Jose Luis Blasco Vasquez KPMG İspanya Risk ve Uyum Hizmetleri Bölüm Başkanı ve Şirket Ortağı Sürdürülebilirlik ve İklim Değişikliği Bölümü ©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Opportunities for improvement

A right moment to change your corporate report Audit Committee Institute 15 December 2016

Jose Luis Blasco Partner

Head of Governance, Risk and Compliance in Spain Head of Global Sustainability Solutions for Europe, Middle East and Africa

[email protected]

The right time to evolve in corporate reporting

Let’s talk about…:

1 Why reporting is becoming a challenging developments and updates in standards and 2 Latest regulations 3 Working on the next report

Origins of corporate reporting In 1834, in the midst of the railroad bubble, the Baltimore and Ohio Rail Road (B&O) company, in support of general shareholders' meetings, published a report that could be considered the first management report of History, both for its content and its Structure and style, which is virtually identical to that of the current integrated reports.      

Operations and launches Market Data Variable and fixed costs, and comparatives Legal Litigation Salaries of executives Research projects in which the resources of the shareholders were invested.

Watson Library at Columbia University

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Corporate reporting link with intangibles S&P 500

1934 Securities Exchange Act

Source: GOOGLE Ngram

1987

1929 RAILWAY CRISIS 1836-1857

2001

1921

1973

1907

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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New meaning of the word ‘value’ S&P 500

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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New meaning of the word ‘value’

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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New meaning of the word ‘value’

SOURCE https://ycharts.com/companies/AKBTY/price_to_book_value 11.12.16

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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International Integrated Reporting Council Aim

Origin Global need to provide greater coherence to corporate reporting Financial stability, sustainable development and a long-term vision

Focus on the business model, the value creation. Show how companies use and depend on various types of capital (financial, production, intellectual, human, social and relational, and natural) and transform them through their activity.

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Fil ing the reporting gap

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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An average of 200 pages of corproate information

The average amount of annual corporate information of a company in Spain main report and additional documents – counts on 241 pages. ©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Driving while looking through the rearview mirror

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Integrated reporting transitions proposal More capitals intervene in the value creation

From ‘Financial Capital Market System’ to ‘Inclusive Capital Market System ’

From ‘Silo Reporting’ to “Silo” organizations are inefficient

‘Integrated Thinking”

From ‘Short-term capital markets’ to ‘Sustainable capital markets’ A short-term vision makes the life of the company shorter

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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is part of the solution: Audiences matter ATTRIBUTES

CONTENTS

Inmediacy

Economics and finance

Reliability

Strategy and future

Transparency

Operative

Regularity

Service

Easy

Environment and society

Materiality

KEY ACTORS WHOSE OPINION REALLY COUNTS ARE DIFFERENT

CORPORATION INVERSTORS EMPLOYEES

BUSINESS UNITS CLIENTS REGULATORS PROVIDERS

LOCAL SITES

Plans and improvements

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

ADMINISTRATION NEIGHBOURS

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Corporate reporting frameworks are evolving

New reporting frameworks

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Introducing KPMG’s Climate Change & Sustainability Services

Social and environmental change as business opportunity

Megatrends

What really affects my business How my business could benefit of this trends 3 years

5 years

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

10 years

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Ene env Inte Em De

Introducing KPMG’s Climate Change & Sustainability Services

Social and environmental change as business opportunity What really affects my business How my business could benefit of this trends

RISKS

OPORTUNITIES

PROMISES

SUSTAINABILITY CHALLENGES

COMPLIANCE

INNOVATION

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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What really affects my business How my business could benefit of this trends

RISKS

OPORTUNITIES

PROMISES

SUSTAINABILITY CHALLENGES

COMPLIANCE

INNOVATION

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Proxy card Wal-Mart

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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_desarrollo sostenible: aquel que es capaz de satisfacer las necesidades de las generaciones actuales sin poner en peligro que las generaciones futuras puedan satisfacer las suyas.

…nos falla el cuadro de controles

El concepto desarrollo sostenible no cambiará el mundo, pero nos ayuda a entender como está cambiando. ©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Sustainability reporting is increasing Tendencias globales

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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The new non-financial reporting directive Applicability Applicability

Approach

Topics to be addressed

Publication

Verification

Responsibility

Guídelines for reporting

 Those companies required to publish and annual management report, PIE and those companies that have more than 500 employees, or companies with a total balance exceeding 20M€ or a turnover of more tan 40M€.  Type of companies included:

 Quoted companies  Financial and insurance companies  Collective investment entities  Subsidiaries are not required if the matrix does.

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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The new non-financial reporting directive Approach Applicability

Approach

Topics to be addressed

Publication

Verification

Responsibility

Guidelines for reporting

    

Business model Proper control over the subjects Results achieved Risks KPIs

It leaves the door open to fiscal information: benefits, tax on benefits and subsidies. ‘Comply or explain’ approach

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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The new non-financial reporting directive Topics to be addressed Applicability

Approach

Topics to be addressed

Publication

Verification

Responsibility

Guidelines for reporting

The Directive states that information should be provided regarding the following issues:

Social issues Environmental issues Human Rights issues  People issues (employees) Fight against corruption and bribery Diversity (age, gender, geographic diversity, level of training or experience) This breakdown will apply at all levels of the Company, included the Board

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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th Germany, 11 March 2016 Bil Ministry of Justice and Consumer Protection bill that foresees changes in different German laws:

• • • • • • • • •

Code of Trade Law on the introduction to the Code of Trade Law Regulation of the Mercantile Registry Securities Trading Act Disclosure Law Corporations Law Law on the introduction to the Corporation Law Cooperatives Act Other federal laws

Regarding the connects, the draft has slightly developed the UE requirements:

Environment

Human Resources

Society

Human Rights

Bribery

Information on greenhouse gas emissions, water consumption, air pollution, the use of renewable and nonrenewable energy sources or to protect biodiversity

Information on measures taken to ensure gender equality, working conditions, respect for the rights of workers and trade unions, and health or safety at work.

Information on dialogue at local or regional level, or on measures taken to ensure the protection and development of local communities.

Information in relation to the prevention of human rights violations.

Information regarding existing instruments for combating corruption and bribery.

Source: https://www.bmjv.de/SharedDocs/Gesetzgebungsverfahren/Dokumente/RefE_CSR-Richtlinie-Umsetzungsgesetz.pdf?__blob=publicationFile&v=1 Own elaboration ©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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The new Sustainability Reporting Standards Main innovations:

Will allow: Quickly adapt and update individual GRI requirements to be aligned with trends and material topics Being able to refer GRI on more occasions

Greater applicability to integrated reporting and easier update

They are organized into universal and specific standards They differ according to requirements, recommendations or guidelines They have been updated with greater clarity and simplicity of language. Clarifications on those unclear G4 items have been specified

Universal Standards

Reporting Principles are included. It is explained how to use GRI Standards

general indicators are included to provide context information about the company

Management approaches for each material subject are included, even though they are not included among GRI Standards.

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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The new Sustainability Reporting Standards 33 specifics topics to be chosen according to the materiality Specific Standards 6 economic topics: 401 - Economic performance 402 - Market presence 403 - Indirect economic impacts 404 - Procurement practices 405 - Anti-corruption 406 - Anti-competitive behavior

8 environmental topics: 501 – Materials 502 – Energy 503 – Water 504 – Biodiversity 505 – Emissions 506 – Effluents and waste 507 – Environmental compliance 508 – Supplier environmental assessment

19 social topics: 601 – Employment 602 – Labor / management relations 603 – Occupational health and safety 604 – Training and education 605 – Diversity and equal opportunity 606 – Non-discrimination 607 – Freedom of association and collective bargaining 608 – Child labor 609 – Forced or compulsory labor 610 – Security practices 611 – Indigenous rights 612 – Human rights assessment 613 – Local communities 614 – Supplier social assessment 615 – Public policy 616 – Customer health and safety 617 – Marketing and labeling 618 – Customer privacy 619 – Socioeconomic compliance

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Integrated report

Preparing an integrated annual report [in practice] ©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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is part of the solution: Audiences matter

ANNUAL REPORTS

ANNUAL REPORTS ACCTIVITIES AND SERVICES

ANNUAL REPORTS QUARTERLY PRESENTATIONS

ATTRIBUTES

CONTENTS

Inmediacy

Economics and finance

Reliability

Strategy and future

Transparency

Operative

Regularity

Service

Easy

Environment and society

Materiality

KEY ACTORS WHOSE OPINION REALLY COUNTS ARE DIFFERENT

CORPORATION INVERSTORS EMPLOYEES

BUSINESS UNITS CLIENTS REGULATORS PROVIDERS

LOCAL SITES

Plans and improvements

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

ADMINISTRATION NEIGHBOURS

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Making good reports… today 1 Initial Message Make it personal

1. Message 2. About us: Business model 3. Market Environment 4. Risks and Opportunities 5. Short-term and long-term strategy 6. Main challenges 7. Government of the company Key indicators: Economic Environmental Social

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Making good reports… today

National Grid Year 2015/16

2 Business Model

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Making good reports… today

National Grid Year 2015/16

2 Business Model

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Making good reports… today Bizz environment and risks

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Making good reports… today Strategy and main challenges

1. Message 2. About us: Business model 3. Market Environment 4. Risks and Opportunities 5. Short-term and long-term strategy 6. Main challenges 7. Government of the company Key indicators Economic Environmental Social

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Making good reports… today Strategy and main challenges

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Making good reports… today Strategy and main challenges

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Making good reports… today Strategy and main challenges

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Making good reports… today Governance

1. Message 2. About us: Business model 3. Market Environment 4. Risks and Opportunities 5. Short-term and long-term strategy 6. Main challenges 7. Government of the company Key indicators Economic Environmental Social

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Making good reports… today Governance

Source: British Americcan Tobacco Annual 2014, pages 52-57. ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG ©2016Report KPMG International Cooperative International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àAnnual Report 2014, pages 52-57. vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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Are you interested in yesterday´s news?

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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The KPMG Survey of Business Reporting

The KPMG Survey of CSR Reporting

Think Tanks analysis on the matter

©2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-àvis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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José Luis Blasco Socio responsable de Gobierno, Riesgos y Cumplimiento de KPMG en España Head of Global Sustainability Services KPMG Europe [email protected] @JLBlasco_KPMG Blog www.kpmgresponsabilidadempresarial.es

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© 2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.