1

Simone de Colle

sd7ua@virginia.edu

Enhancing the Credibility of Social Responsibility

claims and reports:The role of Assurance

ISO WG on SRTG6 - Vienna, 7 November 2007

TG6 BIG QUESTION:How can organizations enhance credibility

of SR claims and reports?

Key points for discussion:

• What is Assurance in the SR field?(AA1000AS + a European definition)

• The PURPOSE of SR assurance (Who assures-towards who?)

• The SCOPE of SR assurance(What is the focus of Assurance?)

• What are the different LEVELS of Assurance?

(Assurance providers, experts, stakeholders…)

• Can we see one EXAMPLE? (Yes! Novo Enzymes)

Assurance

ISO WG on SRTG6 - Vienna, 7 November 2007

The AA1000 The AA1000

PrinciplesPrinciples

--

Applied to Applied to

AssuranceAssurance

The Accountability Commitment

‘Inclusivity’

Principles

Completeness

“knowing your impact & what people think

of you”

Materiality

“knowing what

is important to

you and stakeholders”

Responsiveness

“demonstrating adequate response”

“accounting for stakeholders’ aspirations and needs”

ASSURANCE - DEFINITION DEVELOPED BY THE INTERNATIONAL RESEARCH TEAM:

Assurance is an internal or external evaluation, against a specified set of principles and

standards, of the quality of specified reports and the systems, processes and

competencies that deliver the associated information and underpin the reporting

organization’s performance. Assurance includes the communication of the results of this

evaluation to provide credibility to the subject matter for its users.

Definition of Assurance

Source: “Contributing to the convergence of CSR management standards in Italy, Germany, France and the UK by developing and promoting a common CSR framework, terminology and Management Tools”. Final Research Report. CELE, LIUC University, Italy, March 2005 (121 pp.).

QRES

Common Elements: Assurance All frameworks advocate assurance in the particular sense that management of the organization needs to ensure that what it is doing is what it thinks it is doing, and in addition may wish to communicate this in a credible way, inside or outside of the organizations. Then come some aspects of assurance that only overlap or are distinct between frameworks, as set out below:

 The AA1000 Series includes a specialised “assurance standard” (AA1000 Assurance Standard) that in many ways goes to the heart of its values and orientation;

  SIGMA's approach to assurance is in many ways similar to the AA1000 approach for the simple reason that it has formerly adopted the AA1000 Assurance Standard as the 'Intel inside' approach to assurance it advocates;

ValuesManagementSystem‘s approach to assurance is based on a self-governance approach, which emphasises the role plaid by the organisations who voluntary adopt a self-binding CSR management standard like VMS. Nevertheless, the existence and effectiveness of VMS within an organisation can be verified by an external auditor on a voluntary basis;

Q-RES approach to assurance is twofold: the Q-RES Guidelines define excellence criteria and auditing evidence for external verification concerning the adoption of Q-RES management tools by the organisation; the Q-RES Standard define a CSR management system based on a ISO-like model that could be certified.

“…the issue of assurance is a very controversial topic….being the field clearly still at its development stage. No single agreed

approach to providing CSR assurance exist, and in the practice organizations often seek different forms of assurance from different

assurance providers, from traditional financial auditors to specialised CSR consultants, to

NGOs and respected individuals”.

“…Yet, it is widely recognised that without some form of verification using a generally

accepted framework, any CSR strategy - and its underlying management system – will not be seen as credible by the stakeholders

community.

Why organizations need assurance?

Assurance: Current

approaches

Source: The Future of Sustainability Assurance, by S. Zadek et al., ACCA Report n. 86, London, 2004

PurposeWhy is assurance

obrtained?

&Audience

Who is assurance for?

Internally- To provide useful information to support management- To improve risk management

Externally- To meet stock market and supply chain requirements- To respond to stakeholder demands/claims - To obtain specific social and environmental labels

‘Indoor’ stakeholders- Management: want reliable information ‘Front door’ stakeholders-Media, consumers: interested in social issues‘Back door’ stakeholders- Investors & Regulators: concerned of risk and legal breaches

The issue/organizational levelscope of Assurance

Assurance:

Current approaches

Spurce: The Future of Sustainability Assurance, by S. Zadek et al., ACCA Report n. 86, London, 2004

FocusWhat issues are covered?

&ApplicationWhat level of the

organisation is covered?

social issues - eg human rights, working conditions, diversity… environmental issues

- emissions, energy use, waste management… economic issues

- eg financial performance, multiplier effects

assurance may cover different organisational units: - Company level: the company or the group - Specific level: eg Suppliers; product level assurance; labelling

=> Control (audit) of accuracy of data and information reported

Assurance: Different levels

Levels of Assurance

LEVEL 1.Reported Data Accuracy

LEVEL 2. Quality of Systems, Processes

LEVEL 3. Materiality and Risk

LEVEL 4. Evaluating Performance

=> Evaluating the reliability of SR processes and systems

=> Evaluating the performance on relevant issues; identifying areas for improvement

=> Evaluating completeness and materiality of information reported

Assurance Providers

Assurance: Current

approaches

Source: The Future of Sustainability Assurance, by S. Zadek et al., ACCA Report n. 86, London, 2004

ProvidersWho provides assurance?

&Competencies

How are they able to offer assurance?

Professional Audit firms (KPMG, PWC…) Quality Assurance firms (BVQI, DNV, SGS…) Specific SR assurance providers (Just Assurance,

Veritè, Solstice…) Civil society assurers (WWF, Rainforest

Alliance…) Opinion leaders and NGO advisory panels (eg

John Elkington of sustainsbility or Jonathon Porrit of The Natural Step).

Providing powerful assurance requires a good mix of:

Technical competencies (e.g. on auditing) Process competencies (e.g. on stakeholder engagement) Substantive/content competencies (e.g. on human rights

issues)

Assurance: One example

A specific approach

to Assurance

How to choose the right assurance? A modular approach

The approach taken by an European medium-size pharmaceutical company to its SR Assurance is a ‘modular approach’, which can be synthesized as follows:

The basic idea is that in the field of SR Assurance different skills and competencies are needed, and different organizations can provide the best answer to different questions.

Therefore, the modular approach is articulated as follows:

When it is about seeking assurance over we relies on the work of hard DATA and FIGURES => professional ACCOUNTANTS

For assurance over social, ethical and, we seeks the dialogue with environmental ISSUES that are crucial => the representatives of all in the different business activities relevant STAKEHOLDERS;

When it is about assurance over the => we asks the opinion SYSTEMS concerning the overall SR strategy of SR EXPERTS.Spurce: Q-RES

EU Project 2004

ISO 26.000 - Clause 7 - Guidance on Implementing SR

7.2 Understanding

7.4 Integrating

7.5 Implementing

7.6Communicating

7.3 Working with Stakeholders

Stakeholder Engagement

Stakeholder Engagement

7.2 Understanding the context of SR Understanding an organization‘s profile Analysing the boundaries and context of SR Understanding stakeholder concerns

7.3 Working with stakeholders

Identification process Prioritisation of interests Engangement process

7.4 Integrating SR Adopting principles of SR

and connecting them to an organization‘s statement

Developing objectives and strategies

7.5 Implementing SR into daily practice Raising awareness and building competencies Establishing structure and reviewing operations

against strategy Setting targets for SR Action plans, instruments and implementation

7.6 Communcating on SR Types of communicating SR Planning and selecting forms

of communication and media Stakeholder dialogue on communication

about SR

7.7 Evaluating activities and practices of SR

Organizational self-assessment

Improvement options

7.7Evaluating

7.8 Enhancing the credibility of SR reports and claims

Benefit of relationships based on trust

Levels and forms of assurance

BOX of examples?

Operationalizing Social Responsibility

7.8 Enhancingcredibility

Annette Kleinfeld & Simone de Colle

ISO 26.000 - Clause 7 - Guidance on Implementing SR

7.8 Enhancing the credibility of the organization‘s social responsibility approach

7.8.1 Key considerationsOrganizations can enhance the credibility of their SR commitments [claims] and objectives [reports] by seeking appropriate forms of assurance [must be added in the definitions]. The purpose of assurance (which can be internal or external) is, in fact, to provide a reliable evaluation of how appropriate [effective] the organization‘s policies, decisions and actions are to create socially responsible outcomes.

7.8.2 Benefit of relationships based on trustDemonstrating that socially responsible behavior is integrated into existing organizational strategies, systems, practices and processes, facilitates the process of building relationships based on trust with all the organiza-tion‘s stakeholders. This, in turn, generates positive ourcomes in terms of reduced costs (e.g. of negotiations, contracting and monitoring) and increases the opportunities for mutually beneficial collaboration. Moreover, assurance enables organizational learning that facilitates performance improvements.

7.8.2 Levels and forms of assuranceAssurance can be provided at different levels (e.g. DATA & INFORMATION communicated; Organizational CONDUCT; SR OUTCOMES [performance on SR issues]) and in different forms (e.g. internal self-audit; consultation with external experts and/or organization(s); stakeholder panel). It is important for each organization to choose the most appropriate level and form of assurance in relation to its context and the issues and objectives identified in its SR approach.

- BOX of examples?

7.8 Enhancingcredibility

Annette Kleinfeld & Simone de Colle