The role of sustainability reporting and GRI in stakeholder engagement

Katalin Urbn managing director, senior consultant Alternate Consulting

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Introduction
About myself: Environmental and safety engineer with a degree in environmental law, marketing manager About Alternate Consulting: O Owners: Mandy Fertetics and Katalin Urbn d d l b Our mission is to contribute to sustainable development, to enhance the performance and strengthen the responsible operation of enterprises. we teach how to fish Focuses: CSR trainings, g GRI related services www.alternate.hu
EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Does sustainability reporting enhance stakeholder engagement?

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

To answer the question we go through: th h

What is sustainability reporting? Who report and why? Should we make it compulsory? Who is reading the reports? What is the GRI? The Framework Benefits What is the role of stakeholders? Reporting principles p gp p Forms of stakeholder engagement Examples of stakeholder panels
EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Sustainability reporting
A sustainability/corporate responsibility report covers Environmental social and economic aspects Environmental, Said to be voluntary, but Pressure from external stakeholders Pros and contras (transparency vs. greenwashing)

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

The Main CSR Issues in Europe [CSR Europe]

Workplace Working conditions/health and safety/pay and benefits Equal opportunities in the work place Industrial relations/trade unions/redundancy policies Human Rights Monitoring compliance Stimulating CSR policies to suppliers Forced and compulsory labour Child labour Freedom of association and collective bargaining ba gaining Indigenous rights Security practices Ethics Bribery and corruption Codes of conduct/values/mission Marketplace Consumer health and safety Customer satisfaction Social impact of products and services g Providing maximum disclosure Advertising (positively) Cause-related marketing Socially responsible investing Environment Energy consumption/water usage Emissions, effluents and waste Recycling Environmental impact Community Community support and partnership Employee involvement in community Entrepreneurship and employability in the community

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Who report?
75% of of the global top 500 (2008) early bi d f l birds from controversial sectors t i l t 1992: 27 reports; 2008: 3100 reports

Source: CorporateRegister.com; CRRA 08 CorporateRegister com; CRRA08

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

What are the main reasons for reporting? ti ?

Increase credibility transparency accountability motivation and involvement of employee understanding of non-financial performance i involve stakeholders l t k h ld P Peers are doing it as well d i ll

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Should it be compulsory?
Pro: it would urge companies on transparent operations Contra: would result in lower quality and not so sincere not sincere intentions Denmark, 2010: largest 1100
to include info on CSR in Annual Report companies to report acc. to GRI employee, employee company is to report on 134 labour-related and since 2001, 40 social and environmental criteria in Annual Report report on key non-financial reports

UK, 2006: listed companies to

report on key non-financial issues. and governmental agencies to g g include environmental data in Annual Report

Sweden, 2009: state-owned ,

Japan, 2004: certain companies

France, 1977: if more than 300

China 2008: encouraging stateChina,

owned companies to report on responsible business

Malaysia 2007: all li t d Malaysia, ll listed

Germany, 2004: Companies to

companies to publish CSR info in Annual Report

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Who read them anyway?

Based on web results from CorporateRegister.com European readers are the most active Students (20%), CR professionals (17%), CR Consultants (12%), Investors and analysts (12%)

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective Source: CorporateRegister.com; CRRA08

The GRI -

www.globalreporting.org

A network (stakeholder)-based organisation Developed the most widely used sustainabilty reporting framework Committed to continuous improvement C Consensus seeking process i ki involving b i l i business, civil i il society, labour, professional institutions

Source: CorporateRegister.com; CRRA08

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

The GRI Framework

Source: GRI G3 Guidelines, 2006

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Role of stakeholders
Not new, but attention intensified by CR reporting becoming more structured International principles and standards OECD Principles on corporate governance AA1000 Stakeholder Engagement Standard GRI G3 Guidelines Organisations should identify, listen and give account to stakeholders when taking decisions In the process of reporting Report content - key issues Report on engagement with stakeholders p g g
EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Forms of stakeholder engagement

Indirect e.g. surveys Direct and proactive e.g. panels, partnerships Stakeholder panel characteristics Representatives of different stakeholder groups Clear purpose or assignment Company has committed itself to respond Roles Advisory role on corporate responsibility strategy Assurance role focusing on reporting
EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Case study 1 - Shell

Published first report in 1998. Established (2005 ) an independent External Review (2005.) Committee Shell s Task of the ERC: to assess Shells sustainability reporting effort and provide ideas for improving it Using the principles of AA1000AS Materiality, completeness, responsiveness Process facilitated by external consultant Opinion letter as an output No formal statement regarding reliability or accuracy of data ERC members (6) serve for three years, they receive a honorarium
EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Case study 2 Vodafone Hungary

First local report published in 2008 GRI based, self declared B Involving stakeholders into the report making process: external experts gave views and expectations + employee with key roles Expert panel in report evaluation (2009) Di Discuss CSR issues most important for VF i ti t tf Feedback on report strength and weaknesses U f t Unfortunately cannot be considered as t l tb id d independent, GRI based process
EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Assurance with stakeholders 1

KVET Association for Sustainable Economies

Two-phase process Two phase Data verification with site visits and interviews Stakeholder forum

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

KVET Sustainability ranking

Stakeholder forum Evaluates the report AND companys sustainability y Strengths Non-profit organisation - credibility Non profit Involvement of stakeholders (since 2000!) Weaknesses Question of independence Evaluation of companys sustainability company s performance is not entirely objective

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Assurance with stakeholders - Alternate

Three-level report evaluation system

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Alternate Report Evaluation

Expert panel Representatives of stakeholder groups Acquainted with the concept of sustainability At least basic knowledge of sustainability reporting Members and moderator to be independent Strengths of Alternate Report Evaluation options at different levels of report writing importance of GRI compliance Evaluation by experts Independence Weakness Difficult to earn credibility
EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Conclusions
Stakeholder segmentation is of key importance Stakeholder engagement is enhanced due to reporting practices Q Question of why companies are d i i f h i doing it rises Good and really credible verification processes could be a key in acknowledging real efforts
EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective

Thank You for Your attention!

www.alternate.hu E-mail: urban.katalin@alternate.hu Mobil: +36-20/932-9160

EASY-ECO Budapest Conference 2009. Evaluating Sustainability: The Stakeholders Perspective