“Managing for change: Sustainability reporting for a Sustainable Future Dr. Nelmara Arbex Director, Learning Services

Sustainability Conference - Denver, Colorado, USA - June 2010

Learning Objective: •To learn what is the GRI sustainability reporting process. •To understand the connection between managing and changing. •To understand the importance of transparency in the new business context.

Sustainability Conference - Denver, Colorado, USA - June 2010

Sustainability Challenge

Sustainability Conference - Denver, Colorado, USA - June 2010

Sustainability Conference - Denver, Colorado, USA - June 2010

Introduction to sustainability issues World Situation - Water • Water withdrawal has increased six-fold since the beginning of 20th Century. • More and more water sources are being depleted as a result of growing urban demand, effects of climate change and pollution. • Basic Sanitation for 1 billion people is a component of combating water-borne illnesses and achieving the Millennium Development Goals, a target which we are currently set to miss by more than half. References: http://www.unesco.org/water/wwap/wwdr2/pdf/wwdr2_ch_5.pdf

Sustainability Conference - Denver, Colorado, USA - June 2010

Introduction to sustainability issues World Situation – Waste Production • Despite a growth in municipal waste being converted into energy, from 16 million tons in 1995 to 160 million tons in 2007, hundreds of millions tons of waste end up in landfills every year. • Every ton of waste in a landfill releases an extra 1.3 tons CO2. • Hazardous waste often exported to countries least able to deal with social & environmental impacts of it. References: http://www.waste-managementworld.com/articles/article_display.cfm?ARTICLE_ID=304395&p=123

Sustainability Conference - Denver, Colorado, USA - June 2010

Introduction to sustainability issues World Situation – Pollution and increase of earth temperature • NASA has reported that 2005 was hottest year since records began in the 19th century.

• Anthropogenic emissions will continue to affect global warming for at least the next millennium, contributing to sea level rise, a degradation of biodiversity and endangering food and water supplies.

References: http://www.ipcc.ch/pdf/assessment-report/ar4/wg2/ar4-wg2-chapter20.pdf

* ppm = parts per million

Sustainability Conference - Denver, Colorado, USA - June 2010

Introduction to sustainability issues & reporting World Situation – Wealth Distribution and Inequalities • 85% of global wealth belongs to the richest 10%. • Poorest ½ of world population own about 1% of global wealth. • Lack of basic quantity and quality of food and water a day to day reality for the poorest.

World Situation – Capital Concentration
44 of the top 100 economic entities are companies.

References: http://www.mindfully.org/WTO/2006/Household-Wealth-Gap5dec06.htm 2008 Fortune 500 “World’s largest corporation

Sustainability Conference - Denver, Colorado, USA - June 2010

New business context Companies concentrate financial, technical (research and technology), natural & human resources (experts). They can also influence political decisions.

They have to be part of the solution!

Sustainability Conference - Denver, Colorado, USA - June 2010

Sustainability Challenge •Climate change •Water resources are in dangerous •Waste production is higher than planet can absorb •Increase of poverty and inequalities •Increase of population …How will your business be profitable and contribute to solve these problems? Sustainability Conference - Denver, Colorado, USA - June 2010

Sustainability Challenge •Which is the contribution of your company for the future? •Do you know how to measure it? •Are your managers ready to face what is coming? Have they learned how to face this?

Sustainability Conference - Denver, Colorado, USA - June 2010

Sustainability Challenge •Which is the contribution of your company for the future? •Do you know how to measure it? •Are your managers ready to face what is coming? Have they learned how to face this? Who is asking: •Carbon traders, financial risk managers, insurance companies, buyers, clients,… •…your children It is everyone’s business! Sustainability Conference - Denver, Colorado, USA - June 2010

Philanthropy vs Sustainability Management Both important, but different & lead to different results Philanthropy
Gives support where not available from the state or local communities.
Not related to everyday decision of business.

Responsible (sustainable) management
Totally related to every-day decision of business (selecting employees, defining better salaries, choosing suppliers, changes the way to use natural resources, etc.).

Sustainability Conference - Denver, Colorado, USA - June 2010

New business context Educational Revolution Knowledge is part of very-day life

Technological and communication’s revolution Transparency and Ethics

Civic Revolution Groups are organized to express their expectations and whishes

Sustainability Conference - Denver, Colorado, USA - June 2010

Increasing Stakeholders and Demand

Modern Due Diligence

Sustainability Conference - Denver, Colorado, USA - June 2010

What is Reporting? What you can not measure, you can not manage. What you can not manage, you can not change!

Sustainability Conference - Denver, Colorado, USA - June 2010

What is reporting ? A process to: • Identify critical issues to be managed (social, environmental and economic issues) • Discuss them with different groups around business (stakeholders) • Get ready to monitor them and set goals • Publish what the company has learned and its commitments

Sustainability Conference - Denver, Colorado, USA - June 2010

How to measure and follow up Sustainability Impact?

Who can define the “metrics”?

Sustainability Conference - Denver, Colorado, USA - June 2010

About GRI

Sustainability Conference - Denver, Colorado, USA - June 2010

GRI: Network Organization 1998: 200 organizations in an international network

In 2006: More than 3000 individuals and organizations - business, NGOs, governmental, human rights, specialists, academics, etc.- from all around the world - to prepare GRI-G3.

Sustainability Conference - Denver, Colorado, USA - June 2010

www.globalreporting.org

Sustainability Conference - Denver, Colorado, USA - June 2010

The Guidelines What are the GRI Guidelines ?

Free download!

Sustainability Conference - Denver, Colorado, USA - June 2010

G3’s main characteristics Materiality Principle Levels for use of the GRI Guidelines Indicator’s Protocols

Sustainability Conference - Denver, Colorado, USA - June 2010

GRI Sector Supplements

Sustainability Conference - Denver, Colorado, USA - June 2010

GRI reports - recorded 1600

1400

1200

1000

World

800

USA Europe 600

400

200

0 1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Sustainability Conference - Denver, Colorado, USA - June 2010

Uptake by Country

More than 1500 reports per year! Sustainability Conference - Denver, Colorado, USA - June 2010

sustainability reporting worldwide

Sustainability Conference - Denver, Colorado, USA - June 2010

Fortune 250 Survey October 2008

80% of Global Fortune 250 companies now release CR data Doubled since 2005 - up from 37% Increasingly driven by economic concerns 74% of top 100 US companies published corporate responsibility (CR) information in 2008 either as part of their annual financial report or as a separate document Reasons cited: 70% cited ethical considerations as primary driver for CR disclosures 50% cited economic concerns as the leading reason GRI is used by: 77% of G250 69% of N100 in 22 countries

Sustainability Conference - Denver, Colorado, USA - June 2010

Industry Distribution of GRI Reporters Breakdown per Industry Textiles and apparel Waste Management Computers Commercial Services Household and Personal Products Forest and Paper Products Constructions Materials Metals Products Consumer Durables Automotive Real Estate Non-Profit/Services Aviation Chemicals Retailers Technology Hardware Construction Logistics Telecommunications Food and Beverage Products Mining Energy Utilities Energy Financial Services

* Data as of 25/11/2009

2009* 2008

0

20

40

60

80

100

120

140

Sustainability Conference - Denver, Colorado, USA - June 2010

160

180

How GRI support reporters?

Sustainability Conference - Denver, Colorado, USA - June 2010

Learning Services!

Sustainability Conference - Denver, Colorado, USA - June 2010

GRI Learning Services Area

GRI Learning Publication Series

GRI Local Training Programs

SME’s and Supply Chain Program Sustainability Conference - Denver, Colorado, USA - June 2010

GRI Publications





GRI Guidelines & Template:

GRI Learning Publications:

Research and Development Publications… Sustainability Conference - Denver, Colorado, USA - June 2010

GRI & UN Global Compact: joint value proposition

Sustainability Conference - Denver, Colorado, USA - June 2010

GRI Certified Training Certified TOTAL: 37

in the process: 29

3 2

18 4

3

6

2010 call

4

1

5 2 4 2

Sustainability Conference - Denver, Colorado, USA - June 2010

4

GRI Certified Training Partners in the USA

Brownflynn

ISOS Group, LLC

Lead Canada

Sustainability Conference - Denver, Colorado, USA - June 2010

Uptake SME Projects: 100+

Sustainability Conference - Denver, Colorado, USA - June 2010

GRI Regional Representation Brazil, Australia, India, China

?

2009 2009 2007

Sustainability Conference - Denver, Colorado, USA - June 2010

2009

Sustainability Conference - Denver, Colorado, USA - June 2010

Main users of the report’s info

Sustainability Conference - Denver, Colorado, USA - June 2010

Shareholder Initiatives & Coalitions Principles for Responsible Investment (PRI) [2006] Currently represents over $18 Trillion in investment capital 672 signatories

Investor Network on Climate Risk (INCR) [2003] Currently represents over $8 Trillion in investment capital 88 members

Carbon Disclosure Project (CDP) [2002] Currently represents over $55 Trillion in investment capital act on behalf of 475 institutional investors

Institutional Investors Group on Climate Change (IIGCC) [2001] Currently represents $4 Trillion in investment capital 50 members

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

Sustainability Conference - Denver, Colorado, USA - June 2010

Signatories to the PRI - over 650 signatories INCLUDING GLOBAL INVESTORS LIKE: Australian Super (Australia) CalPERS / CalSTRS (US) Danish Pension Fund for Engineers (DIP) (Denmark) Fond de reserve pour les retraites – FRR (France) Government Employees Pension Fund of South Africa (South Africa) Government Superannuation Fund Authority (New Zealand) Ilmarinen Mutual Pension Insurance Company (Finland) Kikkoman Corporation Pension Scheme (Japan) VicSuper (Australia) Munich Reinsurance AG (Germany) New Zealand Superannuation Fund (New Zealand)

Sustainability Conference - Denver, Colorado, USA - June 2010

Markets

Sustainability Conference - Denver, Colorado, USA - June 2010

NASDAQ CRD Global Sustainability 50 Index

Sustainability Conference - Denver, Colorado, USA - June 2010

Nasdaq “ …due to a failure to disclose at least two out of five quantitative environmental metrics that adhere to the Global Reporting Initiative (GRI) G3 guidelines”

Sustainability Conference - Denver, Colorado, USA - June 2010

ESG at Exchanges Nov. 2009: Sustainable Stock Exchanges Event in NYC Play a key role in fostering market confidence Promoting better ESG disclosure through IPO and listing requirements in some countries Reputation protection and increasing competition are drivers

Sustainability Conference - Denver, Colorado, USA - June 2010

ESG at Goldman Sachs Social Company

Corporate Governance

Leadership

Employees

Stakeholders

Environment

Overall 2006 ESG Score

Apple

25

3

9

6

14

57

CA, Inc.

n/a

n/a

n/a

n/a

n/a

n/a

Dell

24

8

16

7

26

81

EMC

22

3

10

9

16

60

Fujitsu

11

8

9

5

16

49

HP

28

9

17

11

27

92

Intel

n/a

n/a

n/a

n/a

n/a

n/a

IBM

26

9

15

13

27

90

Microsoft

n/a

n/a

n/a

n/a

n/a

n/a

NEC

15

7

9

5

15

51

Toshiba

14

8

12

10

22

66

Maximum score (possible)

30

10

25

15

30

110

Sustainability Conference - Denver, Colorado, USA - June 2010

Proliferation & Consolidation

Sustainability Conference - Denver, Colorado, USA - June 2010

GRI in the USA

Sustainability Conference - Denver, Colorado, USA - June 2010

Who’s involved in the GRI?

Sustainability Conference - Denver, Colorado, USA - June 2010

65 US Organizational Stakeholders •Accenture •Advisory Council for Sustainability in Business •Apollo Group/University of Phoenix •Applied Sustainability International •Baxter International •Bloomberg •Board of Environmental, Health & Safety Auditor Certifications (BEAC) •BrownFlynn •Bucyrus International •BuzzWord Sustainable Reporting

•Calvert •Caserta Concepts •Center for Sustainable Innovation •CERES (Coalition for Environmentally Responsible Economies) •ColcomGroup •Concept Green LLC •CRD Analytics •CSRware •Dante Ingram •Dell •Deloitte •Emertia LLC •ESS - Environmental Support Solutions

•Ford Motor Company •Framework CR •G-Squared Group •General Motors Corporation •Generation Strategy LLC •GoLite LLC •Governance & Accountability Institute •Grant Thornton •Green mountain Coffee Roasters •Greener Living Vermont •Greenview LLC •Hewlett Packard (HP) •HWTR Program: Washington State Department of Ecology •Inter-American Development Bank •ISOS Group

Sustainability Conference - Denver, Colorado, USA - June 2010

65 US Organizational Stakeholders •Inter-American Development Bank •ISOS Group •Locus Technologies •MetaVu •Newmont Mining Corporation •Nike •Novus International •oviya systems llc

•PGCM •PGI (Polymer Group Inc) •PricewaterhouseCoop ers Global •Prizma •ReSolutions •SB Services •SBC (Sustainable Business Consulting) •StakeWare •State Street Corporation •Steward Earth •Symantec •Symbiotic Engineering

•Tamela Stults-Wagner, Juris Doctor •The Verdant Consulting Group •Trillium Asset Management Corporation •UL Environment •Valparaiso University •Verasiti •WAP Sustainability •Waste Neutral Group •William Blackburn Consulting

Sustainability Conference - Denver, Colorado, USA - June 2010

GRI Reporters in the US?

Sustainability Conference - Denver, Colorado, USA - June 2010

Known US GRI Reporters 131 110

64

34 18 3

24

34

42

24

7

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Sustainability Conference - Denver, Colorado, USA - June 2010

Abbott Agilent Technologies Albemarle Corporation Alcoa Allergan AMB Property American Electric Power (AEP) AMR Apple Applied Materials Ashland AT&T Avon Products Bank of America Corp. Baxter International Best Buy Bristol-Myers Squibb Company BrownFlynn Brown-Forman Corporation CBRE Chevron Cisco Citigroup Coca-Cola Company Coca-Cola Enterprises Colgate-Palmolive ConocoPhillips Cooper Industries

Dell Deloitte Desert Glory Dow Chemical Duke Energy Ecolab Ecologic Designs El Paso Corporation Exelon Exxon Mobil Fairmount Minerals Fluor Ford Motor Company Fort Collins Utilities FPL Group Framework CR Freeport Indonesia Freeport McMoran Genentech General Electric GlaxoSmithKline (GSK) Green Mountain Power H.J. Heinz Company Halliburton Haworth Herman Miller Hess Corporation Hewlett Packard (HP) Hormel Foods

Johnson & Johnson Johnson Controls JohnsonDiversey KB Home Kellogg Keystone Foods Lexmark Marathon Oil Mattel McDonald's Corporation McKesson Co. & Foundation Merck USA Microsoft Corporation Millipore Corporation Monsanto Mosaic Motorola National Instruments Newmont Mining Corporation Nike NV Energy Occidental Petroleum (Oxy) Office Depot Owens Corning

2009 US

GRI Reporters Sustainability Conference - Denver, Colorado, USA - June 2010

Parkway Properties PepsiCo Pfizer PG&E PGI (Polymer Group Inc) Phillips-Van Heusen (PVH) Pinnacle West Capital corporation PPG Industries PPL Corporation Praxair Procter & Gamble Global ProLogis PSEG Qualcomm Samsung Electronics Sara Lee SAS Institute SBC (Sustainable Business Consulting) Seventh Generation Sigma-Aldrich Smithfield Southern Co Starbucks Coffee Company State Street Corporation Sun Microsystems Sunco Target TECO Energy Texas Instruments

The Timberland Company The Walt Disney Company TriLibrium U.S. Postal Service United Parcel Service of America (UPS) University of Massachusetts Dartmouth Wainwright Bank Waste Management Westport Innovations Weyerhaeuser Willard Intercontinental Wisconsin Energy Corporation Wyeth Xcel Energy Xerox

2009 US = 131

GRI Reporters Sustainability Conference - Denver, Colorado, USA - June 2010

US Business Roundtable Out of 77 organizations in the report, 30 are GRI reporters. • • • • • • • • • • • • • • •

Abbott (2004-now) • Alcoa (2008) • American Electric Power (2007• now) • Chevron (2005-now) • Chubb (2008) • Citi (2006-now) • Coca-Cola (2004-now) • • Dow Chemical (2002-now) Duke Energy (2007-now) • DuPont (2002-2004, 2008) • • Exxon Mobil (2006-now) General Electric (2005-now) • General Motors (1999-2004) • HSBC (2005-now) • IBM (2007-now)

International Paper (2002-2003) ITT (2007-2008) Johnson Control (2004-now) Merck (2005-now) Motorola (2001-now) Office Depot (2006-now) Owens Corning (2008-now) Pfizer (2007-now) SaraLee (2008) SAP USA (2008) SAS (2008) Tyco (2008) Weyerhaueser (2003-now) Williams (2008) Xerox (2008)

Sustainability Conference - Denver, Colorado, USA - June 2010

April 2009

Searchable online report database Insert snapshot of excel table

Sustainability Conference - Denver, Colorado, USA - June 2010

Trends on reporting

Sustainability Conference - Denver, Colorado, USA - June 2010

Trends in Future Reporting Context: Financial and systemic crisis Goal: Build sustainable economy Corner stone: Transparent management of economy, resources and social issues Tool: Sustainability Reporting Platform: Digital

Sustainability Conference - Denver, Colorado, USA - June 2010

Sustainability Conference - Denver, Colorado, USA - June 2010

The Transparent Economy

2010 - Year of the Tiger

raceability ntegrated Reporting overnment Leadership nvironmental Boundaries ating & Ranking hadow Economies

Sustainability Conference - Denver, Colorado, USA - June 2010

“Managing for change: Sustainability reporting for a Sustainable Future Dr. Nelmara Arbex Director, Learning Services [email protected]

Sustainability Conference - Denver, Colorado, USA - June 2010

raceability Building See-Through Supply Chains

“Wal-mart Reporting Initiative” – supplier questionnaire, linked to its sustainability index. Patrin Watanatada, SustainAbility

Sustainability Conference - Denver, Colorado, USA - June 2010

86% say ‘important’ or ‘very important’

Market Developments November 2009 Thomson Reuters bought leading social responsibility and governance data provider Asset 4 (main clients pension funds)

"People are increasingly aware that they need to get a good understanding of any factors that could affect either performance or risk“ Abel Clark, head of strategy for Thomson Reuters's investment and advisory business

Asset 4 covering over 2,500 publicly listed companies worldwide, as well as a variety of other entities Enables to monitor, rate and benchmark their portfolios against any combination of over 900 data points and 250 key performance indicators

Sustainability Conference - Denver, Colorado, USA - June 2010

Data Comparison

(FY2008)

Company

ESG Disclosure Score

Total GHG (‘000 tonnes)

Total Energy Consumption (‘000 Mwh)

Total Waste (‘000 tonnes)

Community spending (mln US$)

% Independent directors

Apple

37.96

130.00

247

2.2

---

87.50%

CA, Inc.

40.28

---

---

---

5.26

91.67%

Dell

53.24

528.54

---

90.66

26.40

83.33%

EMC

44.91

371.62

727.51

---

---

81.82%

Fujitsu

45.83

----

13798

33.95

---

20.00%

HP

45.83

1713

---

91.83

46.20

90.00%

Intel

66.20

3500

5643

83.80

102

83.33%

IBM

52.31

2500

6598

103.13

179.30

91.67%

Microsoft

43.06

257.7

192.79

---

865.20

80.00%

NEC

59.26

1980

---

48.00

7.90

33.33%

Toshiba

51.39

3510

16138

281.52

---

28.57%

Sustainability Conference - Denver, Colorado, USA - June 2010

ntegrated Reporting Feel the Force

“To have real impact, these separate reports need to be integrated with each other, thereby demonstrating that the company has a sustainable strategy based on a commitment to CSR that is contributing to a sustainable society that takes into account the needs of all stakeholders of which shareholders are one type.” Robert Eccles & Michael Krzus, ONE REPORT

Sustainability Conference - Denver, Colorado, USA - June 2010

89% say ‘important’ or ‘very important’

Companies issuing integrated reports

Sustainability Conference - Denver, Colorado, USA - June 2010 68

Integrated Reporting http://www.linkedin.com/groupRegistration?gid=2733425

Sustainability Conference - Denver, Colorado, USA - June 2010

overnment Leadership New Rules and Incentives

Obama Administration Ambition – “usher in a new era of collaborative democracy and open government.”

Sustainability Conference - Denver, Colorado, USA - June 2010

78% say ‘important’ or ‘very important’

What are governments doing? Acting as: Regulators Shareholders Reporters Customers Sustainability Conference - Denver, Colorado, USA - June 2010

Government Actions Danish action plan for CSR released in May 2008; Hundreds of the largest private and state-owned companies and institutional investors in Denmark must include corporate social responsibility information in their annual financial reports beginning in 2010. In 2002 Sweden was the first country to require sustainability reports from state-owned companies. Guidelines for external reporting by state-owned companies November 2007. Statement on International Corporate Social Responsibility in the Netherlands December 2008 Sustainability Conference - Denver, Colorado, USA - June 2010

Swedish Reporting “Sustainability reporting is a tool to drive forward work with sustainable development by clear reporting and follow-up. The boards of the stateowned companies are responsible for the companies presenting sustainability reports in accordance with the Global Reporting Initiative (GRI)’s guidelines which, together with other financial reports, make up an integrated basis for assessment and follow-up.”

Sustainability Conference - Denver, Colorado, USA - June 2010

nvironmental Boundaries Out Of Our Box “Nine planetary boundaries”, that must not be crossed in order to preserve the planetary and environmental balance that human civilizations (and much of the rest of the biosphere) require. Stockholm Resilience Centre

Sustainability Conference - Denver, Colorado, USA - June 2010

80% say ‘important’ or ‘very important’

ating & Ranking On Your Marks

30% increase from 2005 to 2008, of Global Fortune 250 companies, releasing corporate responsibility information in stand alone reports or integrated with annual financial reports. KPMG Survey Results

Sustainability Conference - Denver, Colorado, USA - June 2010

78% say ‘important’ or ‘very important’

hadow Economies Tackling the Dark Side

“Black-market networks are stealthily transforming global politics and economics.” Moisés Naím, Editor of Foreign Policy Magazine

Sustainability Conference - Denver, Colorado, USA - June 2010

80% say ‘important’ or ‘very important’