CDSB Framework 101
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Introduction to the CDSB Framework for reporting environmental information & natural capital. For more information, get in touch with us at info@cdsb.net.
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CDSB Framework 101
- 1. June 2015 | Tweet @CDSBGlobal Introduction to the CDSB Framework Adding value to your existing environmental disclosure
- 2. June 2015 | Tweet @CDSBGlobal Climate Disclosure Standards Board Introduction to the CDSB Framework 2
- 3. June 2015 | Tweet @CDSBGlobal We are committed to advancing and aligning the global mainstream corporate reporting model to equate natural capital with financial capital.
- 4. June 2015 | Tweet @CDSBGlobal CDSB Framework in a nutshell Introduction to the CDSB Framework 4 Environmental information (CDP, GRI, SASB, ISO 26000, UNGC CEO Water Mandate) CDSB Framework Annual Report / Integrated Report (MD&A, Form 10-K/20-F, Lagebericht, Form 56-1) cdsb.net/Framework
- 5. June 2015 | Tweet @CDSBGlobal The CDSB Framework • Builds on CDSB Climate Change Reporting Framework (2012) • 7 guiding principles • 12 reporting requirements • Reference detailed guidance on climate, forests, water • Alignment with CDP, GRI, SASB and others to support inclusion in mainstream reports • Covers all the environmental related requirements prescribed by current and upcoming legislation (eg: EU Non-Financial Reporting Directive) for reporting environmental information & natural capital Introduction to the CDSB Framework cdsb.net/Framework 5
- 6. June 2015 | Tweet @CDSBGlobal Principles P1 Environmental information shall be prepared applying the principles of relevance and materiality P2 Disclosures shall be faithfully represented P3 Disclosures shall be connected with other information in the mainstream report P4 Disclosures shall be consistent and comparable P5 Disclosures shall be clear and understandable P6 Disclosures shall be verifiable P7 Disclosures shall be forward looking Introduction to the CDSB Framework 6 HOW to report cdsb.net/Framework
- 7. June 2015 | Tweet @CDSBGlobal Relevance and materiality 7 Relevant financial information is capable of making a difference in the decisions made by users, with predictive value, confirmatory value or both. Information is material if omitting it or misstating it could influence decisions that users make on the basis of financial information about a specific reporting entity. Materiality is an entity-specific aspect of relevance based on the nature or magnitude, or both, of the items to which the information relates in the context of an individual entity’s financial report. P1 Environmental information shall be prepared applying the principles of relevance and materiality Environmental information is material if: • The environmental impacts or results it describes are, due to their size and nature, expected to have a significant positive or negative effect on the organisation’s current, past or future financial condition and operational results and its ability to execute its strategy; or • Omitting, misstating or misinterpreting it could influence decisions that users of mainstream reports make about the organisation. IFRS CDSB Introduction to the CDSB Framework cdsb.net/Framework
- 8. June 2015 | Tweet @CDSBGlobal Requirements REQ-01 Management’s environmental policies, strategy and targets REQ-02 Risks and opportunities REQ-03 Governance REQ-04 Sources of environmental impact REQ-05 Performance and comparative analysis REQ-06 Outlook REQ-07 Organisational boundary REQ-08 Reporting policies REQ-09 Reporting period REQ-10 Restatements REQ-11 Conformance REQ-12 Assurance Introduction to the CDSB Framework 8 WHAT to report cdsb.net/Framework
- 9. June 2015 | Tweet @CDSBGlobal Policies, strategy and targets 9 F8.1 Does your organization have a policy that recognizes the role of reducing deforestation in climate change mitigation and sets out clear goals and guidelines for action? F8.2 Has your organization made a commitment to reduce or remove deforestation and forest degradation from your direct operations and/or supply chain? F8.4 Do you have commodity specific sustainability policies? W6.2 Is water management integrated into your business strategy? Please choose the option(s) that best explain how water has positively and negatively influenced your business strategy W6.3 Does your organization have a water policy that sets out clear goals and guidelines for action? Please select the content that best describes your water policy REQ-1 Disclosures shall report management’s environmental policies, strategy and targets, including the indicators, plans and timelines used to assess performance. CDP CDSB Introduction to the CDSB Framework cdsb.net/Framework
- 10. June 2015 | Tweet @CDSBGlobal Policies, strategy and targets Introduction to the CDSB Framework 10 Policies, strategy and targets CDSB Framework for reporting environmental information & natural captial REQ-01 CDP Information Request (2015) CC2.2, CC2.3, CC3.1, CC3.2, CC4.1, CC7.1, CC14.4, F8.1, F8.2, F8.3, F8.4, F9.1, F9.2, F9.3, F9.4, F9.5, F9.6, F10.5, W6.2, W6.3, W7.1, W8.1, W9.1 CDSB Climate Change Reporting Framework Edition 1.1 § 2.8-2.9 GRI (G4) Sustainability Reporting Guidelines pp 8, 12, G4-1, G4-2, G4-15, G4-16, G4-27, G4-EN13, G4-EN29, G4-EN31, G4-EN33, G4-DMA IIRC <IR> Framework § 3.3-3.5, 3.10-3.16, 4.27-4.29, 4.53-4.56 ISO 26000 4.2, 4.3, 6.2.3.2, 6.5.5.2.1, 6.5.5.2.2, 6.5.6.2, 7.3.2.1, 7.4.2, 7.4.3, 7.5.3 (Box 15) OECD Guidelines for Multinational Enterprises Part II (A5, A8, A12-15, B2), and VI (1-8) UN Principles for Responsible Investment P1, P2, P3, P4, P5, P6 UN Global Compact Principles P7, P8, P9 UNGC CEO Water Mandate Section 5 pp 35-39, 60-76 Australian Water Accounting Standards Board (WAS1) § 56 The German Council for Sustainable Development (RNE) Sustainability Code Clauses 1, 3, 4, 7, 12, 19 South Africa King Code III P3.4, 5.2, 9.2 Danish Financial Statements Act 2008 Article 99a para 1, 2 1), 2 2), 3 EU NFR Directive 2014/95/EU 6 EU Amendments to Accounting Directive 2013/34/EU Article 19a 1(b, c, e) and Article 29a 1(b, c, e) French Grenelle II 2010 Article 75 & 225 UK Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 P2 4A 414C (7) (b)
- 11. June 2015 | Tweet @CDSBGlobal Objectives of the Framework 11 • Align with the objective of financial reporting • Encourage standardization of environmental & natural capital reporting • Clear, concise and comparable presentation • Connect environmental performance with overall strategy, performance and prospects • Simplify the reporting process • Support compliance • Support assurance activities Introduction to the CDSB Framework cdsb.net/Framework
- 12. June 2015 | Tweet @CDSBGlobal As investors we find it instrumental to be able to evaluate and compare companies on their sustainability performance. We hope that others will get behind the CDSB Framework so that it can evolve to become the standard the investor community needs. - Marcos Mancini, Director Sustainable Banking, Banorte
- 13. June 2015 | Tweet @CDSBGlobal Fiduciary duty & climate change disclosure Withthe support of Join at: cdsb.net/Fiduciary
- 14. June 2015 | Tweet @CDSBGlobal Contact Michael Zimonyi E: Michael.Zimonyi@cdsb.net T: +44 (0)203 818 3939 www.cdsb.net
Editor's Notes
- About CDSB: The Climate Disclosure Standards Board (CDSB) is an international consortium of business and environmental NGOs committed to advancing and aligning the global mainstream corporate reporting model to equate natural capital with financial capital. CDSB does this by offering companies a framework for reporting environmental information with the same rigour as financial information. In turn this helps them to provide investors with decision-useful environmental information via the mainstream corporate report, enhancing the efficient allocation of capital. Regulators also benefit from compliance-ready materials. Recognising that information about natural capital and financial capital is equally essential for an understanding of corporate performance, CDSB’s work builds trust and transparency needed to foster resilient capital markets. Collectively, the CDSB Board aim to contribute to more sustainable economic, social and environmental systems.
- The CDSB Framework is a tool to help companies use their existing disclosures to report in their mainstream report – this can be an annual report, an integrated report, form 10-K or 20-F or a whole host of other documents depending on where you operate. Simply put, the CDSB Framework helps you with how to report environmental information in your annual report.
- So what is the CDSB Framework? It uses the hard work you have done to prepare your environmental reporting to CDP, GRI or others for reporting in your annual report. Your company might do this to comply with legislation, to prepare for integrated reporting or to simply provide information to your current and potential shareholders alongside your financial information. Not only does it reduce the reporting burden by eliminating the duplication of your reporting, it adds value to your CDP disclosure by displaying the most material information in your annual report. It does this by providing guidance on HOW to report climate change information in annual reports. Simply put, it is a connector between non-financial and financial information. IT ADDS VALUE TO YOUR EXISTING RESPONSE The Framework is available at cdsb.net/Framework (URL is on the slide)
- The Framework provides 7 principles on HOW to report in the mainstream report. These guiding principles are designed to ensure that environmental information is correct and complete, and useful to investors. They are to be applied in determining, preparing and presenting environmental information. For example - P4 Disclosures shall be consistent and comparable – purpose is to elicit information of value to investors in a way that is consistent so as to enable a level of comparability between similar organisations, reporting periods and sectors.
- Where possible, the CDSB Framework adopts principles from financial reporting to ensure that the reported environmental information is aligned with the rest of the report. A specific example is the definition of materiality, which is essentially an adaptation of the financial reporting definition of materiality. As a comparison, you can see the International Accounting Standards Board’s definition. FASB definition: "the magnitude of an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement.” Source: FASB Auditing Standards No 47
- The Framework also has requirements to define WHAT to report. These are not new requirements, but the highest common denominators of what existing reporting standards, guidelines and frameworks are already prescribing. These are therefore high-level requirements to help you find the right information in your existing report for inclusion in your mainstream report.
- An example: CDP Forest & Water information requests and the corresponding CDSB requirement.
- Example continued: CDSB Requirement 01 and a whole range of other standards and even mandatory reporting requirements. This is just to show that the Framework really is based on existing reporting requirements. This means 2 things: No new information is required, so a company can use their existing disclosure as a basis for reporting in their mainstream report The CDSB Framework can be used to comply with existing reporting requirements or serve as guidance for reporting natural capital in an integrated report.
- To summarise, the Framework helps reporters….
- It’s all about what the investor wants…
- And finally, a call to action: CDSB is co-ordinating a statement by companies and investors to send a signal to the UN climate change negotiations about their support of a strong deal. The statement on fiduciary duty & climate change disclosure is a commitment by companies to report climate change information in their mainstream report out of a sense of fiduciary responsibility, ie: because they believe that climate-related corporate performance, risks and opportunities have implications for the relative prospects of firms and industries. The investors who signed this statement in turn pledge to make use of such information in their decision-making. We invite you to join the statement to support this group in fostering climate-resilient economies. To find out more, visit cdsb.net/Fiduciary (URL is on the slide)