Sustainability Reporting: Elements and Experiences

1
Sustainability Reporting Elements and
Experiences

• GCS Monthly Meeting
• 29 December 2008

Annapurna Vancheswaran Pooja Kumar
2
Presentation Outline

• About TERI-BCSD India
• Conceptual Issues Why Reporting? and Reporting
  Trends Global and Indian
• Reporting Frameworks Guidelines
• Preparing a Sustainability Report
• Best Practices
• TERI Experience

3
About TERI-BCSD India

• A CEO-led coalition of 84 companies with a shared
  commitment to Sustainable Development
• Indian Partner and Member of Regional Network of
  WBCSD

4
TERI-BCSD India Projects

• Sustainability Reporting IFC-SustainAbility,
  UK-DSCL
• Corporate Action Plan on Climate Change
  TERI-BCSD India Members
• CSR in the SME sector HSBC
• Cement Sustainability India Forum and Stakeholder
  dialogue on access to energy in India WBCSD
• CEO Forum 04 February 2009
• Promotion of Business Sectors Engagement in
  Indian Market for a Low Carbon Economy Norwegian
  Embassy

5
TERI-BCSD India Outreach

• TERI-BCSD India Talking Tomorrow Lecture Series
• A corporate-member-supported didactic programme,
  aimed at covering core topics inherent in the
  TERI-BCSD India competency.
• Addresses the present concerns and their
  solutions in the field of energy, water, climate
  change, health, sustainable development, and
  their impact (environmental, social and economic)
  on the global business environment.
• Publications
• EnCoRE, CEO Alert, Business Unusual, Citizens at
  Work, Cleaner is Cheaper, Media Clips

6
Conceptual Issues Why Reporting? and Reporting
Trends Global and Indian
7
The Dilemma - simple Conceptual issues

• To whom?
• For what?
• Who cares?
• What happens if we do nothing?

8
The Dilemma profound Conceptual issues

• Disclosure of sensitive information
• Time consuming and effort intensive
• Additional corporate infrastructure is required
  to properly monitor sustainability
• It is not a legal requirement to do business
• There is a massive learning curve to reporting

9
Why Do a Report?

• Providing information about challenges and
  achievements to shareholders, employees, the
  public and other stakeholders
• An internal commitment to environmental and
  social responsibility
• As a marketing tool, associating the company with
  sound environmental management and sustainable
  activities
• Tracking progress on integration of
  sustainability principles into company planning
  and programs
• Taking first steps towards doing things in a more
  sustainable way
• A successful pilot project persuades
  decision-makers to take the initiative
  company-wide
• A commitment while becoming a world leader in
  sustainability

10
Importance of Sustainability Reporting

• Self-assessment tool
• Management system
• External monitoring mechanism
• Action plan
• Business development tool
• Communications vehicle

• Looking beyond short-term band-aids to find
• longer term solutions that make business sense

11
The transparency revolution

• Todays context Growing stakeholders
  expectations (external internal)
• Business case corporate responsibility to
  competitive advantage
• Internal management tool

12
Report Content Percentages
Source CorporateRegister.com
13
Worldwide Drivers (ACCA)

• Stakeholder demand for transparency
• Globalization
• Institutional investors interest from financial
  markets
• Socially Responsible Investment (SRI) funds
• Government initiatives

14
Socially Responsible Company Best Indicators
15
Global Report Output by Year
Source Corporate Register.com
16
Top 20 Countries by Report Output (1992 - 2008)
Source Corporate Register.com
17
India Current Scenario

• With globalization, increasingly becoming a
  necessity
• No specific sustainability/CSR reporting
  legislation or guidelines
• The journey has just begun

Beginning of a Mandatory Regime?
18
New CSR rules in offing

• ICAI CSR ruling Must for the companies to report
  on social, environmental and economic
  initiatives.
• Committee on framework for standardizing the
  disclosures related to sustainability reporting
  is being formed
• For Indian companies going to be listed abroad,
  sustainability reporting has become mandatory.

Source New CSR Rules in Offing, the Financial
Express/ Times of India 23 June 2008
19
Leading by Example

• ABN AMRO Bank NV (India)
• ACC Limited
• Accenture Services Pvt Ltd
• Ashok Leyland
• Bajaj Auto Ltd
• Bharat Heavy Electricals Limited
• Bharti Airtel Limited
• Dr Reddy's Laboratories Ltd
• Ford India Limited
• Grasim Industries Limited
• HDFC Bank Limited
• Hindustan Lever Ltd
• Housing Development Finance Corporation
• Icici Bank Limited
• Infosys Technologies Limited
• ITC Limited
• Jubilant Organosys Ltd
• Kansai Nerolac Paints Limited
• Larsen Toubro Limited

• National Thermal Power Corporation Limited
• Nerolac Paints Ltd
• Oil And Natural Gas Corporation
• Paharpur Business Centre Software Technology
  Incubator Park
• Reliance Communications Ltd
• Reliance Industries Limited
• Satyam Computer Services Limited
• Sesa Goa Limited
• Sharp India Limited
• Sony India Pvt Ltd
• SRF Limited
• State Bank of India
• Steel Authority of India Ltd
• Tata Consultancy Services Limited
• Tata Motors Limited
• Tata Steel Limited
• Tata Tea Limited
• The Tata Group
• The Tata Iron and Steel Company Ltd

Source Corporate Register.com
20
Reporting Frameworks Guidelines
21
Prevalent Reporting Guidelines

• Global Reporting Initiative (GRI) Reporting
  Guidelines
• AA1000 Assurance Standard (AA1000AS)
• Framework for Public Environmental Reporting
  (Australia)
• General Guidelines on Environmental Reporting
  (UK)
• Environmental Reporting Guidelines (Japan)
• Der Leitfaden "Der Nachhaltigkeitsbericht
  (Germany)
• United Nations Global Compact (UNGC)
• Around 25 different guidelines published by
  governments and institutions across the globe

Source www.enviroreporting.com
22
The GRI Reporting Framework

• A generally accepted framework
• Developed through a multi-stakeholder,
  consensus-seeking approach
• Designed to be used by organizations of any size,
  sector, or location
• Takes into account the practical considerations
  faced by a diverse range of organizations
• Sector Supplements and National Annexes respond
  to the needs of specific sectors or national
  reporting requirements.
• First Generation of the guidelines 1999/ Third
  Generation (G3) October 2006

23
GRI Strengths Weaknesses
24
Indian Reports as per GRI Guidelines

• ABN AMRO Bank NV (India)
• ACC Limited
• Dr Reddy's Laboratories Ltd
• ITC Limited
• Jubilant Organosys Ltd
• MSPL Limited

• Reliance Industries Limited
• Shree Cement Ltd
• Tata Consultancy Services Limited
• Tata Steel Limited 
• Tata Tea Limited 
• The Tata Iron and Steel Company Ltd

Source Corporate Register.com
25
Preparing a Sustainability Report
26
Preparing a Sustainability Report

• Intensive, year-round process
• Frequency of reporting Annual (aligned with
  annual reporting process)
• Format and Medium - PDF format in combination
  with Stand-alone hard copy and web-based
  interactive reporting
• Principles for ensuring Report Quality Material
  issues and topics Balance Comparability
  Accuracy Timeliness and Clarity

27
The typical reporting process
0.5 1.5 3.0
Brainstorming
Duration (Months) Minimum Average Maximum
0.25 1.5 2.0
Outline Development
0.75 3.0 6.0
Information Collection
1.0 3.0 7.0
Writing and Design
1.0 2.0 4.0
Internal Review
1.0 1.0 2.0
External Review
28
Templates for Sustainability Report
29
Best Practices
30
Some examples

• Comprehensive Reporting Structure
• Strategic Focus on Data
• Connecting Life Cycle Assessment to Financial
  Performance
• Defining Sustainable Development
• Framework to Define Strategic Directions
• Commitment to Employee Health
• Employee Performance Indicators
• Stakeholder Relationship Performance Indicators
• Benchmarking
• Paperless Report

31
TERI Experience
32
Sustainability Reporting Project

• Combines the expertise of IFC (International
  Finance Corporation), SustainAbility, UK and TERI
• Objectives
• Provide training and working guidelines on
  sustainability reporting to companies in India
• Work with one medium/large Indian company to
  develop sustainability reporting and implement
  effective stakeholder engagement processes
• The project has been divided into two phases
• Phase I Training Workshop on Sustainability
  Reporting
• Phase II Handholding a company in preparing its
  Sustainability Report (DSCL)

33
with DSCL

• Initial meeting with the CEO and other DSCL Board
  members
• Review Committee Members (internal external)
  identified
• Orientation Meeting with DSCL Business Heads and
  TERI Experts.
• DSCL Sustainability Report based on GRI
  Guidelines (version 3.0)
• Template B (equal amount of content and pictures
  on each page)
• Identified Core team from DSCL to take up the
  project
• (Overall coordinator, Environmental cell, Health
  and safety, Labour/social welfare department,
  Supply chain, CSR, Communications department)

34
Milestones and Activities
35
Thank You
36
General Mandatory Requirements

• SEBI Committee on Corporate Governance
• Reporting under the Companies Act, 1956
• Reporting under Environmental Legislation - The
  Environment (Protection) Act of 1986
• Reporting under the Indian Factories Act, 1948
  (Amended in 1987)