Corporate Social Responsibility and Sustainability Initiatives
Global Reporting Initiative (GRI) helps businesses worldwide understand their impact on critical sustainability issues like climate change, human rights, and governance. GRI standards provide a framework for organizations to prepare sustainability reports aligned with material economic, environmental, and social topics. The GRI database includes checklists for compliance with various guidance, such as the UN Global Compact and Sustainable Development Goals. These initiatives aim to drive actions that create social, environmental, and economic benefits for all stakeholders.
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International Corporate Reporting Chapter 13 Corporate social responsibility and sustainability
Global Reporting Initiative (GRI) Helps businesses and governments worldwide understand and communicate their impact on critical sustainability issues such as climate change, human rights, governance and social well-being. Enables action to create social, environmental and economic benefits for all.
GRI standards Core product are the Sustainability Reporting Standards. To prepare a sustainability report in accordance with the GRI Standards, an organisation applies the Reporting Principles from GRI 101 to identify its material (significant) economic, environmental, and/or social topics. These material topics determine which topic- specific standards the organisation uses to prepare its sustainability report.
GRI Standards Universal standards GRI 101 Foundation (principles for reporting) GRI 102 General disclosures (contextual information about an organisation) GRI 103 Management approach (how an organisation manages each topic) Topic-specific standards GRI 200 Economic GRI 300 Environmental GRI 400 Social
Case study: GRI in annual report OCI NV. Annual report 2018 (www.oci.nl) Sustainability review is presented in pages 46-72. The main headings are: Our commitment Our communities Our employees Health & Safety Our environment Table in pages 193-5 links each of the relevant GRI standards to a section of the annual report.
GRI database For each company in the database, a checklist of specific compliance with other guidance, including: The UN Global Compact; Sustainable Development Goals; OECD Guidelines (all explained further in this section); AccountAbility standards AA1000; AA1000; ISO 26000; The Carbon Disclosure Project; CSR Europe; and IFC.
UN Global Compact Calls companies to align their strategies and operations with universal principles on human rights, labour, environment and anti-corruption, and take actions that advance societal goals. The overall aim is a path to end extreme poverty, fight inequality and injustice, and protect our planet by the year 2030.
Ten principles of UN Global Compact Human Rights. Businesses should: Principle 1: support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. Labour Businesses should uphold: Principle 3: the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation.
Ten principles (contd) Environment. Businesses should: Principle 7: support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption Principle 10: work against corruption in all its forms, including extortion and bribery.
Sustainable Development Goals 1. No poverty 2. Zero hunger 3. Good health and well being 4. Quality education 5. Gender equality 6. Clean water and sanitation 7. Affordable and clean energy 8. Decent work and economic growth
SDGs (contd) 9. Industry, innovation and infrastructure 10.Reduced inequalities 11.Sustainable cities and communities 12.Responsible consumption and production 13.Climate action 14.Life below water 15.Life on land 16.Peace and justice strong institutions 17.Partnerships for the goals
Case study: UPM-Kymmene (Finland) Annual Report 2018 is UPM Biofore Beyond Fossils. Page 27 of the Annual Report 2018 shows the contribution to SDGs. Pages 96-97 provides the GRI contents index, in a short version. Page 98 Independent Practitioner s Assurance Report refers to the Annual Report and to website in the Responsibility section. It refers to the AA1000 AccountAbility Principles. Main contents are: Practitioner s responsibility Limited assurance conclusion ( nothing has come to our attention . ) Observations and recommendations (relating to AA1000 Principles) Practitioner s independence, qualifications and quality control
Human rights UN endorsed the Guiding Principles on Business and Human Rights in June 2011. EU endorsed also in CSR Strategy. UN recommends members to encourage and, where appropriate, require business enterprises to communicate how they address their human rights impacts. Financial reporting requirements should clarify that human rights impacts in some instances may be material (significant) to the economic performance of the business enterprise.
Principles for Responsible Investment 2005, the UN Secretary (Kofi Annan) invited a group of the world s largest institutional investors to join a process to develop the Principles for Responsible Investment (PRI). A 20-person investor group drawn from institutions in 12 countries was supported by a 70-person group of experts from the investment industry, intergovernmental organisations and civil society. The Principles were launched in April 2006 at the New York Stock Exchange.
Principles for Responsible Investment 1: Incorporate ESG issues into investment analysis and decision-making processes. 2: Be active owners and incorporate ESG issues into our ownership policies and practices. 3: Seek appropriate disclosure on ESG issues by the entities in which we invest. 4: Promote acceptance and implementation of the Principles within the investment industry. 5: Work together to enhance our effectiveness in implementing the Principles. 6: Each report on our activities and progress towards implementing the Principles.
OECD Guidelines for MNEs Non-binding principles and standards for responsible business conduct in a global context, consistent with applicable laws and internationally recognised standards. The Guidelines are the only multilaterally agreed and comprehensive code of responsible business conduct that governments have committed to promoting.
EU strategy for CSR European Commission believes that CSR is important for the sustainability, competitiveness, and innovation of EU enterprises and the EU economy. The EU has reviewed its progress in implementing the UN guidance on human rights and has pointed to the Directive on non-financial reporting. Guidelines on application of the Directivetake account of 21 national, EU-based or international frameworks.
Task force on Climate-related financial disclosures TCFD was set up in 2015 by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies, banks, and investors in providing information to stakeholders.
Recommendations of TCFD 1 Disclose the organisation s governance around climate-related risks and opportunities. 2 Disclose the actual and potential impacts of climate-related risks and opportunities. 3 Disclose how the organisation identifies, assesses, and manages climate-related risks. 4 Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities.
AccountAbility standards AA1000 global consulting and standards firm that works with business, governments and multi-lateral organisations to advance responsible business practices and improve their long term performance. AccountAbility provides principles-based Standards and Frameworks (the AA1000 Series of Standards) used by global businesses, private enterprises, governments and civil societies to demonstrate leadership and performance in accountability, responsibility and sustainability.
AccountAbility structure and standards The Standards Board is composed of individuals representative of a cross -section of global constituencies, including business, regulators, academia, NGOs and policy-makers. The foundation of the Series of Standards is the AA1000AP (2018) (Accountability Principles), from 2019, replaced the previous AA1000AS (2008) (Assurance Standard).
Case study: assurance report Hyundai Motor company (South Korea) The CSR 2018 report includes an Independent Assurance Statement, signed by an AA1000 Licensed Assurance Provider. The main headings are: Responsibility and Independence Assurance Standards (AA1000AS and ISAE 3000) Limitations Methodology Findings and Conclusion (relating to GRI standards) Inclusivity: Stakeholder Engagement Materiality: Identification and Reporting of Material Issues Responsiveness: Organization's Response to Issues Recommendation *
Carbon Disclosure Project (CDP) Independent not-for-profit organisation aiming to create a lasting relationship between shareholders and corporations regarding the implications for shareholder value and commercial operations presented by climate change. Goal is to facilitate a dialogue, supported by quality information, from which a rational response to climate change will emerge.
CDP repository CDP website claims to be the largest repository of self-reported environmental data in the world. Works on behalf of large institutional investors to seek information on the business risks and opportunities presented by climate change and greenhouse gas emissions data from the world's largest companies. Website provides reports based on submissions of FT 500 and S&P 500 companies in response to information requests sent out by the CDP.
Country-by-country reporting Influential groups such as the Tax Justice Network and Christian Aid pointed out that while the annual reports of a transnational corporation (TNC) contain a wealth of economic and financial information, the approach to segmental reporting allows a high level of regional aggregation. There might be separate information for Africa or Europe or rest of the World but it would be impossible to work out what had happened in each country. Lobbying has led to change (chapters 12 and 16)
CSR Europe Claims to be the leading European business network for CSR. At 2018 it had 48 corporate members and 42 National CSR organisations, through which it gathers over 10,000 companies, and acts as a platform for those businesses looking to enhance sustainable growth and positively contribute to society. Publications include a useful and informative survey, and de jure comparison, of how member states have implemented the Directive on Non- financial and Diversity Information.
Sustainability Accounting Standards Board Mission is to help businesses around the world identify, manage and report on the sustainability topics that matter most to their investors. The SASB Foundation, based in San Francisco, USA, is governed by the SASB Foundation Board of Directors. Standards Board sets, interprets and updates the SASB standards. 77 industry-specific standards designed to assist companies in disclosing financially material, decision-useful sustainability information to investors.
ISO 26000 International Organization for Standardization (ISO). Independent, non-governmental international organisation whose members are national standards bodies. These are not accounting or auditing standards; they relate to products and services.
International Finance Corporation Sustainability Framework (2006, updated 2012) consists of: Policy on Environmental and Social Sustainability, which defines IFC's commitments to environmental and social sustainability. Performance Standards, which define clients' responsibilities for managing their environmental and social risks. Access to Information Policy, which articulates IFC's commitment to transparency.
Corporate Reporting Dialogue Platform convened by the IIRC made up of Carbon Disclosure Project, the Climate Disclosure Standards Board (CDSB), the GRI and the SASB. CRD formed in 2014 to promote alignment and compatibility between the various reporting disclosure frameworks of its participant bodies.
CRD projects Three projects: 1. Which of the UN Sustainable Development Goals are addressed by each of the frameworks. 2. To show that the various frameworks are built on the same fundamental principles and therefore can be used in conjunction with each other. 3. The Better Alignment Project began in 2018 and aims to be completed in 2020. Asks participant bodies to map their respective standards and frameworks to identify the commonalities and differences between them, and to identify how non-financial metrics relate to financial outcomes.
ESG ratings Environmental, Social and Governance Principles for Responsible Investment support incorporating ESG issues in investment analysis and decision-making. Investors ask on how ESG factors can impact the long-term risk and return profile of institutional portfolios. ESG risks and opportunities are analysed and scored by commercial ratings agencies using extensive sources of data.
ESG and corporate reports ESG ratings are significant in investment decisions, so that companies have enhanced their corporate reporting to include ESG reporting. There are no specific reporting standards but stock exchanges may set guidelines. The London Stock Exchange Group has issued a global guide, available on-line to both issuers and investors globally, setting out recommendations for good practice in ESG reporting. Location of information in annual report may vary.
Dow Jones RobecoSAM ESG-Sustainability Indices Companies are invited to be assessed. Sustainability assessment is based on responses to a questionnaire and the contents of documents provided by the company, including the annual report. Increasingly focuses on assessing publicly available information. Seen as useful mechanism to promote increased corporate disclosure on underreported or emerging sustainability topics.
FTSE4Good indices Launched in 2001, designed to measure the performance of companies demonstrating strong ESG practices. FTSE4Good indexes can be a source from which to identify environmentally and socially sustainable companies, or a reference point against which to assess the progress and achievements of companies. Criteria are applied to the FTSE Emerging Indexes, covering over 20 emerging countries, launched in 2016.
Is CSR reporting effective for sustainability? Sustainability applies at the level of an eco- system rather than at the single organisation. Can one organisation report on sustainability? Might be changed to social responsibility or environmental management , less demanding on the organisation. Socially responsible practices may assist profitability, then becomes economic outcome rather than human values.
Possible developments Full costing- taking in not only the costs incurred within the organisation but also those incurred externally as a consequence of the organisation s activities. Sustainable consumption and production., e.g. through Certification schemes. Accountability, pointing to weaker groups in society to make story heard.
Research examples Human rights and accounting. Literature review indicates range of research methods possible. Association of CSR disclosures with financial performance. Creating disclosure scores from a framework. Detecting greenwashing in CSR reports. Qualitative and quantitative methods of research. Descriptive surveys. Provided by accountancy firms and research institutions.
