Insights into the new GRI Standards - ERM · - Lise Kingo, Exec Director, UN Global Compact...

The business of sustainability

© Copyright 2016 by ERM Worldwide Group Limited and/or its affiliates (‘ERM’). All Rights Reserved. No part of this work may be reproduced or transmitted in any form or by any means, without prior written permission of ERM.

Insights into the new GRI StandardsLaunched October 2016


Agenda

Introduction to GRI & global context

Transition to GRI Standards

Potential Challenge Areas

Implementation Considerations

Other Frameworks

Questions

2


Introduction to GRI & global context

3


GRI evolution

G22002

G3 and G3.12006 and 2011

G42013

Standards2016

G12000

4


Global context – more reporting instruments

5Source: Carrots & Sticks 2016 via www.carrotsandsticks.net


Transition to GRI Standards -Overview

6


Why change?

■ Ensure Standards stay relevant

■ Easier to edit, add topics

■ Improve accessibility

■ Make requirements clearer

And most importantly…

■ Allows governments and stock exchanges to reference GRI Standards in reporting instruments

7


Overview of changes

■ Set of modular, interrelated reporting standards

■ Changes focused on format and presentation

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Overview of changes


Overview of changes – GRI 200 Economic

� GRI 201: Economic Performance

� GRI 202: Market Presence

� GRI 203: Indirect Economic Impacts

� GRI 204: Procurement Practices

� GRI 205: Anti Corruption

� GRI 206: Anti Competitive Behaviour


Overview of changes – GRI 300 Environment

� GRI 301: Material

� GRI 302: Energy

� GRI 303: Water

� GRI 304: Biodiversity

� GRI 305: Emissions

� GRI 306: Effluents and Wastes

� GRI 307: Environmental Compliance

� GRI 308: Supplier Environmental Assessment


Overview of changes – GRI 400 Social

� GRI 401: Employment

� GRI 402: Labor Management

� GRI 403: Occupational Health & Safety

� GRI 404: Training and Education

� GRI 405: Diversity and Equal Opportunity

� GRI 406: Non Discrimination

� GRI 407: Freedom of Association and Collective Bargaining

� GRI 408: Child Labor

� GRI 409: Forced or Compulsory Labor


Overview of changes – GRI 400 Social

� GRI 410: Security Practices

� GRI 411: Rights of Indigenous Peoples

� GRI 412: Human Rights Assessments

� GRI 413: Local Communities

� GRI 414: Supplier Social Assessments

� GRI 415: Public Policy

� GRI 416: Customer Health and safety

� GRI 417: Marketing and Labelling

� GRI 418: Customer Privacy

� GRI 419: Socio Economic Compliance


Requirements, recommendations, guidance

Three types of content featured in the Standards:

1. Requirements are mandatory for reporting on that topic

■ Clearly labeled

■ Uses the word “shall” and shows in bold font in the text

2. Recommendations

■ Encouraged or recommended, but not required

■ Uses the word “should”

3. Guidance

■ Provides explanation and examples

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GRI 303-3: Example - water recycled and reuse

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Reasons for Omission


Key terms & other changes

■ G4 terms simplified or revised

■ Indicator disclosure

■ Aspect topic

■ Disclosures on management approach (DMA)’

‘management approach

disclosures’

■ Clarification of employee and worker (person that performs work)

■ Content index format -not mandated

■ Sector supplements – can be used, but not required

Employee and worker – terms defined

■ The term ‘workers’ includes, but is

not limited to, employees.

■ Further examples of workers

include interns, apprentices, self-

employed persons, and persons

working for organizations other

than the reporting organization,

e.g., for suppliers.

■ Individual GRI Standards specify

whether a particular subset of

workers is to be used.

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Merged Topics

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Location in GRI topic-specific Standards

G4 Aspects

GRI 405: Diversity and Equal

Opportunity

Diversity and Equal Opportunity

Equal Remuneration for Women and Men

GRI 412: Human Rights Assessment Investment (Human Rights)

Assessment (Human Rights)

GRI 414: Supplier Social Assessment Supplier Assessment for Labor Practices

Supplier Human Rights Assessment

Supplier Assessment for Impacts on

Society

GRI 417: Marketing and Labelling Product and Service Labeling

Marketing Communications

GRI 419: Socioeconomic Compliance Compliance (Society)

Compliance (Product Responsibility)


Reporting claims

■ Different options for use of modular

Standards

■ In accordance – Core or

Comprehensive

■ GRI referenced – option to reference

individual Standards

■ In accordance consistent with G4

■ Disclosures

■ Management approach, topic boundary

■ Reporting Principles

■ GRI to be notified of all claims

Required statements:

“This report has been prepared in accordance with the GRI Standards: [Core/Comprehensive]

option.”

or

“‘This material references [title and publication year of the Standard]’, for each

Standard used

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Potential Challenge Areas

22


Principles

Report Content Report Quality

Stakeholder Inclusiveness

Accuracy Comparability

Sustainability Context Balance Reliability

MaterialityClarity Timeliness

Completeness

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Disclosure 102-46 in GRI 102: General Disclosures requires an explanation of how the organization has implemented the Reporting Principles for defining report content.


Materiality – G4

Principle: The report should cover Aspects that:

■ Reflect the organization’s significant economic, environmental and social impacts; or

■ Substantively influence the assessments and decisions of stakeholders

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Materiality - Standards

Principle – same as G4

Additional definition of impact

“In this context, ‘impact’ refers to the effect an organization has on the economy, the environment, and/or society (positive or negative). A topic can be relevant – and so potentially material –based on only one of these dimensions.”

“The use of this exact matrix is not required; however, to apply the Materiality principle, it is required to identify material topics based on these two dimensions.”

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Material Topics

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Reporting on material topics

2.5 For each material topic, the reporting organization:

2.5.1 shall report the management approach disclosures for that topic, using GRI 103:

Management Approach; and either:

2.5.2 shall report the topic-specific disclosures in the corresponding GRI Standard, if the

material topic is covered by an existing GRI Standard (series 200, 300 and 400);

or

2.5.3 should report other appropriate disclosures, if the material topic is not covered by

an existing GRI Standard.

For material topics not covered by the GRI Standards, it is:

Required to report the management approach for that topic using GRI 103

Recommended to report other appropriate disclosures for the topic


GRI 103 – Management Approach


Management Approach - Boundary

Disclosure 103-1 asks organizations to

■ Explain why the topic is material

■ Describe the topic boundary

■ Where the impact occurs

■ The organization’s involvement with the impacts

■ Report any specific limitation regarding the topic

boundary

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Management Approach - Strategy

Disclosure 103-2 asks organization to:

■ Explain how they manage the topic

■ State the purpose of the management approach

■ Describe:

■ Policies;

■ Commitments;

■ Goals and targets;

■ Responsibilities;

■ Resources;

■ Grievance mechanisms; and

■ Specific action, such a processes, projects, programs and initiatives.

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Management Approach - Evaluation

■ Disclosure 103-3 asks organizations to

■ Explain how they evaluate the management

approach, including

■ Mechanisms for evaluating effectiveness

■ Results of the evaluation

■ Related adjustments

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Implementation Considerations

31

The business of sustainability 32


Gaining Value from the Process

� New data points

� Increase executive visibility

� Assess the company’s impacts

� Engage stakeholders

� Tighten reporting


Third-Party Assurance

� GRI continues to recommend assurance

� Scope of Assurance will increasingly focus on "what is important" (material topics) rather than "what is easy to assure"

� 'in accordance' criteria is more definitive - less room for interpretation

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Timing

Use of GRI Standards required for reports published from

1st July 2018


Relationship with other frameworks

36

Reporting on SDGs and requirements of South Africa’s King IV code, EU Directive, Singapore SGX and Thailand SET


Sustainable Development Goals

“There is no Plan B. The 2030 Agenda and SDGs is it’

- Lise Kingo, Exec Director, UN Global Compact speaking at GRI 2016

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GRI Standards and the SDGs

■ Focus on impacts aligned with reporting on SDGs

■ SDG Compass available

■ Other GRI services available for G4 reports - to be updated for Standards:

■ Mapping document

■ SDG Mapping Service

(available in 2018)

■ Content index format – more flexibility to map disclosures

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SDGs

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Links into Dow's overall role in addressing the global challenges in 2030.

Focus on specific goals whereby the nature of the business Nestle feels they can maximize impact on a global

scale.

In addition to these focus areas, our current product portfolio allows us to make some contribution to Goals 2, 6, 7, 12, 15. Our operations/internal targets and international operations will have a minor influence on Goals 3-16.

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A Changing Reporting Landscape in Africa

� African stock exchange requirements to include ESG disclosures – Nigeria, Nairobi, Namibia,

Botswana & Tanzania

� South African GHG Emission Reporting Regulations

■ Regulations to be introduced by early 2017; annual reporting by 30 April

■ IPCC Guidelines apply

■ Validation by government

� South African Energy Management Reporting Requirements

■ Expected to be introduced by early 2017; annual reporting within 60 days of financial year end

■ Report on energy consumption & management plans (efficiency)

■ Use SANS 50001 & 50010

� King IV Report on Corporate Governance for South Africa

■ Effective 1 April 2017

■ 16 Principles: “Apply AND explain” approach

■ Outcomes-based governance (& reporting)

■ Reaffirms IIRC’s <IR> Framework

■ Assurance requirements determined by Audit Committee

YB1

YB1 http://www.nigeriatoday.ng/2016/06/ensuring�transparent�sustainable�capital�market/

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=978&Sitemap_x0020_Taxonomy=UNCTAD%20Home;

https://economist.com.na/18363/markets/nsx�joins�un�focus�on�green�economy/

Yakira Bahadur, 04/11/2016


�Flexibility:

■ Reference specific GRI Standards: Sector disclosures

VS

■ ‘In Accordance’: If GRI Standards requirements have been fully

met

�Compatibility with IIRC’s <IR> Framework:

■ GRI Standards provide detail on disclosures while IIRC’s <IR>

Framework is high-level

■ South African National GHG Reporting Regulations:

■ GRI 305: Emissions (note different methodology)

�South African Energy Management Reporting:

■ GRI 302: Energy

How do GRI Standards Support the Complexity?


EU Non-Financial Reporting Directive

Which companies need to report?

� Those classified as a Public Interest Entity (PIE)

� with more than 500 employees

When does it come into force?

� For Member States (12/15) on 6 December 2016 (Includes the UK!)

� Information should be included in Annual (Directors) report

published after 31 December 2016

� The EC expects the rest by April 2017

Member state Current status transposition into law

Denmark Fully accepted the Directive in substance (may 2015)

Greece, Luxemburg, Hungary, Romania, Estonia, Slovakia

Communicated their National Implementing Measures to the

Commission.

UKPublic consultation period, expected transposition into law from 1

January 2017

GermanyPublished a policy draft amending the German Commercial Code in

September 2016.


EU Non-Financial Reporting Directive

Reporting guidance:

� Reporting is mandatory yet flexible -report or explain approach:

� Expected to use an internationally recognized instrument.

� EC non-binding guidance available 6 December 2016.

� Auditors check whether the disclosures are reported.

� Member States may also require verification by an independent assurance provider.

What disclosures are required?

A Non-financial statement (in Annual or separate report) containing disclosures on the following matters, as a minimum:

■ Environmental matters;

■ Social and employee aspects;

■ Respect for human rights;

■ Anticorruption and bribery issues; and

■ Diversity in their board of directors.

Disclosures should include:

A description of the undertaking’s business model; a description ofpolicies for each matter, including due diligence processes; theoutcomes of these policies; the principal risks related to thesematters linked to operations; and explain how the undertakingmanages those risks; plus relevant non-financial key performanceindicators.

PLUS a more detailed DIVERSITY disclosure in the corporate governance statement

.


SGX Sustainability Reporting Guide

■ The Guide is now finalized.

■ It allows companies flexibility in when and how to report, i.e. phased approach in the adoption of sustainability reporting.

■ Listed companies must issue the report, or explain the failure to do so -“comply or explain” basis.

Sustainability Reporting Development Timeline

31 Dec 201631 Dec 2016

• Assessment of material ESG factors

• Commitment & approach to address the factors

31 Dec 201731 Dec 2017

• Issue first sustainability report by 31 Dec 2018

• 5 Primary Components

31 Dec 201831 Dec 2018

• Issue subsequent sustainability reports within 5 months

31 Dec 201931 Dec 2019

• Ongoing

MaterialityMaterialityPolicies,

Practices andPerformance

Policies,Practices andPerformance

TargetsTargetsReporting

FrameworkReporting

FrameworkBoard

StatementBoard

Statement

Five Primary Components


SET Sustainability Reporting

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■ In Thailand, sustainability reporting is mandated by the Securities and Exchange Commission (SEC).

■ SET has regularly organized training related to sustainability and ESG reporting.

■ Supported by SET Sustainability Awards and Thailand Sustainability Investment


Questions

46


About ERM

ERM is one of the leading sustainability consultants worldwide, providing environmental, health and safety, risk and social consulting services in influential assignments.

Over 4,500 employees globally in over 160 offices in 40 countries.

Over the past five years we have worked for approximately 50% of the Global Fortune 500 companies across the world

Over 40 years of experience in the field with in-depth subject matter and sector experience.

James MargolisPartner, North [email protected], US

Who to talk to at ERM:

Jennifer Iansen-RogersHead of Corporate Assurance [email protected], UK

Juan GuerraTechnical Directorjuan.guerra@erm .com

Bogota, Columbia

Swaroop BanerjeeSustainability Consultant [email protected] Delhi, India

© Copyright 2016 by ERM Worldwide Group Limited and/or its affiliates (‘ERM’). All Rights Reserved. No part of this work may be reproduced or transmitted in any form or by any means, without prior written permission of ERM.

Fernanda BrittoSustainability Consultantfernanda.britto@erm .com

Sao Paulo, Brazil

47

Donald Gibson

Partner, South Africadonald.gibson@erm .com

Johannesburg, South Africa

Mark HoffPartner, Central Europemark.hoff@erm .com

Frankfurt, Germany

Nat VanitchyangkulPartner, Southeast Asianat.vanitchyangkul@erm .com

Bangkok, Thailand

Insights into the new GRI Standards - ERM · - Lise Kingo, Exec Director, UN Global Compact...

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