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Community Development
     Community Engagement
Reporting on Community Investment

           Reana Rossouw
     Next Generation Consultants
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
Reporting on Sustainability




                              3
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
In essence …
               • Sustainability reporting
                 describes performance
               • Sustainability reporting
                 involves measurement
               • Sustainability reporting is
                 a recurring process
               • Sustainability reporting
                 requires stakeholder
                 engagement
From Annual Report to Sustainability
Report to an Integrated Report………..




                                       6
7
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
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
In summary:
Reporting is not an end in itself. Even
good reporting does not necessarily
  result in improved sustainability.




                                          10
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
Reporting
Frameworks




             12
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
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
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 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
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
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
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
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

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Reporting on Community Relations, Investment and Development

  • 1. Community Development Community Engagement Reporting 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
  • 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 Sustainability Report 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. Even good 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
  • 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 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. 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