The effective abolition of child labour. 6. The elimination of discrimination in respect of employment and occupation. 7. Businesses should support a precautionary approach to environmental challenges. 8. Undertake initiatives to promote greater environmental responsibility. 9. Encourage the development and diffusion of environmentally friendly technologies. 10. Businesses should work against all forms of corruption, including extortion and bribery.Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 8
  • One Framework - The Natural StepNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 9
  • Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and QuestionsNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 10
  • The Range of Sustainability DocumentsOne of the challenges in the field of sustainability is the vast reporting and disclosure spectrum thatorganizations – from small not-for-profit associations to F1000 global enterprises – may choose from. Formality of Statement Company UN Global DJSI / 10K Sustainability Compact Statement Plan Code of Complex GRI Report Conduct Simple Statement of Intra-company Sourcing Direction Scorecards Audits Complexity of DisclosureNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 11
  • Statement of DirectionA Statement of Direction – Similar to a 10K President’s Message – is a publically communicated intentto address particular goals, mandates, or targets. This is generally non-binding and can be confusedwith company ―green washing‖ of marketing efforts. A Statement of Direction is a document intended to convey to the public, customers, shareholders, analysts and other stakeholders the position of the organization and its intent.Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 12
  • Code of ConductA Code of Conduct is a statement of policy which governs how the company will behave inside itsbusiness ecosystem, as well as the individual behavior expectations of its employees andstakeholders. Codes may be binding from a performance management perspective. A Code of Conduct is interpreted by organizations abiding by them in the form of policies, procedures and guidelines.Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 13
  • Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and QuestionsNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 14
  • Why consider a reporting approach?Organizations may have several reasons for implementing a sustainability program. While the initialor primary focus may be on fixing ―hygiene‖ problems, organizations may exploit the opportunity toachieve more strategic objectives in corporate sustainability and corporate social responsibility. Problems Opportunities Manual (spreadsheet-based) systems are  Adopt a more proactive approach to supplier siloed, error-prone, and do not reuse data in management enterprise systems  Anticipate and mitigate risk events; develop Roll-up processes to support audits and response plans should these events occur other reporting needs are cumbersome  Elevate profile of global corporate citizenship Organizational accountabilities for and enhance competitive brand position sustainability are unclear  Permeate sustainability initiatives and Risk of being out of compliance with a culture of social responsibility throughout the changing global regulations organization No systematic way to respond to crisis or  Improve efficiency of adjacent core processes other unforeseen event (design, manufacturing, QA) No alignment with overall corporate  Incorporate sustainability in strategic planning sustainability goals and enterprise performance managementNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 15
  • How do you interpret Sustainability?Sustainability has Three Pillars — we find that while there may be an immediate focus on one keyarea of Corporate Sustainability, attention must be given to how reporting and decision-making occurs.This increases value drivers, reduces redundancy, improves operations, and manages costs. Target Focus of Sample Fortune 500 CSR Programs Survey of Selected Cross-section of Industries 2007-2009 Economic and Company Environmental Social Accountability Financial Improve the Human UPS Strengthen the Enterprise Protect the Environment Condition Minimize Environmental Local Community Starbucks Sustainable Coffee Prices Impacts Engagement Commitment to Ethical Kimberly-Clark Business Practices Environmental Stewardship Safety and Health Eliminate Adverse Impacts Lockheed Martin Perform with Excellence from Operations Safety of Every EmployeeGenerally organizations focus on one particular domain of sustainability which needsimmediate attention, however understanding the strategic interaction of the other CorporateSustainability areas is essential and often required by reporting guidelines.Source: CSR documents from each organization, selected from 2007-9 supplier manuals and other internal corporate documents.Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 16
  • How do you Enable Sustainability? Three aspects of corporate sustainability programs have emerged: (1) development of corporate sustainability as a profit-driven strategy, (2) assurance of the actions of the corporate sustainability program, and (3) technology enablement of corporate sustainability for reporting and monitoring. Development of Sustainability Programs Corporate Sustainability Programs – Align to “pillars” and determine materiality The three “aspects” of program activities – Determine strategic orientation – Define areas, actions, ownership, roles, viability Program Assurance of Sustainability Programs Development – Confirm roles, metrics, outcomes, ownership – Assure program is “as advertised” – Second-party corporate reporting Monitoring Governance – Third-party accreditations / certifications Corporate Sustainability Enablement of Sustainability Programs – Identification of source information Program Program – Definition of reporting cycles, metrics Assurance Enablement – Monitoring processes and governance Reporting – Technology platforms, solutions, practicesNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 17
  • Reporting and GRI3In 2006, the Global Reporting Initiative (GRI) was created to provide guidelines and auditrecommendations for organizations participating in corporate sustainability reporting (CSR) activities.These guidelines ensure a level of consistency and governance in the practice of corporate sustainability. How does GRI consider CSR?  CSR “involves reporting financial and nonfinancial information to key stakeholders on the company’s operational, social, and environmental activities and its ability to deal with related risks.”  Considers the “triple bottom-line” of reporting – Economic Performance – Social Responsibility – Environmental Compliance  Considers broader set of stakeholders beyond shareholders – Financial – RegulatoryCSR as a practice in accounting areas is still emerging, – Politicalwith general guidelines based on the objectives of the – Others based on company programCorporate Sustainability program.Sources: The Future of Corporate Sustainability Reporting, The Journal of Accountancy. The American Institute of Certified Public Accountants, 2006. Royal Dutch Shell, 2003 Corporate Sustainability Report (courtesy of AICPA).Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 18
  • Communicating Sustainability PrinciplesGRI reporting is a function of confirming that program initiatives, principles, and objectives aretracked, monitored, and reported correctly. Some specific guidelines and a set of broad principles ofGRI have emerged, leaving management free to ―do what you say‖ from an auditor’s point of view aslong as it is verifiable. UPS is an exemplar in this area as shown by their reporting presentation. Areas of CSR program called out, then detailed against Key Performance Indicators (KPIs) in subsequent sections of the sustainability report. Overall graphic, such as a Venn diagram, communicates the areas of importance to various stakeholders. Interactive Web sites allow stakeholders including shareholders to create personalized reports, graphics, and tables.Source: 2008 Corporate Sustainability Report, United Parcel Service (used with permission). Newport Consulting Group record of client interviews and feedback, 2009.Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 19
  • Ratings against GRI3 The GRI3 guideline provides a number of criteria whereby the organization pursues a self- assessment, third-party review, and final grading. This is similar to self-reporting, compliance audit and certification review followed by audit, assurance and assessment of other management systems. Inputs and Outputs for Standard Reporting Inputs Report Content Guidance Report Content Principles Report Quality Principles Report Boundary Setting Profile Profile Profile Profile Management Report Management Report Management Report Management ReportOutputs Performance Indicators Performance Indicators Performance Indicators Performance Indicators Source: GRI3 Standard Guidance Documents, 2006-2010. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 20
  • Assurance and Oversight AA1000 AS (2008) has emerged as a guidance document in assurance circles with respect to sustainability and corporate responsibility programs. This approach considers two levels of assurance reporting: (1) dealing with organization behaviors and (2) behaviors in combination with KPIs, metrics. Key conclusions provided by assurance activities on GRI3 and AA1000 AS (2008) – Inclusivity: Does organization X engage with stakeholders and involve them in organizational decision making? – Materiality: Does organization X identify the issues relevant and significant to it and its stakeholders and include these in its disclosures? – Responsiveness: Does organization X respond to stakeholder issues and feedback through decisions, actions, performance and communication? – An assurance statement for a Type 2 assurance engagement must also provide conclusions on the reliability and accuracy of specified performance information. Additional observations, comments, and recommendations are also provided in the assurance report.Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 21
  • Considerations for the Public Sector ICLEI Five Milestone Approach for municipal and local governments provides a framework for public sector organizations to address triple bottom-line initiatives, share best practices, and monitor compliance for community outreach programs. International council for local environmental initiatives (ICLEI) – international association of local governments as well as national and regional local government organizations who have made a commitment to sustainable development – ICLEI provides technical consulting, training, and information services to build capacity, share knowledge, and support local government in the implementation of sustainable development at the local level. Tools, methods and processes – Clean Air and Climate Protection (CACP) – Data collection templates – Energy management standards – Over 300 local government strategies, KPIs – Knowledge base of best practicesNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 22
  • Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and QuestionsNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 23
  • How to Get Started …. Sustainability planning and reporting is a multi-year journey. There are several things an organization can do to get started which will decrease the ―ramp up‖ time through the use of best practices. Educate and Align Stakeholders – Agreement on “what is sustainability” and what frameworks apply to your organization – Assign budget to introduce sustainable practices, codes, behaviors Facilities planning, corporate communications, finance, engineering, etc. Craft a “Roll-in Strategy” based on your Culture – Creation of a Sustainability Program Office (SPO) – Creation of employee-driven “Green Teams” – Uber-recycling programs, integrate with lean manufacturing activities Remember Do some Housekeeping some targets – Define what KPIs and targets are realistic. may be binding! – Determine who owns what data and information in your organization – Figure out how best to report this (centralized vs decentralized) – Conduct an initial assessment to know where you stand now. Get help if you need it – don’t start something and watch it die!Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 24
  • Some Helpful Resources Global Reporting Initiative www.globalreporting.org Social Accountability International www.sa-intl.org Social Fingerprint www.socialfingerprint.org (Reference Code# Newport11R) SCORE Assessment Framework http://www.axisperformance.com/SCORE_overview.html ICLEI – Local Governments for Sustainability www.icleiusa.org The Sustainable Enterprise Fieldbook (Wirtenberg) www.thesustainableenterprisefieldbook.net Cradle to Cradle (McDonough) www.mcdonough.com University of Oregon Sustainability Leadership Program http://sustain.uoregon.edu/Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 25
  • Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and QuestionsNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 26
  • 7 Key Points to Take Home1. Sustainability is a growing field of business practice, winners and losers will be chosen in part by what organizations decide to do in this field2. There is a compelling economic and financial incentive for pursuing long-term sustainability strategies (5-7% increase in performance)3. Each organization is different, therefore stakeholders need to determine which frameworks, guidelines and approaches are applicable.4. You can’t do everything – and if you say you will you will be held accountable for binding statements. Determine your KPIs and goals realistically.5. If you are going to embark on GRI3 reporting make sure the benefits outweigh the costs (ROI calculation). Plenty of companies “ISO’d themselves out of business” – the same can happen with GRI3 reporting.6. Use assurance services judiciously and at the appropriate program time.7. Celebrate your accomplishments, use success to create opportunities elsewhere inside the organization!Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 27
  • Your Turn … William Newman, MBA, CMC, SA wnewman@newportconsgroup.comNewport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 28
  • William Newman, CMC, MBA, SA Author, professional speaker, writer and consultant - William (“Bill”) Newman serves as Managing Principal of Newport Consulting Group, an independent management consulting firm focused on strategy, operations, risk management, and technology. Mr. Newman has 25 years experience in a wide range of operations including manufacturing, IT, R&D, sales, marketing, planning, human capital, service delivery and finance. His expertise spans service, manufacturing (automotive, aerospace, life sciences, high tech, CPG), government, utilities, transportation, and healthcare industries. Mr. Newman’s service area focus is innovation, strategy, market growth entry, program design and oversight, and corporate sustainability. He is a former executive of Volkswagen’s technology division and has served in a number of professional and management positions at Grant Thornton, KPMG/BearingPoint, and Booz & Company. Mr. Newman serves as anoutside advisor to the Sustainability Executive Advisory Council (EAC) of software maker SAP. He is an adjunctprofessor at Northwood University in the field of management studies serving the Flint, Lansing and Troy programcenters, as well as a participant of the University of Oregon Sustainability Leadership Program.Bill was granted the Certified Management Consultant (CMC) designation by the Institute of Management Consultantsin 1995 and has served on the IMC national board of directors and three regional boards across the USA for over 10years. Mr. Newman is a qualified Trainer / Coach granted by the American Society for Quality (ASQ) since 2000, aqualified consultant for Social Accountability International (SAI) in SA 8000 for social accountability since 1998 and theSocial Fingerprint® method for business improvement since 2011. Mr. Newman is an member of the MichiganAssociation of CPAs (management consulting task force) and a registered expert witness with the Technical AdvisoryServices for Attorneys (TASA).Bill holds a Bachelor’s Degree in Aerospace Engineering with a minor in Economics from the Henry Samueli School ofEngineering at UCLA, and an MBA in Management and minor in International Business from the Conrad Hilton Schoolof Business at Loyola Marymount University (Los Angeles). Bill and his wife Teresa make their home in southeastMichigan.Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 29
  • Exhibit – Slide 7Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 30
  • Exhibit – Slide 19Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 31
  • Exhibit – Slide 20Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 32