Sustainability Reporting Trends

“Game Changing Developments”

December 2011December 2011

Mike WallaceDirector, Focal Point USAGlobal Reporting Initiativewallace@globalreporting.org+1 212 339 0356

Venue, Date

+1 212 339 0356

What is the current a s e cu esituation?

Range of Terminologyg gy• CSR - Corporate Social Responsibility• CC - Corporate Citizenshipp p• SD - Sustainable Development• ES - Environmental Sustainability• BE - Business Ethics • CE - Corporate Ethics

CG C t G• CG - Corporate Governance• ESG - Environmental, Social & Governance• IR Integrated reporting• IR - Integrated reporting

What is your “Footprint”?What is your Footprint ?

H d GRI h l ?How does GRI help?

GRI’s Vision & Mission

Vision A sustainable global economy where organizationsA sustainable global economy where organizations manage their economic, environmental, social and governance performance and impacts responsibly g p p p yand report transparently.

Mi iMissionTo make sustainability reporting standard practice by providing guidance and support to organizationsproviding guidance and support to organizations.

The GRI GuidelinesEnvironmental• EN 3 - Direct energy consumption by primary

energy sourceLaborLabor• LA 7 - Rates of injury, occupational diseases, lost

days and absenteeism, and number of work related fatalities by region.

Human Rights• HR 4 - Total number of incidents of discrimination

and actions takenProduct ResponsibilityProduct Responsibility• PR 6 - Programs for adherence to laws, standards,

and voluntary codes related to marketing communications, including advertising, promotion, ad sponsorshipad sponsorship.

Economic• EC 4 – Significant financial assistance received

from government.

Wh t i ?What are we seeing?

Corporate Sustainability:A P RA Progress Report

• Reviewed 3400 companies representing the national leaders from 34 countries around the world, including the 250 largest 

October 2011

global companies

• Ninety‐five percent of the 250 largest companies in the world (G250 companies) now report on their corporate(G250 companies) now report on their corporate responsibility (CR) activities, two‐thirds of non‐reporters are based in the US.

• CR reporting has gained ground within the Top 100 companies in each of the 34 countries surveyed.

• The total number of reporting N100 companies increased byThe total number of reporting N100 companies increased by 11 percentage points, to 64 percent in 2011. 

• Eighty percent of G250 and 69 percent of N100 companies li i i d dare now aligning to GRI reporting standards.

GRI Reports by Region 2010*

O i Af iOceania4%

Africa3%

Europe

Northern America

14%Europe

45%

Latin America14%

Asia20%

14%

20%

GRI Reports by Sector 2010*300

250

300

150

200

50

100

0

50

Wh th R t ?Who are these Reporters?

GRI Reporters (North American Sample)( p )

US Business Roundtable• ABB• Accenture

• ITTJohnson & Johnson April 2009Accenture

• Abbott• Alcoa • American Electric Power • AT&T• CB Richard Ellis Group Inc.

Johnson & Johnson Johnson ControlLife Technologies Corp McKesson Corp.Merck Motorola

April 2009

p• CH2MHill Companies, Ltd.• Chevron • Chubb • Citi • Coca-Cola

NexTera (Formerly FPL) Office Depot Owens Corning PepsiCoPfizer

• Conoco Philips • Cummins • Darden • Deloitte • Dow Chemical

PraxairProctor & Gamble Co. RyderSara Lee SAP USA

April 2010

• Duke Energy • DuPont • Eastman Kodak Co. • EMC• Exxon Mobil

F t M M

SAS Southern Company Siemens CorpTarget Corporation Tyco UAL C ti• Freeport McMoran

• General Electric • General Motors • HSBC• IBM

International Paper

UAL Corporation WeyerhauserWhirlpool Corporation Williams Xerox

• International Paper

Wh ll ?Who really cares?

Increasing Stakeholders and Demand

Modern DDue

Diligence

Shareholder Initiatives & Coalitions• Principles for Responsible Investment (PRI) [2006]

– Currently represents over $30 Trillion in investment capital– 900+ signatories900+ signatories

• Investor Network on Climate Risk (INCR) [2003]– Currently represents over $10 Trillion in investment capital– 100+ members– 100+ members

• Carbon Disclosure Project (CDP) [2002]– Currently represents over $71 Trillion in investment capital– act on behalf of 550+ institutional investors– act on behalf of 550+ institutional investors

• Institutional Investors Group on Climate Change (IIGCC) [2001]– Currently represents $6 Trillion in investment capital– 70 members

• Interfaith Center on Corporate Responsibility (ICCR) [1972]– Currently represents over $100  Billion– 300 members

Signatories to the PRI (US)900+ international signatories

PARTIAL LIST OF ASSET OWNERS (200):

• AFL‐CIO Reserve Fund / AFL‐CIO Staff Retirement PlanAFL CIO Reserve Fund / AFL CIO Staff Retirement Plan

• CalPERS / CalSTRS

• Connecticut Retirement Plans and Trust Funds (CRPTF)

General Board of Pension and Health Benefits United Methodist Ch rch• General Board of Pension and Health Benefits United Methodist Church

• Illinois State Board of Investments

• Los Angeles County Employees Retirement Association (LACERA)

• Maryland State Retirement and Pension System

• New York City Employees Retirement System / New York State Local Retirement S

• SEIU Pension Plans Master Trust

• State Universities Retirement System of Illinois

• Teachers' Retirement System of the City of New York

• Universal Health Care Foundation of Connecticut• Universal Health Care Foundation of Connecticut

Signatories to the PRI (US)900+ international signatories

PARTIAL LIST OF INVESTMENT MANAGERS:

• BlackRock• Calvert Investments                                   • CBRE Investors

l

• Boston Trust• Capital Group International • Clear Bridge Advisors

• Domini Social Investments• JPMorgan Asset Management• Kohlberg Kravis Roberts & Co, LLP• Krull & Company

• MFS Investment Management • Principal Global Investors • T. Rowe Price• To er Capital Asset• Krull & Company

• Northern Trust Global Investments• Prudential Real Estate Investors• Russell Investments

• Tower Capital Asset Management LP

Russell Investments• TD Asset Management Inc.• The Townsend Group• TIAA ‐ CREF

Mainstream Involvement

Proliferation & Consolidation

How would you conduct ydue diligence?

Can any of this really beCan any of this really be measured?measured?

Sustainability Disclosure Databasehttp://database.globalreporting.org/

Research & BenchmarkingResearch & Benchmarking Capabilities

• 3,012 Organizations, g

• 7,681 Reports

• 7,593 GRI Reports7,593 GRI Reports

ESG Analysis of Tech Sector

Apple x x 7.95 

CA ‐‐‐

Dell x x x x 6.14

EMC 6 86EMC x 6.86

Fujitsu x ‐‐‐

HP x x x 7.74

Intel x x x x 7.96

IBM x x x 7.60

Microsoft x x x x 6.54x x x x 6.54

Toshiba ‐‐‐

X Updated 2010

Technology Hardware \ Technology Software & ServicesSoftware & Services

Company Corporate Governance

SocialEnvironment Overall 2010

ESG Scored hi l k h ld

Governance ESG ScoreLeadership Employees Stakeholders

Apple 28 3 11 7 14 63

CA, Inc. 25 4 14 16 9 68

Dell 27 8 16 8 21 80

EMC 26 5 19 12 14 76

Fujitsu 13 7 10 10 18 58

HP 26 8 16 10 25 85HP 26 8 16 10 25 85

Intel n/a n/a n/a n/a n/a n/a

IBM 24 9 20 12 20 85

Microsoft 29 7 15 17 15 83

Toshiba 19 7 13 10 18 67

Maximum score (possible) 30 10 30 15 30 115

Market Evolution

300,000+ data terminals globallyglobally

5,000+ companies and climbing

Sustainability Aspects• Emissions • Energy Consumption• Human Rights• Policies

Board Make Up• Board Make-Up

Built around GRI

Environmental Criteria (2010)CompanyNames 

Environmental Disclosure  

Score

Total Energy Consumption

(Mwh)

Total GHG Emission(Th Tonnes)  

Water Consumption(Thousands of cubic 

meters)

Total Waste(Thousands of metric 

tons)

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

Apple ‐‐‐ 12.40 ‐‐‐ n/a ‐‐‐ 9542.00 ‐‐‐ n/a ‐‐‐ n/a

CA Inc n/a n/a ‐‐‐ ‐‐‐ n/a n/a ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐CA, Inc. n/a n/a ‐‐‐ ‐‐‐ n/a n/a ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Dell 37.98 40.31 676.00 619.90 366.19 406.25 1596.00 1683.00 52.61 100.00

EMC ‐‐‐ 54.26 ‐‐‐ 932.51 ‐‐‐ 386.26 ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Fujitsu 55.04 55.04 6638.90 7713.89 273.00 428.00 23106.00 24569.00 32.44 29.71

HP ‐‐‐ 44.19 ‐‐‐ 4046.00 ‐‐‐ 1951.00 ‐‐‐ 7647.00 ‐‐‐ 124.48

Intel ‐‐‐ 46.51 ‐‐‐ 5110.00 ‐‐‐ n/a ‐‐‐ 30379.32 ‐‐‐ 44.48

IBM ‐‐‐ 41.09 ‐‐‐ 6323.06 ‐‐‐ n/a ‐‐‐ ‐‐‐ ‐‐‐ 87.33

Microsoft 11.63 n/a ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Toshiba 53.49 56.59 15398.33 15856.11 3078.00 3435.00 52930.00 55800.00 2610.00 291.00

Social & Governance (2010)Company Social Disclosure Score Governance Disclosure scoreCompany

NameSocial Disclosure Score Governance Disclosure score

2010

2009

% Employees Unionized

Community Spending

(Mn $) 2010

2009

% IndependentDirectors

% Women on Board

Scor

e2

Scor

e 2 ( $)

Scor

e2

Scor

e 2

2010 2009 2010 2009 2010 2009 2010 2009

Apple ‐‐‐ 8.77 ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ 51.79 ‐‐‐ 85.71 ‐‐‐ ‐‐‐Apple

CA, Inc. 3.51 3.51 ‐‐‐ ‐‐‐ n/a n/a 46.43 46.43 88.89 90.00 22.22 20.00

Dell 29.82 38.60 ‐‐‐ ‐‐‐ 27.43 40.89 51.79 57.14 81.82 83.33 ‐‐‐ ‐‐‐

EMC ‐‐‐ 42.11 ‐‐‐ 0.00 ‐‐‐ ‐‐‐ ‐‐‐ 66.07 ‐‐‐ 82.00 ‐‐‐ 9.00

Fujitsu 47.37 45.61 46.97 50.35 50.00 20.00 57.14 57.14 30.00 30.00 10.00 0.00

HP ‐‐‐ 43.86 ‐‐‐ ‐‐‐ n/a 52.20 ‐‐‐ 57.14 ‐‐‐ 90.91 ‐‐‐ 18.19

I t l 50 88 n/a 100 00 75 00 90 91 27 00Intel ‐‐‐ 50.88 ‐‐‐ ‐‐‐ n/a 100.00 ‐‐‐ 75.00 ‐‐‐ 90.91 ‐‐‐ 27.00

IBM ‐‐‐ 40.35 ‐‐‐ ‐‐‐ n/a 185.90 ‐‐‐ 51.79 ‐‐‐ 92.86 ‐‐‐ 21.42

Microsoft 36.84 14.04 0.00 0.00 687.50 516.90 57.14 46.43 78.00 80.00 22.22 20.00

T hib 36 84 36 84 189 00 3000 00 53 57 51 79 28 57 28 57 0 00 0 00Toshiba 36.84 36.84 ‐‐‐ ‐‐‐ 189.00 3000.00 53.57 51.79 28.57 28.57 0.00 0.00

Sustainability Performance

Sustainability PerformanceSource: Bloomberg

Sustainability PerformanceGRI Reporters Presence:

• 95% of the Dow Jones Sustainability Index

78% f th FTSE4G d• 78% of the FTSE4Good

• 70% of the Global 100• 70% of the Global 100

• 70% of the NASDAQ OMX CRD Sustainability Index

GRI Developments & Trends

• Government Uptake

• Supply Chain

• Financial Markets, Private Equity & Exchanges

• Integrated Reporting

• G4 Development

Global Regulatory Review"M t ki t i bilit"More governments are making sustainability

reporting mandatory.“

• 142 regulatory instruments addressing• 142 regulatory instruments addressing sustainability reporting exist in over 30 countries

• 65% are classified as mandatory, the rest voluntary

• United States• WH CEQ - EO 13514• USPS, US Army, etc….• GSA• Department of State• SEC

Business Transparency on

New US Legislation

Trafficking and Slavery ActNew US LegislationCalifornia’s Transparency in Supply Chains legislation goes into effect

in January 2012.

Who will this affect?The legislation (SB657 for short) impacts all retailers operating in California that generate over 100 million in annual gross receiptsCalifornia that generate over 100 million in annual gross receipts.

What does it require?It requires “conspicuous” public disclosure of the actions companies are taking to prevent Human Trafficking and modern day slavery in their supply chains.

Supply Chain RippleOctober 14, 2011“. . . The objective of this contract is 

i h i h hto equip the government with the skills it requires to complete a GRI report. The work performed under this contract shall result in a core group of GSA personnel developing expertise in the application of GRI standards to GSA's operational environment, application of the GRI Framework and principles to GSA's SSPP, and how the agency should approach its first‐ever GRI sustainability report..”

Supply Chain RippleOctober 13, 2011

“. . . Microsoft will also ll it liencourage all its suppliers 

to consider use of the reporting guidelinesreporting guidelines provided by the Global Reporting Initiative. . . .”

Supply Chain Ripple

Customer

TrainingTraining

Suppliers

GRI Stakeholders

Mainstream Uptake

May 2010 January 2011May 2010 January 2011

International Integrated Reporting Committee (IIRC)Committee (IIRC)

http://theiirc.org

IIRC Participants

Early Adopters of Integrated ReportingReporting

GRIC ti I tContinuous Improvement

G4 Development ProcessConsensus Based Approach:

• Phase I:Phase I:Call for Sustainability Reporting Topics

• Phase II:Registration for Public Comment Period

• Phase III:FIRST - Open Public Comment Period (90-day - through Nov. 24, 2011)

2012• 2012Working Group Development

Thank you

Mike WallaceDirector, Focal Point USAGlobal Reporting Initiative

wallace@globalreporting.org+1 212 339 0356+1 212 339 0356Twitter: M_A_WallaceLinked In: http://www linkedin com/in/mikewallace

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http://www.linkedin.com/in/mikewallace