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Reporting CSI
in Sustainability Reports

      Reana Rossouw
Next Generation Consultants
What is sustainability?
• The term sustainable development means different things
  to different people:
   – But in essence - it is concerned with meeting the needs of
     people today without compromising the ability of future
     generations to meet their own needs:
• Sustainable Development therefore involves:
   – A broad view of economic, social and environmental risks,
     challenges, and opportunities
   – A long term future perspective concerned with the interests
     and rights of current and future generations
   – An inclusive approach to action that recognises the need of all
     people to be involved in the decisions that affect and impact
     their lives
Key Drivers of Sustainability
             • Competition for resources
                – Population growth, finite resources (water,
                  energy, forests, ecosystems)
             • Climate change
                – Fossil-fuel based economy lead to a
                  concentration of greenhouse gases that is
                  driving extreme weather patterns
             • Regulation
                – Reporting compliance, industry sector
                  compliance and resource (water/carbon)
                  regulation and taxes have a greater impact
                  on licence to operate conditions.
                  Companies now need to comply, apply or
                  explain why they don’t
             • Economic globalisation
                – Companies operating/sourcing in multiple
                  countries with wide disparities of
                  environmental and social standards
             • Connectivity and communications
                – Reputation can be built and destroyed in
                  seconds and is increasingly disaggregated
                  across multiple social networks –
                  considering all stakeholders requirements
                  and expectations not only shareholders is
                  becoming more important
Driving value    • Companies that adopt
                   sustainable business
from               strategies and practices drive
sustainability     value by:
                   – Growing revenue through new
                     products and services
                   – Reducing costs through
                     efficiency gains
                   – Managing operational and
                     regulatory risk more effectively
                   – Building intangible assets such
                     as their brand, reputation and
                     collaborative networks
The Sustainability Pathway
            Cost Saving                             Resilience
             Efficiency                            New Future



         Revenue Protection                    New Revenue Streams



           Compliance
            Reputation                            Connectivity
               Risk                               Stakeholders
           Management

         Licence to Operate
                                              Revenue Generation
        Freedom to Operate




Source: Next Generation Consultants – www.nextgeneration.co.za
Integrating Sustainability
           • Go Deep
              – Integrate and embed sustainability
                into the company strategy and
                standard operating practices
           • Go Wide
              – Engage and leverage the value chain
           • Go Long
              – Short-term focus – long-term
                objectives
           • Go Local
              – Shared responsibility that needs local
                action and commitment
              Model: UN Global Compact



                                                 6
Sustainability Reporting
  • Sustainability Reporting is the
    practice of measuring, disclosing
    and being accountable to
    internal and external
    stakeholders for organisational
    performance against specific
    environmental, social and
    governance goals and metrics
    that support sustainable
    development, and for how
    sustainability is incorporated into
    the company’s overall strategy
    and policies.

                                  7
HAND OUT: GRI 3.1 SUMMARY
PRACTICAL: EVALUATING REPORTS
The GRI
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
Disclosure on Management Approach
                   (DMA) (1)
•   A statement from the most senior executive :
     – This person will have operational responsibility for 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
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
Indicators in Detail (1)
EC1 –       Voluntary donations and investment of funds in the broader community where the
Community 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.
Indicators continue (2)
EC6                                • Report geographic definition of ‘local’
Policy, practices and proportion • Percentages should be based on invoices
of spending on locally based       • Report the policy for preferring locally based
suppliers at significant locations   suppliers
                                   • State the percentage of the procurement
                                     budget used that is spend on suppliers
                                   • Indicate the factors that influence supplier
                                     selection
EC8                              • Explain the extent of development (size, cost,
Development and impact of          duration) of investment and support and the
infrastructure investments and     current or expected impacts (positive or
services provided primarily for    negative) on communities and local economies.
public benefit through             Indicate whether these investments and
commercial, in-kind, or pro bono   services are commercial, in-kind or pro bono
engagement                       • Report whether the organisation conducted a
                                   community needs assessment to determine
                                   infrastructure and other services needed, if so,
                                   explain the results of the assessment
Indicators Continue (3)
SO1                              •   Identify the total number of operations
Percentage of operations         •   Identify organisation wide local community engagement,
with implemented local               impact assessments and development programs
                                 •   Report the percentage of operations with implemented
community engagement,
                                     community engagement, impact assessments and development
impact assessments and               programs including, but not limited to:
development programs                   • Social impact assessments, including gender impact
                                          assessments, based on participatory processes
Document sources may include:          • Environmental impact assessments and on-going
                                          monitoring
Baseline studies - health,             • Public disclosure of results of environmental and social
economic, environment,                    impact assessments
cultural, etc.                         • Local community development programs based on local
Social impact assessments,                community needs
gender impact assessments,             • Stakeholder engagement plans based on stakeholder
human rights impact                       mapping
assessments, environmental             • Broad based local community consultation committees
impact assessments, social and            and processes that include vulnerable groups
labour plans, resettlement             • Work councils, occupational health and safety
action plans, community                   committees and other employee representation bodies to
development plans, grievance              deal with impacts
and complaints mechanisms,             • Formal local community grievance processes
public/ community consultation
plans
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 risk
with          assessments - Including:
              •   Vulnerability and risk to local communities from potential impacts due to:
significant         • Degree of physical or economic isolation
potential           • Level of socio economic development including gender equality
or actual           • State of socio economic infrastructure
                    • Proximity to operations
negative            • Level of social organisations
impacts on          • Strength and quality of governance of local and national institutions around local
local                   communities
communi-      •   Identify exposure of community to operations due to higher than average use
ties              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
Indicators Continue (6)
SO10                                       Use the information on potential and
Prevention and mitigation measures         actual negative impacts reported in SO9.
implemented in operations with             Report whether –
significant potential or actual negative   • Prevention and mitigation measures
impacts 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
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 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
Contact

•   Reana Rossouw
•   Next Generation Consultants
•   Specialists in Corporate Sustainability and Integrated Sustainability as well Socio Economic
    Investment and Development
•   Tel: (011) 258 8616
•   E-mail: rrossouw@nextgeneration.co.za
•   Web: www.nextgeneration.co.za



•   PLEASE NOTE: THIS PRESENTATION IS PART OF A LARGER BODY OF RESEARCH!
•   THIS INFORMATION IS COPYWRITED AND THE INTELLECTUAL PROPERTY OF
    NEXT GENERATION CONSULTANTS

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Reporting CSI in Sustainability Reports

  • 1. Reporting CSI in Sustainability Reports Reana Rossouw Next Generation Consultants
  • 2. What is sustainability? • The term sustainable development means different things to different people: – But in essence - it is concerned with meeting the needs of people today without compromising the ability of future generations to meet their own needs: • Sustainable Development therefore involves: – A broad view of economic, social and environmental risks, challenges, and opportunities – A long term future perspective concerned with the interests and rights of current and future generations – An inclusive approach to action that recognises the need of all people to be involved in the decisions that affect and impact their lives
  • 3. Key Drivers of Sustainability • Competition for resources – Population growth, finite resources (water, energy, forests, ecosystems) • Climate change – Fossil-fuel based economy lead to a concentration of greenhouse gases that is driving extreme weather patterns • Regulation – Reporting compliance, industry sector compliance and resource (water/carbon) regulation and taxes have a greater impact on licence to operate conditions. Companies now need to comply, apply or explain why they don’t • Economic globalisation – Companies operating/sourcing in multiple countries with wide disparities of environmental and social standards • Connectivity and communications – Reputation can be built and destroyed in seconds and is increasingly disaggregated across multiple social networks – considering all stakeholders requirements and expectations not only shareholders is becoming more important
  • 4. Driving value • Companies that adopt sustainable business from strategies and practices drive sustainability value by: – Growing revenue through new products and services – Reducing costs through efficiency gains – Managing operational and regulatory risk more effectively – Building intangible assets such as their brand, reputation and collaborative networks
  • 5. The Sustainability Pathway Cost Saving Resilience Efficiency New Future Revenue Protection New Revenue Streams Compliance Reputation Connectivity Risk Stakeholders Management Licence to Operate Revenue Generation Freedom to Operate Source: Next Generation Consultants – www.nextgeneration.co.za
  • 6. Integrating Sustainability • Go Deep – Integrate and embed sustainability into the company strategy and standard operating practices • Go Wide – Engage and leverage the value chain • Go Long – Short-term focus – long-term objectives • Go Local – Shared responsibility that needs local action and commitment Model: UN Global Compact 6
  • 7. Sustainability Reporting • Sustainability Reporting is the practice of measuring, disclosing and being accountable to internal and external stakeholders for organisational performance against specific environmental, social and governance goals and metrics that support sustainable development, and for how sustainability is incorporated into the company’s overall strategy and policies. 7
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  • 10. HAND OUT: GRI 3.1 SUMMARY PRACTICAL: EVALUATING REPORTS
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  • 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 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 the Community 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 invoices of spending on locally based • Report the policy for preferring locally based suppliers at significant locations suppliers • State the percentage of the procurement budget used that is spend on suppliers • Indicate the factors that influence supplier selection EC8 • Explain the extent of development (size, cost, Development and impact of duration) of investment and support and the infrastructure investments and current or expected impacts (positive or services provided primarily for negative) on communities and local economies. public benefit through Indicate whether these investments and commercial, in-kind, or pro bono services are commercial, in-kind or pro bono engagement • 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 operations Percentage of operations • Identify organisation wide local community engagement, with implemented local impact assessments and development programs • Report the percentage of operations with implemented community engagement, community engagement, impact assessments and development impact assessments and programs including, but not limited to: development programs • Social impact assessments, including gender impact assessments, based on participatory processes Document sources may include: • Environmental impact assessments and on-going monitoring Baseline studies - health, • Public disclosure of results of environmental and social economic, environment, impact assessments cultural, etc. • Local community development programs based on local Social impact assessments, community needs gender impact assessments, • Stakeholder engagement plans based on stakeholder human rights impact mapping assessments, environmental • Broad based local community consultation committees impact assessments, social and and processes that include vulnerable groups labour plans, resettlement • Work councils, occupational health and safety action plans, community committees and other employee representation bodies to development plans, grievance deal with impacts and complaints mechanisms, • Formal local community grievance processes public/ community consultation plans
  • 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 risk with assessments - Including: • Vulnerability and risk to local communities from potential impacts due to: significant • Degree of physical or economic isolation potential • Level of socio economic development including gender equality or actual • State of socio economic infrastructure • Proximity to operations negative • Level of social organisations impacts on • Strength and quality of governance of local and national institutions around local local communities communi- • Identify exposure of community to operations due to higher than average use ties 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 and Prevention and mitigation measures actual negative impacts reported in SO9. implemented in operations with Report whether – significant potential or actual negative • Prevention and mitigation measures impacts 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. 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 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
  • 24. Contact • Reana Rossouw • Next Generation Consultants • Specialists in Corporate Sustainability and Integrated Sustainability as well Socio Economic Investment and Development • Tel: (011) 258 8616 • E-mail: rrossouw@nextgeneration.co.za • Web: www.nextgeneration.co.za • PLEASE NOTE: THIS PRESENTATION IS PART OF A LARGER BODY OF RESEARCH! • THIS INFORMATION IS COPYWRITED AND THE INTELLECTUAL PROPERTY OF NEXT GENERATION CONSULTANTS